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

Is Bitcoin a Bubble? Economists Say ‘Yes’

blogs.wsj.com

Post reply on HN
Print view View original

211–220 of 238 posts

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

#211

Post by sasas »

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…

Sam Harris just realised an episode on his “waking up” podcast that discusses the concept of experts -

https://www.samharris.org/podcast/full_archive

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

#212

Post by scottnyc »

bhouston wrote: post #3

In the end Bitcoin is so similar to Gold. It is a means of storing wealth and is valued on a shared belief of finite quantities and that it is an effective/secure means of storing wealth. It is hard for me to call a shared belief a bubble, because there is a clear understanding I think now that there is no underlying fundamental asset value.

I'll disagree. Gold once mined will be there for us forever. Bitcoin once mined will need us to perpetually mine it to exist.

Gold will survive a nuclear war. EMP blasts, Hard drive failures, viruses, quantum computing and the lack of an internet connection aren't real risks to gold.

In the throws of WWIII, with buildings burning to the ground off in the distance, as you cross the border to mexico with just the clothes on your back, which would you rather line the seams of your jacket with: gold? Or a piece of paper with some numbers that unlocked your 'virtual currency'?

Let's see how well that shared belief holds up then.

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

#213

Post by Akujin »

ceejayoz wrote: post #207
Akujin wrote: post #201

Earlier quoted context omitted.

For hacker news I expect people to be a lot smarter but apparently no one in the entire thread realized I said Tulipmania. Not Tulips. Tulips as a financial instrument were only used for 6 months. Here's a fucking chart since you can't be bothered to look it up: https://en.wikipedia.org/wiki/Tulip_mania#/media/File:Tulip_... From November 12th through May 1st. Almost exactly 6 months. Period. Counting anything outsid…

> For hacker news I expect people to be a lot smarter but apparently no one in the entire thread realized I said Tulipmania. Not Tulips. Yes, and then you went and compared the tulip mania against the entire history of Bitcoin . The current orgy of speculation and people taking out mortgages to buy Bitcoin is a recent phenomenon.

This is like me talking about dollars and you go "paper has existed for much longer than dollars".

This is why I (almost) never comment online. Too many idiots posing as experts.

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

#214

Post by AznHisoka »

JamesBarney wrote: post #147
Meekro wrote: post #131

"Experts" predicting bitcoin's impending doom is nothing new. Does anyone remember Professor Mark Williams, a top economist who is so well regarded that he has been called to testify before Congress many times? In late 2013, he predicted that bitcoin would crash from $1200 to under $10 within the next 6 months [1]. After he was proven wrong, he revised his claim to say that the crash would happen eventually. I guess…

This is true of every bubble ever. No one knew how to predict when the real estate bubble was going to collapse. And they wouldn't have been able to make any specific predictions, despite real estate being an obvious bubble. It was very easy to see that the price did not reflect the fundamentals. And Bitcoin is similar. The fundamentals of Bitcoin do not support the price. Also in terms of putting your money where yo…

There are ways, like buying a put option on Overstock for June of 2018, or January of 2019, if you think it'll take more time:

https://finance.yahoo.com/quote/OSTK/options?p=OSTK&date=152...

One look at their performance graph this year, and you'll see it's almost correlated with bitcoin prices.

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

#215

Post by pocoloco »

excalibur wrote: post #56
tedeh wrote: post #10

Well, there's already talk that Bitcoin is the biggest financial bubble in world history: http://www.zerohedge.com/news/2017-12-12/its-official-bitcoi...

Well, we still have that apocalyptic "derivatives bubble" hanging over our heads, which is estimated to be around $1.5-2 quadrillion (with a q). I don't think Bitcoin is competing in the same league.

MarketWatch has an infographic that shows the relative sizes. It's originally from 2015 but it has as been updated for 2017.

https://www.marketwatch.com/story/this-is-how-much-money-exi...

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

#216

Post by Xixi »

dynofuz wrote: post #44
adamnemecek wrote: post #16

The one thing they aren't accounting for is that there really hasn't been anything like bitcoin. In most bubbles, eventually the whales start selling which triggers an avalanche, however bitcoin is distributed enough that this might not happen. Too many different people are interested in it doing well now. E.g. rich people in 3rd world countries, boy are they pumped for bitcoin. I've mentioned it before, and I was ki…

recently posted 1000 people who own 40% of the BTC market https://news.ycombinator.com/item?id=15877838

It's 1000 wallets, not people: there can be a lot of people behind a single wallet (exchange cold wallets, for instance).

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

#217

Post by tarnacious_ »

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.

I understand bitcoin are traded like this but it doesn't address this issue the parent raises. Also if you are trading through an exchange like this you are likely exposed to even greater risks.

If you buy some bitcoin from an exchange and you don't get the bitcoin in an address you control, you are effectively buying an IOU for the bitcoin. The value of the IOU depends not only on the value of bitcoin but also on the exchanges willingness/ability to repay it.

If the exchange doesn't own a similar amount of bitcoins as they have sold IOUs, at the current market value they couldn't possibly repay the IOUs they issued a month ago. If a significant amount of people they have issued IOUs want to redeem them, then they will surely need to sell some bitcoins to repay the IOUs they have issued.

By using a futures market they could limit their exposure price changes when buying or selling coins they don't have, but these markets are quite young and it's certainly not clear how much risk these exchanges are exposing themselves to.

As you apparently understand this better than we do, what do you think will happen on these exchanges if the value of bitcoin starts falling rapidly?

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

#218

Post by Terretta »

bringtheaction wrote: post #179
heurist wrote: post #63

Earlier quoted context omitted.

Having read a thousand rabid forum posts over the last week, I get the feeling people will hold for decades regardless of short term changes or regulation. They think there is unlimited upside as it eats into gold and fiat, so it's only rational told hold until the new world order comes and everyone in the world is using bitcoin. I'm hard pressed to disagree. But diversification is important. Best strategy I've seen…

I hold a diverse portfolio. In my experience when the price of bitcoin falls, the alts fall too. Additionally, if I'd held bitcoin only I'd have greater dollar value today. If my alts were protecting me I'd be happy to sacrifice the greater growth I could have seen but honestly I am not so sure that I am protected at all. I believe in the usefulness of the blockchain and related technologies though, and I am certain…

Can’t just be “alt” coins.

Harvest profits and put into multiple uncorrelated premises or theories of how digital value works.

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

#219

Post by quantdev »

0xfeba wrote: post #82
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 But most of the time, they are in fact right. I don't know why a couple instances of wrong-ness proves that experts are unreliable. Other than selection/confirmation bias.

Your reasoning is an example of failing to understand the difference between a random variable and an exposure to a random variable.

Experts are almost always right when the outcome is irrelevant. Economists can accurately predict next year's GDP growth most of time, sure. Except that time they're all somehow wrong at the same time and it's a massive miss and we enter a recession. This is really the only time we care about them being right ("Housing can't be in a bubble").

Until economists are financially harmed or benefited in proportion to how bad or good their predictions are, they won't understand this idea either.

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

#220

Post by shepardrtc »

placeybordeaux wrote: post #66
billmalarky wrote: post #35

Both the founder and lead dev of Ethereum and Litecoin think they are both significantly overvalued. Vitalik Buterin (Ethereum): https://mobile.twitter.com/VitalikButerin/status/94085013791... Charlie Lee (Litecoin): https://twitter.com/SatoshiLite/status/940353265585160192 I've been bullish on crypto past few years but it's gone too far. I've flipped to bear until the tech catches up.

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…

You forgot about Ripple, which I think is about $0.0003 USD or so.
Post reply on HN