Researchers find that one person likely drove Bitcoin from $150 to $1,000

For now the technical aspects of cryptos are simply not all that important. We're still in the incubation phase where crptos are being used as assets instead of currencies. And at this point all that matters is public perception and security, which go hand in hand. And I think the lack of any individuals behind Bitcoin also greatly benefits it. The team behind Ethereum, for contrast, somewhat belies the notion of decentralization - even moreso after they chose to unilaterally roll back "their" ledger.

The next phase begins when 'regular' people are engaging in at least occasional direct exchanges of currency using private wallets to purchase goods/services. That would highlight the technical issues with Bitcoin, but even then I suspect Bitcoin will remain the top dog as a store of value and we'll collectively choose a runner up for rapid exchange/verification. It might not even be an independent coin itself, but a strap-on tech that helps protect against double spend, even if with a sub-100% accuracy in exchange for speed. The idea there being that it would primarily be used to mostly validate small-value transactions, with an inherently reduced double spend incentive, whereas big value transactions could go through the main coin.

I think we are nearer to 'Fixed Odds Betting Terminals' [1] than the dot com boom. Even the most absurd excesses of the dor com boom seem quite rational in comparison the situation today. I think that it really is somewhere between straight gambling and how we imagine the tulip craze to have been.

What is actually needed to understand the situation today is a ringside seat to one of the devoted believers that has shut down their whole life and decided to gamble away their girlfriend's inheritance on fake coins. The way it takes over a person's life is a bit like crystal meth addiction combined with joining a religious cult. For these people there is no way out, their fear and greed locks them in to going all of the way. These people are not going to make any money, just lose every penny they can borrow.

With dot com there was not this low barrier to entry for essentially gambling, people did not cut themselves off from society in their little pyramid scheme cult. I find bitcoin really horrible and I am glad to have studied it close hand. I do google the coin names and it seems that everything considered a hot coin by those dedicated to the cult is blatantly a scam.

I think there is good money to be made in bitcoin for me just by documenting the fall of an individual and those around due to the obsession. Storytelling matters and I have a lot of very good material coming out of this bitcoin thing and the crazy things people say. All I have to do is keep good notes and the story should write itself very nicely.

https://en.wikipedia.org/wiki/Fixed_odds_betting_terminal

I liked this comment in the original article, which is far too flippant for HN but sums up how nonsensical everything bitcoin is to me:

if this article wants to be taken seriously it needs to have a header image of some real, metal-stamped bitcoins with the logo embossed on them, all round and shiny and gleaming. Preferably it would also show two cupped hands with the bitcoins spilling out of them. Otherwise I don't even know what we're doing here.

sigh maybe this just isn't the venue or even the right group to try to discuss this stuff (myself included). We like to pretend like everybody else has an 'easy' job but economics is hard stuff.

I think you're mostly right, except for a couple of problems that I know of.

One, when the system goes sideways those liabilities tend not to be paid off. Bankruptcies and such. And we assume that banks are managing these risks but that doesn't always turn out to be the case - which is how the reserve rate got instituted in the first place. The government says, we don't care how much you think you've got it sorted out, we insist that you be at least this tiny bit pessimistic. My original post was sort of pointing out that if you hear "Oh we have an 8% reserve so that means only 92% of assets are being used", the money moves around so many times that the effective rate is much lower and the risk is shared. But it still does put an upper bound on how much they can be leveraged. How much money is moving around (modulo fraud and 'monetary easing'). It's not the only one, and it might not even be the most important 'resistance' built into the financial policies, but it is part of it.

The second is that we for some reason measure the health of our economy by how much money is changing hands. We don't discount liabilities changing hands at all in that, which is a bit worrying, because in the early 2000's when they weren't lending money to anybody, everything tightened up, and when they're throwing money at anybody it looks like growth but feels like danger.

Yes, when they are easy and they get the job done. Then you move on to the long-term solutions.

It's partly substantive. The 'too the moon' part was snark, but Bitcoin went from $400 to $1,000 in 2016, then from $1,000 to $14,000 in 2017, and I guess the same people driving the market who enjoyed 1,000% returns 2 years in a row will attempt to do it again this year too.

This time next year if Bitcoin hasn't imploded it will be up around $100,000.