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The Bitcoin bubble – Greater fool theory

economist.com

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Re: The Bitcoin bubble – Greater fool theory

#61

Post by mbrock »

autokad wrote: post #26

I was having a conversation about bitcoin, and I was saying the fact that the price goes up so fast means people cant/wont actually use it as a currency. I think someone bought a pizza with 10k bitcoin? thats now 70 million $. Even in the last year it has moved up so fast, and if people think it will continue to grow 'because of adoption', people cant actually 'adopt' it and use it as a currency, because todays bitco…

It definitely means people won't use it as a unit of account (for debts, budgets, etc), which is one primary use for a currency...

But I don't think it means people won't spend it or trade it for some other currency or asset. If you held a bunch of bitcoin while the price in USD doubled, and you happened to want a new smartphone, you're sure you wouldn't buy one?

If you were absolutely confident the price would quickly rise even more, maybe you would prefer holding, but if you really want the phone and you think BTC/USD has some risk?

Re: The Bitcoin bubble – Greater fool theory

#62

Post by craigc »

platz wrote: post #23
brndnmtthws wrote: post #11

Frankly I'm astounded by the vitriol toward Bitcoin on HN. Bitcoin has the potential to actually change the world (unlike most of the BS startups coming out of SV), and yet all these voices on HN poo-pooing Bitcoin appear (to me at least) to outweigh those who are willing to give it a shot. Why is this? Do people fear what they don't understand? Are they mad because they feel like they missed out? Does Bitcoin's succ…

The hubris Bitcoiners carry is completely different. The net started among academic wonks and University faculty pages. Bitcoiners purport to bring down Central banks and subvert the state, delivering a new social order.

I encourage you to read the Bitcoin white paper if you haven't.

https://bitcoin.org/bitcoin.pdf

I think you are a little off base in the original intentions. It was designed to solve a real problem, and its creator was likely someone who had a background in academia although we may never know for certain.

It is true that maybe a lot of the proponents today want to bring down central banks, but I think it's a little unfair to imply that that was the original intention.

Re: The Bitcoin bubble – Greater fool theory

#63

Post by granitosaurus »

brndnmtthws wrote: post #11

Frankly I'm astounded by the vitriol toward Bitcoin on HN. Bitcoin has the potential to actually change the world (unlike most of the BS startups coming out of SV), and yet all these voices on HN poo-pooing Bitcoin appear (to me at least) to outweigh those who are willing to give it a shot. Why is this? Do people fear what they don't understand? Are they mad because they feel like they missed out? Does Bitcoin's succ…

You shouldn't be surprised - HN is literally a platform built off startup and IPO culture. Where's bitcoin and crypto in general are complete opposite - decentralised and bleeding-edge.

Re: The Bitcoin bubble – Greater fool theory

#64

Post by paulgb »

scurvy wrote: post #36
brndnmtthws wrote: post #11

Frankly I'm astounded by the vitriol toward Bitcoin on HN. Bitcoin has the potential to actually change the world (unlike most of the BS startups coming out of SV), and yet all these voices on HN poo-pooing Bitcoin appear (to me at least) to outweigh those who are willing to give it a shot. Why is this? Do people fear what they don't understand? Are they mad because they feel like they missed out? Does Bitcoin's succ…

It comes down to politics really. While Silicon Valley has a large Libertarian contingent, European tech crowds are dominated by statists. The statists are fundamentally opposed to bitcoin on many levels, so the vitriol runs hot and heavy there. The Libertarians love bitcoin like their forebears liked gold and distrusted the government. What is money today but the ultimate manifestation of politics in everyday life?

That's a tempting narrative but I think for a lot of people who oppose Bitcoin it's a matter of belief in the monetary ideas behind it. Not in a political, what should we do sense, but the actual normative economics of how money works.

Re: The Bitcoin bubble – Greater fool theory

#65

Post by heifetz »

Can someone explain why bitcoin should be worth more than any of its forks, or any of the other cryptocurrencies? It feels to me that if anyone can fork bitcoin and create a parallel currency then I don't see why bitcoin should be valued differently, other than if people feel that it is much more "useful". But even in that case, vendors and trading markets will support multiple currencies. It seems to me that bitcoin might be useful as a conduit for transactions, but not as a store of value.

Re: The Bitcoin bubble – Greater fool theory

#67

Post by johndevor »

autokad wrote: post #26

I was having a conversation about bitcoin, and I was saying the fact that the price goes up so fast means people cant/wont actually use it as a currency. I think someone bought a pizza with 10k bitcoin? thats now 70 million $. Even in the last year it has moved up so fast, and if people think it will continue to grow 'because of adoption', people cant actually 'adopt' it and use it as a currency, because todays bitco…

Or people who are sensible, are incentivized to sell or buy things because they know the crazy bubble won't last. Thus creating adoption in a deflationary model.

Re: The Bitcoin bubble – Greater fool theory

#68

Post by vog »

thanatropism wrote: post #44
porter wrote: post #4

Famous NYU valuation professor on how to value bitcoin: http://aswathdamodaran.blogspot.com/2017/10/the-bitcoin-boom...

Without having read the post I can attest: Damodaran is the real MVP.

Do you care to elaborate? That statement (or joke?) does not make any sense to me.

Re: The Bitcoin bubble – Greater fool theory

#69

Post by apo »

But it is one thing to become a millionaire (the word was coined during the Mississippi bubble of the early 18th century) on paper, or in "bits"; it is another to be able to get into a bubble and out again with your wealth intact.

The Mississippi Bubble is an interesting one to invoke here. It was a share bubble fueled by France's overprinting of paper money and habitual currency devaluation.

The idea was to create a monopoly that would exploit the vast riches of France's territories in North America. The company never got off the ground, but the shares were sold and began trading anyway. Investors starved for returns flocked to the trading of the shares.

So yes, it's entirely possible that the overproduction of money by the world's governments is fueling a speculative bubble in stocks, bonds, Silicon Valley startups, and even digital currencies - not unlike the Mississippi Bubble.

Unlike the other inflating assets, however, the supply of bitcoin is rigidly fixed. As world governments produce ever more currency in an attempt to keep the other bubbles inflated, we can expect the bitcoin exchange rate to respond accordingly.

It's worth noting that the basic idea behind the Mississippi company was sound. The Mississippi was set to become a hub of world economic activity and valuable almost beyond measure - but not on the time scale of the day's short-sighted investors.

Re: The Bitcoin bubble – Greater fool theory

#70

Post by qznc »

SirensOfTitan wrote: post #24

I really love Ethereum and have been invested in it for a while. I think @vbuterin and crew have a clear idea as to how to move past problems, and I find it exciting to watch the Ethereum foundation execute their vision well. Bitcoin, on the other hand, doesn't perform its simple functions well in the short term, and seems to have very little idea on how to scale long term: 1. Transactions are still pretty expensive…

Formal verification is critical. Projects like this are necessary: https://github.com/pirapira/eth-isabelle

Paper: https://yoichihirai.com/malta-paper.pdf

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