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Bitcoin Price Pressure

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Re: Bitcoin Price Pressure

#141

Post by jbaudanza »

boyaka wrote: post #37
sillysaurus3 wrote: post #33

In a moment of some depression, reflecting back on sinking so much money into Bitcoin at close to the peak of its price history, I made this: http://i.imgur.com/f3tIJwK.png It's important to understand that Bitcoin is dangerous to you, and you need to respect its danger if you decide to buy some. You need to be using a secure cold storage wallet. You need to not trust services like Coinbase to hold onto your coins fo…

Can you provide reasons/evidence for why I should not trust Coinbase?

Coinbase is hosted on Heroku. So you are also trusting that Heroku and AWS don't have any disgruntled employees with production access that want to be instant millionaires.

Re: Bitcoin Price Pressure

#142

Post by ISL »

gphilip wrote: post #108
ISL wrote: post #85

Earlier quoted context omitted.

There's risk associated with every investment, and there are plenty of other arenas in which you can lose all of your money in an eyeblink (for example: a single-drug pharmaceutical company with a drug undergoing FDA approval; the outcome is almost binary). I've been thankful to have experienced the highs and lows of bitcoin -- it's been a tumultuous introduction to the internal psychology of investing. The key to my…

> There's risk associated with every investment As things are now (and as GP points out) speculation is probably the right word, not investment . From Wikipedia [1]: Speculation is the practice of engaging in risky financial transactions in an attempt to profit from short or medium term fluctuations in the market value of a tradable good such as a financial instrument, rather than attempting to profit from the underl…

Perhaps the word 'purchase' is more appropriate... "there's risk inherent in any purchase" ?

Re: Bitcoin Price Pressure

#143

Post by logicallee »

dwaltrip wrote: post #137
diogenescynic wrote: post #107

Warren Buffet said this about gold, but it's still relevant to Bitcoin: >“If you put your money into gold or other non-income- producing assets [read: Bitcoin] that are dependent on what someone else values that in the future, you’re in speculation,” he said. “You’re not into investing....” >To illustrate the point, he asked readers to picture the world’s entire gold stock melded together into a cube 68 feet (21 mete…

Bitcoin has many extremely strong advantages compared to gold that make it a far more pragmatic monetary asset/neutral currency. I would list them out but I'm sure you know them (very fast transfer anywhere in the world, maximum portability, etc).

As you can see in my other comments the basic things it lacks are a worldwide history of acceptance as currency (going back millennia in the case of gold) as well as uniqueness (the non-existence of equivalent substitutes). Whatever the technical characteristics of bitcoin, an alt coin can have the same technical characteristics. So we are riding a thin uniqueness, in terms of level of acceptance, that is not going to be driven deeper due to limits on adoption as a currency. (That I mention elsewhere.)

The uniqueness is a special lock-in for gold, and as gold becomes inconvenient due to price or scarcity, you can't just transfer it to Pt (platinum) or Ag (silver) in 10 minutes times however many confirmations you need. Gold has several layers of stickiness or lock-in, including historical and technical/physical.

Not so for bitcoin. It has self-limiting on adoption (due to the lack of anyone minting it by fiat, and its low total numbers), but moving away from it takes just minutes.

The most interesting chart is seeing the fall of bitcoin market cap against the rise of all other alt coins market cap - and to see if that is on the fall or on the rise.

Especially when things aren't denominated in BTC, but it is just used transiently, really, any other currency with a spot price will do just as well. There is no reason to believe bitcoin will have any greater use as a currency in the future than it does now. And unlike gold, it has no historical lock-in as a long-term store of value. No one is "stuck" with it, it is easy to verify transfer, and it is a totally liquid market (even at 3 AM on bank holidays) that is not held up by any printed prices or industrial uses.

It doesn't even have basic exchange mechanisms such as halting trading. The spot price of Bitcoin can collapse overnight. Unlike gold, there is just anything holding it up long-term.

It's a bit like pokemon cards, beanie babies, or pogs. Sure it can have value for a while, but as it doesn't see adoption as a currency, has no alternative or basic uses (less than these three examples in fact), and is very easy to move away from - there is no reason to suppose this will not happen. Bitcoin for a while was the only currency with its particular properties. But that is far from true anymore.

Re: Bitcoin Price Pressure

#144

Post by mpyne »

endeavor wrote: post #124
IvyMike wrote: post #35

> Anecdotally, I hear from merchants who start taking bitcoin that after an initial spike they see almost no volume. To me, this is one of the biggest problems with adoption--bitcoin doesn't offer much benefit to the typical consumer for mundane transactions. I'm about to buy a coffee machine on Overstock.com. There's no practical reason that bitcoins are better than what I'm going to do which is put it on my masterc…

When you say "the typical consumer", I think you are really saying "the typical, relatively wealthy consumer living in the first world". For the some billions of people on the Earth who don't have a stable currency, credit/debit cards, mortgages and other financial products Bitcoin has more benefits. Think of the WhatsApp demographic without a smart-phone.

Honestly I think it would be the opposite; Bitcoin would be yet another way that the developed world has screwed over the developing world, once malicious actors realize that perfectly good wallet.dats exist on the cellphones of people who think that having sex with virgins cures AIDS.

Re: Bitcoin Price Pressure

#145

Post by mpyne »

a_c_s wrote: post #122
acomjean wrote: post #87

Earlier quoted context omitted.

Odd because one of the benefits of Bit Coin is lower transaction fees that what credit card companies charge. One would think businesses would really like this and promote it.

The huge variations in price mean that a company could very easily lose more than the few, entirely predictable, percent the credit card companies charge.

And adding the cost of insurance to account for the risk of having your hot wallet wiped out could ruin the transaction fee advantage all by itself.

Re: Bitcoin Price Pressure

#146

Post by Phlarp »

philrapo wrote: post #92
VMG wrote: post #18

> And even if bitcoin itself fails, I think the blockchain will be one of key technical innovations of this time period. A blockchain is only useful if it is heavily secured by hashing power. This is only the case if there is significant mining equipment devoted to validating blocks. That in turn only happens if there is a reward for validating a block. Long story short, it's currently very difficult to use a secure…

>A blockchain is only useful if it is heavily secured by hashing power. Ripple consensus keeps a distributed database in sync without requiring mining. And the network's security has no correlation to the amount of hashing power involved. (There's no 51% attack on Ripple) I actually think PoW based systems, because of the 51% attack, present an extremely undesirable amount of systemic risk for broad adoption in the f…

>the network's security has no correlation to the amount of hashing power involved. (There's no 51% attack on Ripple)

I think you are misunderstanding what the majority of users consider "security". Typically it involves a situation where someone else can't arbitrarily change the rules on a whim or influence the outcome of transactions on a one-off basis.

I'd also like to point out this account is used almost exclusively to promote ripple here on HN while rarely disclosing that the owner, Phil Rapoport, is currently involved with Ripple (the corporation) and has been since 2011 [1]

[1] https://ripple.com/blog/interview-with-phil-rapoport-directo...

Re: Bitcoin Price Pressure

#147

Post by logicallee »

battani wrote: post #119
logicallee wrote: post #98

>This doesn’t mean bitcoin is doomed. It just means that for it to succeed, we’ll need significant external buy pressure. As I wrote awhile ago, I think the key thing we need for this is people actually using bitcoin for transactions instead of speculation (and merchants willing to hold bitcoin balances). [3] Unfortunately, transaction volume still appears to be trending down. Let's look at this. Yes, one easy way in…

You raise interesting points, but you make many, many assumptions. It's totally possible that they may all come true, but there is a lot of speculation in your analysis. Also, you assume that BTCUSD price will rise as bitcoin gains adoption (that is the basis of your analysis). But there is no correlation between price and adoption. It's not hard to imagine a world where 1 BTC is stable at ~$10K for example. Denomina…

I don't think I make all that many assumptions. I am seeing what would happen if we imagined it is adopted as "the" Internet currency. On the Internet, especially in a situation like this where it takes 10-100 minutes to move away from holding bitcoin, it is quite difficult to play "second fiddle" to another curency. So we should look primarily at what happens if it becomes "the" Internet currency, and I think $7 trillion is a good cap to look at that under.

If you see my other comment to someone on the differences between Gold and bitcoin (https://news.ycombinator.com/item?id=7676732) you will see that it is incredibly easy to move away from and has no lock-in.

So we have to look at the macro process as BTC gains adoption as a currency, and we have to look at what would happen if it succeeded.

Bear in mind that unlike Gold, which has a poorer cousin in silver, every cousin of BTC has the exact same technical properties.

The only difference is the level of usage and acceptance. And that is dictated by what is the de facto crypto currency, and the amount of currency that is needed. If people tire of bitcoins, they can move away from them overnight.

Re: Bitcoin Price Pressure

#148

Post by ars »

obilgic wrote: post #102
sillysaurus3 wrote: post #33

In a moment of some depression, reflecting back on sinking so much money into Bitcoin at close to the peak of its price history, I made this: http://i.imgur.com/f3tIJwK.png It's important to understand that Bitcoin is dangerous to you, and you need to respect its danger if you decide to buy some. You need to be using a secure cold storage wallet. You need to not trust services like Coinbase to hold onto your coins fo…

This chart isn't even logarithmic.

Agreed.

Any time you see a financial graph that isn't logarithmic you can immediately ignore it as garbage.

Re: Bitcoin Price Pressure

#149

Post by sillysaurus3 »

ISL wrote: post #142
gphilip wrote: post #108

Earlier quoted context omitted.

> There's risk associated with every investment As things are now (and as GP points out) speculation is probably the right word, not investment . From Wikipedia [1]: Speculation is the practice of engaging in risky financial transactions in an attempt to profit from short or medium term fluctuations in the market value of a tradable good such as a financial instrument, rather than attempting to profit from the underl…

Perhaps the word 'purchase' is more appropriate... "there's risk inherent in any purchase" ?

If I had fully appreciated that there was a significant risk of my purchase completely vanishing overnight, I wouldn't have made the purchase. I had planned for "What if the price falls to 1/3rd of its current value?" At least I'd still have 1/3rd of the money. But zero is a much lonelier number.

Bitcoin is speculation. Not only is it speculation, but it's the kind of speculation where you can fail for reasons beyond your control and which no one knew existed. (See transaction malleability, which hit the reincarnation of Silk Road pretty hard.)

Losing your coins to theft or third party loss is simply spirit shattering, and unless people are truly okay with their coins literally vanishing, I would hold off on converting a sizable portion of your wealth into coin. It's easy to say that you'd be okay with losing it all, but the reality of it is much harder to deal with.

Re: Bitcoin Price Pressure

#150

Post by logicallee »

gnaritas wrote: post #91
tethis wrote: post #81

Earlier quoted context omitted.

But to succeed as a currency, it needs to encourage people to spend .

It doesn't need to succeed as a currency to succeed.

bingo. It can succeed the way beanie babies did, which were never used as a unit of account or medium of exchange. /s
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