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The Bitcoin bubble – Greater fool theory

economist.com

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Re: The Bitcoin bubble – Greater fool theory

#101

Post by jonwachob91 »

nickysielicki wrote: post #29
porter wrote: post #4

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

Flawed argument because he doesn't understand the tech. > The only exception that I can think off is that if it becomes a necessary component of smart contracts, it could take on the role of a commodity; that may be ethereum's saving grace, since it has been marketed less as a currency and more as a smart contracting lubricant. This applies to bitcoin too, but he doesn't seem to be aware of it. So when he later claim…

>Flawed argument because he doesn't understand the tech.

People don't buy technology, they buy the experiences technology creates.

If the price remains this volatile I have no reason to sell it, or to use it as a currency to purchase goods and services. The real problem is that the technology wasn't designed to increase the value of the coin, it was designed to create a currency for use in purchasing goods and services. In other words, if I can't use the technology for what it was intended for (purchasing goods and services) than I can't experience what the technology creates.

Re: The Bitcoin bubble – Greater fool theory

#102

Post by deevolution »

brndnmtthws wrote: post #25
ufo wrote: post #18

Earlier quoted context omitted.

I dont think poopooing bitcoin's speculative bubble has to do with poopooing it as a technology. For its original purpose as a digital currency, USD value should not matter (as long as it doesn't fluctuate too much)

That's similar to the argument that "blockchain good, Bitcoin bad". Bitcoin is the killer app. Similarly, the internet is great not because of TCP, but because of the information (which is what gives it value).

The medium is the message. I'd argue the underlying technology, that is blockchain, is actually the most impactful. Bitcoin is just an implementation and an example of how blockchain based technology can affect society.

Re: The Bitcoin bubble – Greater fool theory

#103

Post by platz »

craigc wrote: post #62
platz wrote: post #23

Earlier quoted context omitted.

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 u…

I am not scoping\targeting my statement to bitcoin's original intensions and white papers.

I am referring 'Bitcoiners', the social entity, which have a separate life from the original intensions and white papers , and why there is "vitriol towards Bitcoin", as the OP requested.

Re: The Bitcoin bubble – Greater fool theory

#104

Post by simias »

nxsynonym wrote: post #15
simias wrote: post #9

The article is perfectly right when it describe what drives the current Bitcoin craze and its insane valuation but the conclusion is frankly a bit lazy: >When the crash comes, and it cannot be too far away, it will be dramatic. People have been saying that Bitcoin was going to crash for years now. And it has, multiple times, but always recovered so far. Seems like there's no shortage of "fools" willing to pump the cu…

Yeah I'm pretty disappointing in the quality of this article, especially considering its coming from the Economist. The summary is a coin flip in essence. It did, however, get me to think about this question: Is there a point where enough "fools" get involved that Bitcoin becomes "too big to fail"?

It's the other way around really. This "greater fool" system works as long as fresh money comes it to keep pumping the value. At some point you'll run out of "fools" to come in and invest money, at which point the bubble stops expanding.

At this point the most anxious investors will start selling their coins, fearing a crash. This in turns causes the value to start dropping and then you have a runaway effect as more and more people want to dump their coin, crashing its value more and more.

Re: The Bitcoin bubble – Greater fool theory

#105

Post by adrianveidt »

craigc wrote: post #94
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…

I have used Bitcoin for purchases in the past. I try not to do it so often because of the exact thing you mentioned, but I feel like this is something that could improve with time. If Bitcoin does get mass adoption and becomes THE worldwide currency then that also means that the volatility will decrease significantly to the point where I wouldn't have any problem transacting using Bitcoin. I realize the idea of that…

How would volatility decrease in case of mass adoption?

Re: The Bitcoin bubble – Greater fool theory

#106

Post by bitveil »

bringtheaction wrote: post #85
stevep98 wrote: post #77

Earlier quoted context omitted.

I wonder whether scrutiny of those tax avoidance schemes revealed in the paradise papers or Panama papers will lead to those investors moving their funds to bitcoin.

Rather they would use a crypto currency with actual anonymity don't you think? I'm not going to mention it by name lest someone thinks I'm here to "shill" it (which btw I'm not, I only hold BTC and ETH currently).

Or use a Bitcoin mixer.

Re: The Bitcoin bubble – Greater fool theory

#107

Post by havetocharge »

beefield wrote: post #59
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 problem is that it has potential to change world for the worse, not the better. Fixed supply monetary systems have been tried in the history and there are reasons other than evil bankers wanting to get power for their dismissal. And claiming that bitcoin's success would be bankers loss indicates that you don't quite get what is the utility finance sector creates. One of the main things banks do is they convert sh…

Well said. Credit is unlimited and it propelled real growth in the past. The sole use of Bitcoin would make this capability an anti-pattern.

Re: The Bitcoin bubble – Greater fool theory

#108

Post by gautamnarula »

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…

Isn't that deflation?

Re: The Bitcoin bubble – Greater fool theory

#109

Post by deevolution »

flunhat wrote: post #93
krupan wrote: post #79

The "blockchain" hype right now feels so much like "internet" hype in the late 1990's. Was that a bubble? Yes, but successful companies and technologies did emerge from it. People did make money too: those who started companies (even the companies that aren't around anymore), those who got lucky and invested in the few winners (like Yahoo), and those who invested broadly across the whole "internet" market.

I want to believe this argument so badly, but it's been 7 years and we still don't have a widely used application related to it. How much longer do we have to wait? While we're on this topic, why are all Ethereum projects so damn meta? Like, the top dapps are all recursively related to Ethereum in some way (like wallets for ethereum, different ways of spending ethereum etc.) If a technology is new and exciting, shoul…

ARPANET adopted tcp/ip in 1983. That's a solid 16 years before the beginning of the internet bubble. Blockchain is far from being a mature technology.

Re: The Bitcoin bubble – Greater fool theory

#110

Post by heifetz »

craigc wrote: post #84
heifetz wrote: post #65

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…

This same question could be asked about many technology startups. Why should Uber be valued higher than Lyft? That's a pretty crude comparison, but I'm just pointing out that just cause someone comes along and makes a clone of something doesn't mean it will be worth more than the original even if it is technologically superior. It's true that forking a cryptocurrency required much less work than starting a company, b…

except that Uber and Lyft are operating companies with revenue, expenses and earnings. Bitcoin is a "currency" without inherent value, or cashflow potential. I admit, Bitcoin may have some utility, but is that utility any different from another cryptocurrency? To rephrase my question, if someone was able to clone Gold, why should Gold be worth more than the clones?
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