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It can all go to zero

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Re: It can all go to zero

#71

Post by mattbrewsbytes »

cableshaft wrote: post #9

So many people love to parrot the 'It'll go down to zero!' line, especially if they don't have skin in the game, but there's pretty much no way. Specific cryptocurrencies, sure they could potentially go to zero. I'm watching one right now that's looking pretty darn close. But this entire industry? I don't think so. It's too late for that. Too many players, too much ease of access, too much of the potential has been d…

Comparing cryptocurrencies to actual companies isn't fair. A lot of companies that went bankrupt (aka worth $0) had assets. Those assets were worth something and were probably sold off and used to pay debtors.

What assets does a cryptocurrency have? What value is actually there?

Re: It can all go to zero

#72

Post by JumpCrisscross »

adamnemecek wrote: post #59
JumpCrisscross wrote: post #58

Earlier quoted context omitted.

> Can you talk more about your failure case then? The classic one. Nobody wants to pay more than a token amount for Bitcoin. Maybe central banks jacked up rates or we went into a recession or something newer and shinier came about. Value crashes, miners find it more valuable to sell their equipment than keep mining or confirming transactions, the entire ecosystem compresses to where it was when it was more about tink…

Are we talking about Bitcoin or all crypto?

> Are we talking about Bitcoin or all crypto?

Either. Spinning up a cryptocurrency may become as mundane as creating up a database, as silly (or illegal) as trying to market a Ponzi-based hedge fund, or simply a pedagogical tool for CS students.

There is nothing inherent to crypto that says it must hold value. Markets are moody.

Re: It can all go to zero

#73

Post by adamnemecek »

Joeri wrote: post #66
adamnemecek wrote: post #51

Earlier quoted context omitted.

Ok can you talk more about your failure case then? What are the conditions like what exactly is the end result. There are 0 exchanges?

A bug is discovered allowing fraudulent creation of bitcoins, and no easy or timely fix is possible. That or governments outlaw it entirely.

You are fundamentally arguing that cryptocurrencies, all of them, will be gone? That like 30 years from now, there will be 0 things that are basically cryptocurrencies or something that replaced them?

Re: It can all go to zero

#75

Post by tribby »

the idea that blockchains with utility are valued as a % of BTC is the real insanity. IMO the nature of crypto-panic will change quite a bit when fairx and other similar "every shitcoin is a cash market now" exchanges get off the ground.

Re: It can all go to zero

#76

Post by hbosch »

aitrean wrote: post #33

Time for the monthly cryptocurrency panic thread. While I fully agree that most cryptocurrencies are grossly overvalued, these articles always pretend a 20% selloff is the beginning of the end, when, in crypto land, 20% selloffs are a pretty standard bad day for the market.

The trend of 15-20% swings is well documented in Bitcoin history, no doubts about that. Crypto is a young economy in general, and it's been thrilling for me (on the outside, as I don't speculate or hold) to watch.

But I don't know. If you play with the zoom levels on price tracking sites, the $20k peak onward has been a pretty steady downward trend. BTC is down 20% over three days, down nearly 23% over a week. Is that par even for Bitcoin flash-crashes lately? Zoom out further to a month and the price is now down almost 40% at the time of this post.

We zoom out to six months, or a year, or two years, and we see astounding gains then – we are all aware of the blistering rise in price over 2017. But once it dipped after 20k, there were a lot of people who swore it would climb back. And then it dipped further, and further, and the collective memory of Bitcoin's humble recent history was lost in the cacophony of media blitzes and new customers entering the market.

I think the underlying worry for most people isn't the fact that the price goes up and down a lot... I think the worry really is that when growth stops will people still be interested? Can Bitcoin last forever if the price is e.g. <$5000/BTC?

Re: It can all go to zero

#77

Post by paulmd »

adamnemecek wrote: post #42
skykooler wrote: post #37

Earlier quoted context omitted.

To buy Bitcoin, a miner somewhere has to produce a block with your transaction in it. If the value of Bitcoin falls that much, it will no longer be profitable to mine. With no miners, nobody could buy or sell anything.

That was planned for. Like there's only 20million Bitcoins tops.

It has nothing to do with the issue rate of Bitcoin, frisbee-on-the-roof is potentially a real problem.

Say Bitcoin crashes down to $1 tomorrow, such that it's no longer profitable to mine. A bunch of miners go dark. What happens to the block time?

Now remember that difficulty readjusts every 2016 blocks. If there are now 1% as many miners, that means a 1000-minute blocktime and potentially up to 1400 days per adjustment period (average of 700).

In this situation, the only option would be a hardfork to bootstrap the network back to a live state, either by directly adjusting the difficulty or by readjusting more frequently and more aggressively.

Re: It can all go to zero

#78

Post by api »

I think a big problem is that people are conflating two kinds of value. One is the technical value of block chain and other distributed consensus algorithms. The other is the monetary value of block chain backed assets.

The latter could indeed crash without impacting the former. Advances in the former that solve cryptocurrency scaling problems could even cause the latter to crash by reducing artificial scarcity. Unlike gold there is no real objective scarcity here. It's just software.

"Bitcoin is a major innovation" and "Bitcoin is a bubble" can both be true.

BTW...

I'm waiting for someone to explain to me why this kind of appreciation in value is actually a desirable thing in a currency. It makes Bitcoin less useful.

It's similar to housing. How is housing being more expensive a good thing?

Re: It can all go to zero

#79

Post by blhack »

mattbrewsbytes wrote: post #71
cableshaft wrote: post #9

So many people love to parrot the 'It'll go down to zero!' line, especially if they don't have skin in the game, but there's pretty much no way. Specific cryptocurrencies, sure they could potentially go to zero. I'm watching one right now that's looking pretty darn close. But this entire industry? I don't think so. It's too late for that. Too many players, too much ease of access, too much of the potential has been d…

Comparing cryptocurrencies to actual companies isn't fair. A lot of companies that went bankrupt (aka worth $0) had assets. Those assets were worth something and were probably sold off and used to pay debtors. What assets does a cryptocurrency have? What value is actually there?

It's also not fair because a company can actually "go away" as in they sell the building and stop operating.

You can't really do this with bitcoin. It's never going to "shut down".

Re: It can all go to zero

#80

Post by [deleted] »

Kiro wrote: post #69
skykooler wrote: post #37

Earlier quoted context omitted.

To buy Bitcoin, a miner somewhere has to produce a block with your transaction in it. If the value of Bitcoin falls that much, it will no longer be profitable to mine. With no miners, nobody could buy or sell anything.

The difficulty will be adjusted accordingly and automatically (it's part of the protocol). Your scenario can't happen.

[deleted]
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