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Ask HN: Why is Bitcoin's value rising so fast?

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Re: Ask HN: Why is Bitcoin's value rising so fast?

#21

Post by nonsince »

theklub wrote: post #14
xchaotic wrote: post #8

By design, Bitcoin is scarce - there will only be 20999999.9769 bitcoins ever made. Contrast that with USD where more and more money is being printed or added to the system via: quantative easing increasing federal debt ceiling So that is one factor. The other is simple supply and demand - more and more people want to invest in bitcoin for speculative reasons, not as a means to buy goods and services but to heard in…

It's not really scarce though because you can divide up bitcoins into tiny pieces. It's more of a mental scarcity.

Yes, but that still means that the price _per bitcoin_ will keep increasing.

Re: Ask HN: Why is Bitcoin's value rising so fast?

#22

Post by 6d6b73 »

xchaotic wrote: post #8

By design, Bitcoin is scarce - there will only be 20999999.9769 bitcoins ever made. Contrast that with USD where more and more money is being printed or added to the system via: quantative easing increasing federal debt ceiling So that is one factor. The other is simple supply and demand - more and more people want to invest in bitcoin for speculative reasons, not as a means to buy goods and services but to heard in…

At any point number of bitcoins can change.. It might be another fork, but that number is not set in stone afik

Re: Ask HN: Why is Bitcoin's value rising so fast?

#23

Post by anm89 »

theklub wrote: post #14
xchaotic wrote: post #8

By design, Bitcoin is scarce - there will only be 20999999.9769 bitcoins ever made. Contrast that with USD where more and more money is being printed or added to the system via: quantative easing increasing federal debt ceiling So that is one factor. The other is simple supply and demand - more and more people want to invest in bitcoin for speculative reasons, not as a means to buy goods and services but to heard in…

It's not really scarce though because you can divide up bitcoins into tiny pieces. It's more of a mental scarcity.

You are misunderstanding the term scarcity in the economic sense. The ability to acquire some limited quantity of the thing isn't sufficient. If you cannot easily acquire an arbitrary quantity that you desire than a good has some element of scarcity.

Re: Ask HN: Why is Bitcoin's value rising so fast?

#26

Post by nfin »

You should look at it in a logarithmic scale (like all things that has been growing exponentially):

https://bitinfocharts.com/comparison/bitcoin-price.html#log

Here you can see how long it takes to double or get 10x bigger. And you see that at times bitcoin did grew faster (the curve was steeper at some moments). You also see that the corrections were bigger... so volatility does seem to decrease (until now).

So it is not new that is grows fast. Why it does grow fast? I prefer to let this question open. There are many different possible answers. Maybe the actual system has no solid fundamentals? (if every runs to the bank, the is not enough there for everybody o_o). Or the younger libertarian generation prefer it to gold? Or it could bank the unbanked of this world (once lightning implementations in bitcoin and other improvements are past alpha/beta stadium)? Or because venezuela might not be the last state with hyperinflation and cryptocurrencies might be the alternative (once scaling through lightning/... is improved)? Or a new way for machines to exchange with each other?

Obviously speculation on some of these (and other) reasons is still dominating... but it may mean that people seem to belive these secenarios might happen

Re: Ask HN: Why is Bitcoin's value rising so fast?

#27

Post by theklub »

asafira wrote: post #19
theklub wrote: post #14

Earlier quoted context omitted.

It's not really scarce though because you can divide up bitcoins into tiny pieces. It's more of a mental scarcity.

I don't think that means it isn't scarce: if there was a supply of water (and you could buy it in any amount) and people were buying it up and selling it on a secondary market, it would still cause the price to go up.

Water isn't bitcoin though.. you can meaningfully divide a bitcoin down to .0001 and give it to someone. You can't really trade drops of water.

Re: Ask HN: Why is Bitcoin's value rising so fast?

#28

Post by steeleduncan »

The success of bitcoin (amongst other cryptocurrencies) has led to great investor interest in blockchain techologies. Investments in these technologies are generally made by way of an ICO, usually denominated in bitcoin and/or ether. This increases demand for bitcoin & ether which raises the price and generates even more investor interest in blockchains/cryptocurrencies, leading to further ICO's and so on.

There are of course speculators, and an increase in the number of businesses accepting bitcoin for regular transactions, but I suspect the ICO boom is likely the driver behind the recent spike.

It is the same mechanism noted by Paul Graham in his time at yahoo - http://www.paulgraham.com/yahoo.html

Re: Ask HN: Why is Bitcoin's value rising so fast?

#30

Post by theklub »

nonsince wrote: post #21
theklub wrote: post #14

Earlier quoted context omitted.

It's not really scarce though because you can divide up bitcoins into tiny pieces. It's more of a mental scarcity.

Yes, but that still means that the price _per bitcoin_ will keep increasing.

That's fine, I'm not talking about the price. I just mean its not really scarce when you can divide it up so much and trade it. The scarcity is fake. It's like saying there is only 10 trillion dollars in a bank so the trillions are scarce if I'm only going to trade 1 trillion at a time.
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