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Is Bitcoin a Bubble? Economists Say ‘Yes’

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

#171

Post by rhino369 »

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 don't think Bitcoin is like gold at all because I don't think there is a common belief that "it is an effective/secure means of storing wealth."

A small number of people think that now because Bitcoin is in a huge run up. If bitcoin crashes 90%, it suddenly stops being a "secure means of storing wealth" and, instead, is a means of throwing away your wealth.

If the market psychology changes, bitcoin becomes worthless.

Gold has the same problem, but has a huge historical record of actually being somewhat stable. And there is a price floor for practice demand of gold, though I'm not sure what that is.

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

#172

Post by craigc »

How would someone classify Bitcoin’s rise from $0.08 to $31 from 2010 to 2011 before dropping to $2 or its rise from around $100 to around $1200 and subsequent crash to around $200 from 2013 to 2015?

I would say losing 85% to 95% of its value in a relatively short period of time after a large run up could be considered a bubble bursting. The thing that is interesting is that each time this has happened with Bitcoin the price settled somewhere ABOVE where it was before the last bubble.

I do think Bitcoin is in a bubble right now, but I think it could go much higher (maybe $50-100k?) before crashing, and I think the price after the crash will not go below $5k or $10k. The current wave began around $1000.

So what I think we are seeing is actually mass adoption of a new technology in waves that are increasing exponentially.

There has never been anything like Bitcoin so it is difficult to use lenses of Bubbles in the past to explain what is happening with it.

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

#174

Post by KasianFranks »

dresstotheleft wrote: post #156
KasianFranks wrote: post #26

Gotta love how the negative crypto articles rise to the top on HN immediately. What's not understood is that crypto is a way for the un-banked (1/3 of the people on earth who barely have clean water, toilets or telephones, yes telephones and that make $1/day) now have access and participation in a global trading platform. Disruption for the first time is happening to both VCs and traditional investment bankers and th…

Barely have toilets and telephones, yet unfettered access to the internet and Bitcoin exchanges?

Where are you from?

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

#175

Post by Geee »

wyldfire wrote: post #109
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.

Raiblocks [1] offers zero fee transactions. It will be interesting to see if node operators can be motivated by the same decentralization/benevolence that causes people to run bitcoin nodes today. [1] https://raiblocks.net/media/RaiBlocks_Whitepaper__English.pd...

RaiBlocks has PoS consensus so node operators are incentivized. It also has PoW as a spam prevention mechanism (transactions are not completely free (few seconds on commodity CPU), and you can also "cache" PoW). I think it makes sense, unlike IOTA for example.

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

#176

Post by KasianFranks »

matt4077 wrote: post #33
KasianFranks wrote: post #26

Gotta love how the negative crypto articles rise to the top on HN immediately. What's not understood is that crypto is a way for the un-banked (1/3 of the people on earth who barely have clean water, toilets or telephones, yes telephones and that make $1/day) now have access and participation in a global trading platform. Disruption for the first time is happening to both VCs and traditional investment bankers and th…

The unbanked have absolutely no use for a volatile pseudo-currency with transaction costs >$20

Ever heard of other crypto?

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

#177

Post by placeybordeaux »

MarkTee wrote: post #170
placeybordeaux wrote: post #150

Earlier quoted context omitted.

I was just pulling up avg tx fees. I realize that tx cost on ETH varies highly, do you have a preferred site to tell what contracts are economically viable for what amounts? For instance I would be happy to buy a cryptokitty or two at the ~1 USD price range, but if the tx fees are ~1 USD then it's obviously a no go.

For ETH, https://ethgasstation.info has not let me down.

That site is saying 0.3 USD. I wouldn't call that pennies.

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

#178

Post by DennisP »

placeybordeaux wrote: post #150
DennisP wrote: post #148

Earlier quoted context omitted.

Most of the time Ethereum is less than a penny for a simple value transfer, and it does more than twice as many transactions per day as Bitcoin. It's also pretty easy to implement simple payment channels: http://www.blunderingcode.com/a-lightning-network-in-two-pag...

I was just pulling up avg tx fees. I realize that tx cost on ETH varies highly, do you have a preferred site to tell what contracts are economically viable for what amounts? For instance I would be happy to buy a cryptokitty or two at the ~1 USD price range, but if the tx fees are ~1 USD then it's obviously a no go.

A great place to look is the ETH Gas Station:

https://ethgasstation.info/

It tells the lowest gas price you can use to be reasonably sure your transaction will go through, and how long it's likely to take. Using that gas price it also gives a dollar cost of a simple transfer, which at the moment is higher than I expected at 20 cents for a 20-minute wait, or 33 cents for a 3-minute wait.

For cryptokitties you'll have a higher gas cost; I don't really know how high but I think I've seen people complain about spending six bucks for cryptokitty transaction at a 60 gwei gas price.

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

#179

Post by bringtheaction »

heurist wrote: post #63
dumbfounder wrote: post #17

Earlier quoted context omitted.

Yes. Internet stocks were in a bubble in the late 90's. It burst but the Internet turned out just fine. The question is, when the crypto bubble bursts, will Bitcoin recover, or will it be something else?

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 that adoption among businesses of said technology will only keep rising.

I don't know if the crypto currencies have a future though. And even if they do I don't know if they will ever be priced as highly again as they are now. I hope they do, but if my portfolio fell to $0 tomorrow I'd be bummed out but it wouldn't be critical.

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

#180

Post by chomp »

rubenrails wrote: post #71

Did you guys see this thread on Twitter a couple of days ago? https://twitter.com/TedOnPrivacy/status/940588631709896704 Have you had similar problems selling bitcoin? EDIT: saw -> see

Yes, I used breadwallet to sell some bitcoins, accidentally set the transaction fee at (what I'd later find out to be) ~10 satoshis/byte.

Now I have ~$2300 locked up in the mempool, and no end in sight for these high transaction fees. Can't figure out a way to raise the fee.

https://jochen-hoenicke.de/queue/#4d

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