Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The Bitcoin bubble – Greater fool theory

economist.com

Post reply on HN
Print view View original

131–140 of 161 posts

Re: The Bitcoin bubble – Greater fool theory

#131

Post by beefield »

omio wrote: post #121
beefield wrote: post #98

Earlier quoted context omitted.

Each one of the cryptocurrencies I have encountered relies on the idea that the supply is somehow predefined. Give me a cryptocurrency whose supply is adjusted based on the needs of their users and I am interested. Give me a cryptocurrency that allows heavily negative interest rates for savings to embrace current consumption in the economy over hoarding of "money" and I am interested. But these are complete anathema…

It can be done easily. I would say it will be done in the future by governments and forced on us. The amount of control a government would have with a forced cryptocurrency is the only problem I see.

Yes, easily if it is made by government. But if you wanted to do that without government help enforcing things bit in a distributed manner, I find it a bit more difficult.

Re: The Bitcoin bubble – Greater fool theory

#132

Post by xiphias »

UncleMeat wrote: post #97
krupan wrote: post #92

Earlier quoted context omitted.

Are you saying our fiat systems of transfers and settlements use no energy?

It uses like seven orders of magnitude less per transaction.

Fiat currencies use proof of military power (war) as their security system. As an example you think USA would allow Kim Jong Un to issue US bonds (like he does with Bitcoin)? I much prefer the energy cost to military cost (that's why mining over Tor / satellite system is so important)

Re: The Bitcoin bubble – Greater fool theory

#133

Post by jnordwick »

dhosek wrote: post #32
HorizonXP wrote: post #21

The article makes a valid point. Everyone can not possibly sell all of their Bitcoin, and if they tried, it would be defined as a crash. I would be lying if I said I wasn’t worried about this. But I think it’s wrong to think of Bitcoin as a commodity, or that it needs some killer application. I really think Bitcoin is best thought of as a currency. Fiat currencies work because as a whole, we agree on its value. Usual…

The problem with bitcoin as a currency is that it's inherently a deflationary currency which provides a disincentive to use it as a currency at all. If your BTC will buy more tomorrow than today, why spend now? Thus it turns into a speculative vehicle and not a currency and prone to a big crash.

That doesn't make sense. Of you used btc for a purchase you can always buy more. The choice isn't "do i spend bitcoin or not", the choice is "do i buy this item or not and what else could i have bought".

Why spend a thousand dollars on an item when that thousand dollars could be worth more tomorrow by buying btc with it.

Its the same choice. The currency you use is irrelevant.

Re: The Bitcoin bubble – Greater fool theory

#134

Post by jnordwick »

abrkn wrote: post #76
cletus wrote: post #60

So I've been giving this a lot of thought. I mean after I lick my wounds about not buying any Bitcoin at any point ever. But alas... I honestly don't see any cryptocurrency being used as a currency possibly ever but at least not until it stabilizes in value. You have to look no further than the real world to see what happens with unstable currencies. In countries like Venezuela for example a secondary economy forms a…

As someone who gets paid in Bitcoin and only has Bitcoin I can explain how it works. I make purchases using Bitcoin or credit cards. I then sell enough Bitcoin to pay the credit card bills.

When you buy a pizza for $20 when does the FX transaction happen, at purchase time or at the time you pay your credit card bill?

I would hate to be on the hook for btc denominated loan.

Re: The Bitcoin bubble – Greater fool theory

#136

Post by ufo »

adrianveidt wrote: post #118
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)

PoW costs money. As PoW difficulty increases, and mining reward decreases, it makes sense for value to increase to make it sustainable.

Bitcoin's price is determined by supply and demand, not by the mining reward curve. But yes, Bitcoin would need an exponentially increasing price to be sustainable in the long term without higher transaction fees.

Re: The Bitcoin bubble – Greater fool theory

#137

Post by avyfain »

rbanffy wrote: post #89
Nursie wrote: post #73

Earlier quoted context omitted.

I'd spend dollars on the phone, because the same BTC might buy 10 phones in a few weeks.

> the same BTC might buy 10 phones in a few weeks. Which is kind of crazy and defies all logic - cryptocurrencies can be manufactured without any limit, even Bitcoin can be cloned and rebooted, creating a new currency space/ledger that's fresh.

You can print out a piece of paper that says "TEN US DOLLARS" on it, but if the corner store or the bank won't take it it isn't really the same as $10.

Re: The Bitcoin bubble – Greater fool theory

#138

Post by Balgair »

tom_mellior wrote: post #87
porter wrote: post #4

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

The key part is the statement that "it cannot be valued". Saved you a click.

To expand on this, as it is mysterious to me:

The reason it cannot be valued or invested-in is that it is a currency, and as such it only has a price. The difference is a bit murky to me (value v. price) but I think it's because as a currency it has a 'fiat' kinda representation.

Re: The Bitcoin bubble – Greater fool theory

#139

Post by googletazer »

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…

Deflation is not a bad thing. Instead of throwing away their money at junk, people become more discriminating and buy what they actually need at the moment. Thats terrible news for our economic system short term, but great news for all of us and the planet long term.

Re: The Bitcoin bubble – Greater fool theory

#140

Post by jonex »

tom_mellior wrote: post #130
howlin wrote: post #119

Earlier quoted context omitted.

Google shares represent a stake in Google's revenue stream. It has an intrinsic value beyond what you could currently sell a share at on the stock market. Likewise gold has some intrinsic value in manufacturing and ornamentation. Bitcoin has no intrinsic value. Its value is just what you can trade it for at the moment.

> Google shares represent a stake in Google's revenue stream. It has an intrinsic value [...] I'm not up to date on Google specifically, but for a long time in its existence, it did not pay a dividend, so its shares did not represent a meaningful stake in Google's revenue stream. Did they have an intrinsic value anyway? But regardless of your answer to that, my statement stands. If everyone holding Google stocks sudd…

You buy stake in _future_ dividends. For companies that don't have any dividend currently you just have to compensate for the time delay when calculating the value.

If everyone would race to sell Google stocks for no reason, the price would quickly drop to a level where it would make huge sense to start buying. Imaging having a dividend to price ratio of 1000%. Even with no dividend, buying stocks (preferably with voting rights) in a company at a price to profit ratio of 1000% would be a great deal as it'd be a small thing to start paying dividends with those profit levels.

This does not mean that there aren't overvalued stocks and physical assets which does not make sense to buy at the current price. Bubbles has occurred before...

Post reply on HN