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Is Bitcoin a Bubble? Economists Say ‘Yes’

blogs.wsj.com

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Re: Is Bitcoin a Bubble? Economists Say ‘Yes’

#121

Post by acdha »

Alex3917 wrote: post #73
pedrocr wrote: post #39

Earlier quoted context omitted.

>If there's 1 thing I've learned in the past 2 years, it's that experts can be deadly wrong (Trump being president, Brexit). Be very careful with those conclusions. In both cases the predictions were that the elections were very close. Trump winning the presidency when the best models we had gave him a 30% chance is not a failing of prediction at all.

> Trump winning the presidency when the best models we had gave him a 30% chance is not a failing of prediction at all. How accurate the "best models" were isn't really relevant to the accuracy of the predictions of experts as a whole. The media was running that Clinton had a 98% chance of winning the morning of the race.

You might want to check the sources for that claim. It’s often repeated but the reputable polls weren’t anywhere near that lopsided.

Nate Silver wrote at length about this but the gist is that the polls were pretty accurate but some people talked about them imprecisely:

https://fivethirtyeight.com/features/the-real-story-of-2016/

Re: Is Bitcoin a Bubble? Economists Say ‘Yes’

#122

Post by craigc »

googletazer wrote: post #106
jandrese wrote: post #53

Earlier quoted context omitted.

That's textbook bubble behavior. One caveat with Bitcoin is that the network is so slow (effectively just 3 transactions per second) that a crash would be spread out over time. If a panic starts you won't be able to get a slot to sell your bitcoins unless you pay an enormous transaction fee. It could be an interesting situation where the rich literally pay to get to the head of the line and avoid the crash.

You don't understand how trading bitcoin works. Trading is not done on the chain, its the centralized exchanges which keep the books. Its instantaneous, with people who are involved in arbitrage between the exchanges keeping the prices level across all.

That assumes you have your coins on an exchange. If you have them in a wallet you would have to send them to the exchange before selling, and that process could take hours or days.

Re: Is Bitcoin a Bubble? Economists Say ‘Yes’

#123

Post by rhino369 »

OscarCunningham wrote: post #62

I've seen a few estimates for what value Bitcoin would have if it did become a world currency (or suchlike), and they're all in the $500 000+ range. So the current price of around $20 000 is consistent with the theory that Bitcoin will succeed with probability 5% and go to zero with probability 95%. I don't think that's obviously wrong, so I'd say it's wrong to call it a bubble. And even if Bitcoin does go to zero th…

I think a 5% chance of bitcoin becoming a world currency is obviously wrong. You also have to figure in discount rates.

Re: Is Bitcoin a Bubble? Economists Say ‘Yes’

#124

Post by ceejayoz »

Akujin wrote: post #20
evanwise wrote: post #6

I'm committing the cardinal sin of commenting before I'm done with the article, but whenever this discussion comes up, I feel like asking: why not both? Could it be that Bitcoin is currently overvalued and in a "bubble", but it or something like it still may have huge value and utility in the long run? The idea that the Bitcoin bubble is something more like the Dot Com bubble than Tulipomania seems plausible to me.

Tulipmania lasted 6 months. Bitcoin is now 8 years old. Stop comparing Bitcoin to flowers. It's not even close to the same thing.

If you chart them, they're actually right on top of each other.

http://www.zerohedge.com/news/2017-12-12/its-official-bitcoi...

Re: Is Bitcoin a Bubble? Economists Say ‘Yes’

#125

Post by wyldfire »

whiskyant wrote: post #86
RosanaAnaDana wrote: post #28

Earlier quoted context omitted.

I think the contents of that bubble will fill another, more technically useful crypto. Something with 0 cost transaction fees.

It's not currently possible to have a crypto with 0 fees that's both distributed/non-centralized as well as very secure against attacks. If there is, Bitcoin can easily incorporate the technology.

Proof-of-stake is "very secure against attacks" but is less decentralized than proof-of-work. See Peercoin, Raiblocks.

Re: Is Bitcoin a Bubble? Economists Say ‘Yes’

#126

Post by slyfocks »

DrNuke wrote: post #65

It is still pioneers and early adopters time, people seeing bitcoin as the first possible single currency for the entire planet. We will see how it goes when the masses and legislators come. Utopian it is not anymore and even technically feasible nowadays, so we will have attempts.

My grandma bought some Bitcoin last week and she doesn’t even use the internet. Friends who are not tech-savvy are talking about Bitcoin often.

It most definitely is not still “pioneers and early adopters time”—that idea seems to be Bitcoin propaganda aimed at potential new Bitcoin buyers on the margin.

Re: Is Bitcoin a Bubble? Economists Say ‘Yes’

#127

Post by VectorLock »

craigc wrote: post #117
hectorr1 wrote: post #112

Earlier quoted context omitted.

Bubble concerns worth listening to on crypto usually talk about the price getting to far ahead of the tech, network congestion, tx volume, scaling solutions, hard and soft forks, governance challenges, and regulatory uncertainty. Bubble concerns not worth listening to talk about lack of transparency, the fact that not backed by anything, hacks, and of course tulips. Since I can't view the WSJ Economist Survey crossta…

I agree. As soon as anyone starts comparing crypto currencies and Bitcoin to tulips I tune out. It is a sign that they clearly do not understand what they are talking about.

Totally right. Tulips were a tangible asset with intrinsic value.

Re: Is Bitcoin a Bubble? Economists Say ‘Yes’

#128

Post by billmalarky »

azinman2 wrote: post #90
placeybordeaux wrote: post #66

Earlier quoted context omitted.

I was just reviewing the avg tx fee on major coins. Micropayments aren't possible on any widely accepted coin. BTC has hit 20 USD a tx (albeit without segwit). It's looking a little rough. Might be time for a draw back. EDIT: I was pulling together the avg tx fees from https://bitinfocharts.com/ $BTC: 24.4 USD $ETH: 1.07 USD $BCH: 0.17 USD $LTC: 0.632 USD $DASH: 0.62 USD $XMR: 5.49 USD My other thoughts on the subjec…

Bitcoin doesn’t HAVE to be used for micropayments to be useful.

Absolutely true. However, if crypto doesn't scale one way or another, it's use case is _greatly_ diminished.

Re: Is Bitcoin a Bubble? Economists Say ‘Yes’

#129

Post by jo909 »

googletazer wrote: post #106
jandrese wrote: post #53

Earlier quoted context omitted.

That's textbook bubble behavior. One caveat with Bitcoin is that the network is so slow (effectively just 3 transactions per second) that a crash would be spread out over time. If a panic starts you won't be able to get a slot to sell your bitcoins unless you pay an enormous transaction fee. It could be an interesting situation where the rich literally pay to get to the head of the line and avoid the crash.

You don't understand how trading bitcoin works. Trading is not done on the chain, its the centralized exchanges which keep the books. Its instantaneous, with people who are involved in arbitrage between the exchanges keeping the prices level across all.

But only if you already have your bitcoins on the exchange. If you keep them in your own wallet you need a blockchain transaction to be able to trade them at all.

That will effectively put a limit on the amount of bitcoin that is able to be sold quickly in a crash.

Re: Is Bitcoin a Bubble? Economists Say ‘Yes’

#130

Post by 21 »

pedrocr wrote: post #39
AznHisoka wrote: post #22

If there's 1 thing I've learned in the past 2 years, it's that experts can be deadly wrong (Trump being president, Brexit). They seem to be good at predicting things with known variables, but not with unknown unknowns. I'm making a contrarian bet that experts are wrong this time as well (at least in the near term). People are jumping the gun, trying to look smart and predict the right outcome. The same people that ne…

>If there's 1 thing I've learned in the past 2 years, it's that experts can be deadly wrong (Trump being president, Brexit). Be very careful with those conclusions. In both cases the predictions were that the elections were very close. Trump winning the presidency when the best models we had gave him a 30% chance is not a failing of prediction at all.

Taleb wrote at long on the election models. TL;DR: A proper statistical analysis should have given around even odds (50:50), not 98:2.

"So back to the mechanism of the model, Taleb imposes a no-arbitrage condition (borrowed from options pricing) to impose time-varying consistency on the Brier score. This is a similar concept to financial options, where you can go bankrupt or make money even before the final event. In Taleb's world, if a guy like Nate Silver is creating forecasts that are varying largely over time prior to the election, this suggests he hasn't put any time dynamic constraints on his model."

http://lesswrong.com/lw/o5x/nassim_taleb_on_election_forecas...

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