Bitcoin Approaches $10,000 a piece
bbc.co.uk Current market capitalization in US dollars:
Global M2 money supply over $90.0 trillion [a]
US dollar M2 money supply $13.8 trillion [b]
Euro M2 money supply $13.2 trillion [c]
All coins and banknotes in circulation $7.6 trillion [d]
All gold ever mined $7.1 trillion [e]
Bitcoin under $0.2 trillion [f]
Bitcoin has very different, unique characteristics compared to the other money-like assets on the list. For example, like gold, Bitcoin's continued existence doesn't depend on the good management of any national economy; however, unlike gold, bitcoins are digital so they can be encrypted, backed up, emailed, etc. Bitcoin is truly a new kind of money-like asset.
The trillion-dollar question is, to what extent does the world need a money-like asset with Bitcoin's unique characteristics to function in the 21st century?
[a] http://money.visualcapitalist.com/worlds-money-markets-one-v...
[b] https://fred.stlouisfed.org/series/M2
[c] http://sdw.ecb.europa.eu/reports.do?node=1000003501
[d] http://money.visualcapitalist.com/worlds-money-markets-one-v...
[e] https://www.fool.com/investing/2017/08/17/how-does-bitcoins-...
Nobody actually uses bitcoin for payment.
There is more or less the same places where to spend it as there was 4, 5 years ago. And they all have about the same traffic, which is nearly zero.
Most people only use it for speculation. This can't end well.
I disagree, I use it for booking flights and hotels everytime I travel (e.g. Expedia, Destinia; 9flats, CryptoCribs). Smooth experience, much better than paying with {credit|debit} cards.
I also get paid in bitcoin thanks to bitwage. It's easier to get good (figurative) raises this way instead of depending on your boss x-) If you're wondering how the hell I'm so crazy to "bet" my salary on this, check this shower thought: https://www.reddit.com/r/Bitcoin/comments/79zy2d/shower_thou...
> Nobody actually uses bitcoin for payment
Is anyone else fatigued by repeating the same arguments over and over forever? If I just state them here once maybe we can talk about new ideas (pro or con, doesn't matter).
1) There are no "real" cryptocurrency transactions
2) It's all speculation
3) There's no intrinsic value
4) Tulips I say, TULIPS!
5) If you can't pay taxes with it, it's not "real money"
6) Governments will shut it down
7) Transactions aren't really private
8) Mining uses more energy than entire nations
9) Nobody will ever spend a deflationary currency
10) It's only useful for drugs, assassinations, gambling and ransoms
11) It doesn't scale, not enough transactions per second, blockchain will get too big
12) It's too volatile to be useful
13) Since the exchange rate keeps rising it's not useful for payments
14) Since I can't buy coffee with it it's not useful
15) Since fees are high it's not useful
16) It's a scam, Ponzi, pyramid
17) The "market cap" is (a) too small to be relevant, (b) evidence of a bubble
18) Will never completely replace gold / national currencies / corporations so there's no value
19) There are a lot of shady exchanges that (a) get hacked, (b) steal customer deposits, (c) are secretly insolvent
20) If the cryptography gets broken / bugs or exploits are discovered and the whole thing goes to zero
Maybe so many new people are just now getting involved that we keep rehashing a decade of stale thinking?
Let's talk about some new ideas!
What may be more helpful that a definitive list of arguments is a definitive list of valid responses to those arguments.
As a random example, mining does use more energy than some nations. Why this may be a good thing in a medium of exchange/value store tends to receive somewhat hand wavy responses. If you have a great answer then it might be helpful to share it.
You're right, many of these are valid criticisms.
It's just that we've been having the identical arguments over and over for nearly ten years now. We're not advancing our understanding by re-hashing the same tired ideas.
Maybe I'll make a page with common responses to these arguments.
To use your example ... it's true that mining cryptocurrencies consumes a lot of energy. So do casinos. So does Facebook and Starbucks. So does manufacturing weapons.
The world's televisions consume a lot of energy.
Bank office buildings and the millions of bank workers who drive to work every day also use a lot of energy.
The question isn't how much energy a thing uses, it's how much value is derived per watt-hour of energy.
Can you point me to comprehensive and conclusive discourse on each of these; or even just:
> 20) If the cryptography gets broken the whole thing goes to zero
I bring it up often here and each time I am met with a similar argument that you are making, but loudly ignoring is different from discussing
It's like going to a doctor and each time saying 'ugh, the tired old cancer conversation..can we just talk about something new?!' until the cancer just kills you
That's the thing - there's no "comprehensive and conclusive" answer to these arguments, just a never-ending parade of the same discussions repeated ad infinitum.
As for breaking the cryptography, it's been nearly 10 years now, with all the code in the public domain and massive incentives to find a flaw.
That's why some people call Bitcoin "anti-fragile" since it seems to get stronger the more it's attacked.
But of course it's theoretically possible that the NSA / GCHQ / FAPSI will (or has already) broken the cryptography. What happens then? Do miners stop until the flaw is fixed? Do they roll back to before the compromise? Does the blockchain fork into a new, fixed coin?
I guess that's the beauty of financial assets defined by open-source software. Bugs and exploits happen, they get fixed, and we move ahead on a new version.
But your reply only covers a small aspect of a single possible perspective on the question: 'a bug in only sha256 was disclosed publically'
Perhaps you are having 'the same discussions repeated ad infinitum.' because of your input stead the actual subject matter
> I guess that's the beauty of financial assets defined by open-source software. Bugs and exploits happen, they get fixed, and we move ahead on a new version.
I am unconcerned with the 'move ahead' bit
My concern is with the assets currently in the blockchain
When I warn those that ask me if they should 'get Bitcoin' that the technology is propped up on unsolved math problems
It is to protect their finances stead attempt to disparage Bitcoin
If the cryptography is broken then the entire blockchain is suspect and needs to be discarded along with the record of any assets locked in it
That's great, but the availability of services accepting bitcoin and the general usage as a payment didn't increase nearly as much as the value did. There is a minor usage, but that doesn't explain the rise in value.
I'm going to repeat myself here, but please bear with me if you haven't heard this argument before.
I respectfully disagree with the idea that Bitcoin's killer-app is to be used as a currency for transactional purposes.
I can't really think of many reasons why you would use crypto to pay for a coffee or a sandwich if you live in the West (or frankly, even most developing nations).
On the other hand, I can definitely see the utility in a censorship-resistant digital medium to store wealth. To me, this latter use case has much, much more potential to serve the unbanked (as well as the banked).
Some use cases I can think off the top of my head:
(1) You are from Syria and need to flee war and escape into Europe – however bank transfers into Europe are almost impossible if you are a common Syrian. Bitcoin allows you to take your wealth with you, in your brain, as you escape across the border, by just memorising your twelve word private key.
(2) You are from Venezuela or Zimbabwe – The government has issued capital controls and is devaluing currency by the day. You transfer your wealth into Bitcoin in order to offset capital erosion due to hyper-inflation. When the situation stabilises, you transfer your Bitcoin back into fiat.
(3) You are Saudi billionaire Al-Waleed bin Talal. The government freezes all your assets in a political coup. If you have a portion of your wealth in Bitcoin, you could protect them from government expropriation and anonymously transfer them to associates or family members abroad.
(4) You are whistleblower Julian Assance and have been cut off from the financial system as a way to censor your speech. Bitcoin allows you to have an unbreakable digital "Swiss bank account" that the authorities are not able to reach.
This reminds me of Peter Thiel's recent words about Bitcoin: "it's like a reserve form of money, it's like gold, and it's just a store of value. You don't need to use it to make payments."
Reference
[1]: https://www.cnbc.com/2017/10/26/bitcoin-underestimated-peter...
All of your proposed use cases depend on the authorities approving your actions. Governments can and will at some point request standard AML procedures when you are depositing large sums of crypto currency into an exchange. If a state decides to introduce capital controls it would also be pretty easy to shutdown access to such an exchange. You can be forced to hand over your private keys or your public addresses could be simply black listed, making them unusable. I would think of bitcoin more like an insurance (like gold) which you need to buy in calm times. Once shit hits the fan it's most likely too late to buy or send bitcoin.
> I can't really think of many reasons why you would use crypto to pay for a coffee or a sandwich if you live in the West
I can think of one: if you get paid in Bitcoin, having to buy some GBPs just so you can buy a coffee or a sandwich is a hassle.
But getting paid in Bitcoin is already a way bigger hassle than getting paid in GBP in the first place.
According to your other comments, you opt in to getting paid in bitcoin. That's your choice. So you're creating the hassle.
Do you think your answer is in the spirit of the question?
I am sceptical that Bitcoin would be able to hold its value in the absence of state support. If major world governments decided to ban Bitcoin exchanges, then how useful is your "censorship resistant wealth"? People accept its value at the moment because they know they can turn it back into more widely accepted currency if and when they need to. But if that becomes substantially more difficult, I think a lot of people would prefer something more liquid.
You forgot the use case where you're a drug dealer or other shady character and would like a means of transferring money internationally without relying on a regulated payment system. This group was responsible for the most payment-related bitcoin transfers a couple of years ago, at least until that exchange site was shut down. Also, ransomware.
I'm so tired of seeing this trucked out as a response anytime someone talks about how bitcoin is used.
Cash is used for some pretty shitty stuff too, so are credit cards, and checks, and just about every other form of payment.
And funnily enough, Bitcoin is about the dumbest thing to use for illicit things, as it's so easily trackable and records of the money's movement is forever carved into the blockchain (so even if it takes someone 10 years to track the money, or even realize it needs to be tracked, it's still going to be there).
But what about the valid and legal use cases of:
1. paying for goods and services without having to give the company i'm paying access to my account information in a way that they can charge more whenever they want, or lose my information and put my financials at risk
2. Receiving payment for goods and services in a form of money that you don't need to worry about "chargebacks", "reversals", or any kind of way of taking money back after it's been sent
Combine both of those things, and I could see a very real reduction in costs of doing business in just about every area.
>I can't really think of many reasons why you would use crypto to pay for a coffee or a sandwich if you live in the West (or frankly, even most developing nations).
If you had the choice between a form of currency not controlled by a bunch of extremely corrupt entities that is much more convenient and cheaper in terms of storage and transactions, why would you use traditional money? I can't even transfer money to my friend overseas, it is too difficult.
You're preaching to the choir, I love BTC.
I realise that I haven't been clear.
The point I was trying to make is only that you don't need for Bitcoin to be a replacement to visa in order to justify current skyrocketing valuation.
I would venture that Bitcoin's censorship-resistant store of value use case is enough to justify current valuation.
This simply isn't true. If you pointed out that adoption and price aren't growing in a correlated manner I'd be inclined to agree, but steam, whole foods, and subway weren't accepting bitcoin 4 years ago.
At least three of those payment acceptors also make to US top 25 list for traffic (Microsoft's bing, reddit, wikipedia) so they aren't exactly zero traffic, either.
https://99bitcoins.com/who-accepts-bitcoins-payment-companie...
I don't even have a dog in this fight, as I don't own any, but this is blatant misinformation.
I’ve been paying salaries for a while using bitcoin. My volumes aren’t entirely insignificant and using Bitcoin is far more convenient than wire transfers.
I just paid my 25k rent deposit using bitcoin too, it was much easier than dealing with a SWIFT wire. It took only minutes for the landlord to be confident that he’s got the money.
I’ve been living without personal bank accounts for multiple years now, and thanks to bitcoin it’s been pretty great.
And no, I won’t be crying if bitcoin drops back to $300.
I use bitcoin for payment. I get paid in bitcoin and I pay in bitcoin wherever possible.
Does your pay get adjusted according to the current price of BTC? It's got to be strange to have money in your account that is worth 20% more over the weekend.
I'm self-employed. I occasionally adjust my prices when the value of BTC changes.
You can buy drugs with it online. ...and also pay ransomware ransoms.
Nobody really pays for anything with gold Krugerrands either.
Why? Gold is used for speculation. So is land...
You can't build an apartment complex on a bitcoin
And you can't transfer an apartment complex to the other side of the world within minutes without asking for permission. What's your point?
As the older generation doesn't get why you would buy a bitcoin and where you would keep it, the newer generation doesn't get why you would buy a shiny piece of metal as in gold bullion and where you would safely keep it.
Bitcoin market is still minuscule comparative to gold, and while most will point out that it doesn't work amazing as a currency, if it gets to like 50% of the current gold market, it is going to be worth a lot.
Yes, but bitcoin is not scarce in any meaningful sense in the long run. Using the same software alternative versions of the coin can be created. Or worse better versions ...
Gold will cease to be meaningfully scarce if we ever mine an asteroid or something like this, but the barriers to that are obviously somewhat higher.
Wrong. Bitcoin has a fixed supply of 21M bitcoins that will ever exist. I could also create software alternatives of Facebook & Wikipedia, but they would have no value. Network effects are what matter.
21M with fractions down to 0.00000000001, so while it's fixed it's also fractionable to a very small number.
I'm not sure if this is the point you were making, but divisibility doesn't make something less scarce, any more than being able to cut a gold brick into nuggets means gold isn't scarce. A single Bitcoin remains exactly as scarce regardless of how it is divided.
I don't think scarcity necessarily correlates directly to value. Land values are a good example. New land is not getting created, you can subdivide it down to small pieces, yet it's worth more in some areas.
Since Bitcoin is divisible down to a small fraction, and you can trade it for whatever price you'd like, it makes more sense to me for the two parties involved in a Bitcoin transaction to take some tiny fraction of a coin and use that as a token to transfer the value from one party to another. You'd convert fiat -> BTC fraction -> fiat almost immediately.
You would have the benefit of the decentralized network to make completing the transaction much easier, and by using a fraction of a coin you'd remove risk caused by exposure to fluctuations in the value of a whole BTC.
is scarce, is like a social network, make another facebook, "better technically", no one will care, there is only one bitcoin, its value is in the code as much as facebook value is in react and php.
"Alternative" bitcoins aren't as good as real bitcoins in the same way that "Alternative" USDs aren't as good as real USDs.
Not true. USD is backed up by a State entity; bitcoin doesn't need one. An alternative USD needs an alternative guarantee of its value, an alternative bitcoin is as safe as the original one.
Not quite, since the "backing" of Bitcoin is in it's proof of work, an alternate won't have as much hashpower backing the work, so it won't have as much guarantee.
Good point. I guess that the major bitcoin miners could already derail any emerging competitors with a few intermittent 50% attacks.
Every now and then I like to look at the chart at [0] to show just how important this is.
The most prominent "fork" of bitcoin (bitcoin cash) is still only about 45 days away from having their entire history since the fork rewritten using just 25% of the available hashpower.
In a little over a month, they could re-mine every single block since the fork changing which transactions are included. And that's the most popular fork, rewriting the entire chain since the fork. If you want to rewrite just the last 50 or so blocks? You'd need something like a few days and a few percent of the overall hash power to do it.
Are you in possession of like 1% of hashpower? Then it's more than possible for you to send something like 100 BCH to an exchange, wait for the 10 confirmations, then go to work rewriting the chain from that point to "current" without your transaction.
You are wrong, Bitcoin has a designed in limited number of 20999999.9769 BTC.
Why isn't it a round number of BTC?
Probably something to do with floating point numbers; https://en.bitcoin.it/wiki/Units has a link to http://www.wolframalpha.com/input/?i=(sum(210000*floor(50000...),+i%3D0+to+32)%2F10000000, idk what all that means but, 32 bits I guess.
The younger generation probably gets it, but it doesn't sound as attractive as 1000% return of investment within a relatively short period that a lot of people who own bitcoin (and thus depend on new people buying it) are trying to promote.
There is also concern that Bitcoin could be vulnerable to hackers. Mr Ahmad said that recently it lost almost 20% in value on fears it was being hacked.
Am I missing something or is the hacking part nonsense?
They aren't talking about hackers breaking the blockchain but rather about hackers gaining access to the wallets. Short of moving the bitcoin across an air gap there is always a risk of hackers finding and pilfering the bitcoin.
I think he confused with ETH, he also mentions south korea banning ICOs, which has nothing to do with bitcoin.
There is a big confusion where all cryptocoins are read as bitcoin for many.
Bitcoin mania appears to be well underway.
Yes, bitcoin has uses. (Including some cool, elegant and potentially very significant ones.) But despite the troubled state of the world, it does not appear to me that anything has happened that would justify the current ongoing explosion in price.
For an example of a mania in action, take a look at the price spike in tulip bulbs in the early 1800s: http://www.thebubblebubble.com/tulip-mania/
To people who believe it's not a bubble. Please explain what wasn't priced in yesterday that warranted +17% today.
In 20 years, Bitcoin will either be worth $0 or $350k. (Stability and history to become a safe-haven asset something like gold.)
People don't think that the network today is +17% more valuable, but rather that the chance of Bitcoin going to zero in the next 20 years is 17% less.
Institutional investors building positions in Bitcoin makes a strong case for long-term viability, because if the govt tries to mess with something in everyone's mutual fund, the financial lobbyists will push back strongly.
People read about bitcoin hitting new all time highs over the weekend, today their bank transfers to exchanges started to clear. So, what wasnt priced in was all the new money.
I'm not really taking a position on whether its a bubble or not, though. My gut says yes, but it also said so back when it was $5 (having risen rapidly from nothing to "break the dollar", then up 5x more pretty quickly).
The previous discussion with Bitcoin crossing $9,000 is still warm (posted 19hs ago) at: https://news.ycombinator.com/item?id=15782222
Do we have anything new to add at each 1K step announcement?
I feel its too late for me to buy in and to get any value out of Bitcoin. 3 years ago (when it was around $350 per coin) I asked my friend about buying one up and I received a pretty good reason not to jump in.
3 years later and it looked like I made the wrong choice. I don't have $10,000 just hanging around to buy into one whole coin.
Oh well...
It's just as easy to buy $350 worth of bitcoin today as it was 3 years ago. There is no real reason or advantage to buying whole coins.
If you think there is a chance that Bitcoin will continue gaining value long term:
- Decide what you think a bitcoin could be worth in X years
- Multiply that by the probability that outcome occurs
- That's your 'fundamental' price
Ex. if you think bitcoin has a 10% chance of being worth $100k in the future, it is rational to buy at prices up to $10K.
(some time-value of money handwaviness, but can be a useful way to look at things. ideally should be compared against other investments)
You don't have to buy a whole coin though.
Bitcoin can be broken up. You can buy 0.01 BTC for $100 if the price is $10k.
I am a bit on the fence with Bitcoin.
A few years ago I brought a little bit of altcoin and 'believed' in it. I only put a small amount but I still was nervous spending money on some 'pretend' digital asset. Within a few days it was worth half what I started with. Thinking I was in a low point of the chart, I invested a little bit more.
It then dropped again, so much I lost around 80% of the value within a week.
I then declared the money lost and saved my private keys.
Fast forward to the beginning of this year, I randomly picked up my private key from a backup drive that I was going to wipe and decided to check it's value.. around £15
As it was such a little amount I decided just to cash it out, buy a pizza and continue with my life. However, as it wasn't so straight forward to just 'cash out' I left it.
A few months later I hear the news that bitcoin is rising so checked on my altcoin (because the altcoin charts followed closely to the bitcoin charts), and there you go, I tripled my initial investment. I still declared the coins 'dead' so wasn't worried about losing it, but converted them into bitcoin as that felt most secure to me. The conversion lost me some percent but I stuck it out and have had 0.1BTC in my wallet since.
It's nice watching my little amount go up. It's not a deal breaker if I lost it, but it's now more 'alive' than 'dead' to a point I have started thinking about converting it into fiat and enjoy a good Christmas. But there is that little bit inside me now, that refuses to listen to my 'the coins are dead, and I wouldn't really lose anything' mentality which is unfortunate because I feel as the price goes up that feeling will cement harder to a point I would never cash it out.
I get the feeling a lot of people are going to get a very nasty shock in the not too distant future.
Other than buying purely for speculation, does Bitcoin really have any purpose right now, at scale? Geniunely curious.
Bitcoin is the world's first way to send money to anybody else, anywhere in the world, almost instantaneously, without asking permission from anybody, and without trusting any intermediary.
That's huge. Bitcoin is to money what the internet was to communications.
But I do trust intermediaries. Intermediaries are fine. And I think it's appropriate that large international transactions should be scrutinised by authorities.
I think most people buy Bitcoin for its speculative value but never use it as a currency to actually buy or sell stuff.
I use it as a currency to both buy and sell stuff.
If the gp had said “no one uses it to...” your anecdotal sample of one response would have been sufficient to disprove the claim. However, it is at best anecdotal and at worst completely irrelevant to the actual claim made (i.e. that most BTC users are investing in the currency).
Okay? Do you have any insight as to whether you belong to the set of "most people"?
I bought some Bitcoin over five years ago, totally forgot about it, and then remembered I had bought some. I sold it and bought an SLR camera to photograph the total eclipse this summer. It felt like the time I won a few hundred bucks at the slots in Nevada.
I feel that bitcoin is unstoppable.
It offers massive, tangible benefits. Money that is not controlled by corrupt institutions completely changes the game.
There is an entire industry being built around it. Thousands of engineers are creating new businesses as we speak.
It has different properties to stocks. The more people that convert their money to bitcoin, the more use it has. This is a basic property of currency. While people will say you can't buy much with it now, the very fact that massive amounts of people are now acquiring bitcoin gives incentive to people to start accepting bitcoin as a form of payment.
Most governments can now no longer make it illegal. The horse has bolted. By the time it is made illegal, millions of people will have bitcoin and you will be committing political suicide. They will try to regulate it in a way that benefits large corporations though.
I believe the transfer of money away from questionable stocks like facebook, into something based on real value like bitcoin, will crash the share market.
The problem is that bitcoin cannot be a currency - because it cannot facilitate more than 7 transactions per second, this is many orders of magnitude not enough for a currency. It can be something similar to gold - mostly a value store. But personally I have doubts - first of all the energy costs are crazy. I think it will be eventually replaced by a POS coin - proving that the value store function of something that new is not very reliable.
7 transactions per second isn't enough for it to be an everyday currency for everyone.
It's certainly enough to be an everyday currency for the people who want to use it as an everyday currency at the moment, and Lightning Network will expand the capability massively.
Bitcoin is more of a competitor to ACH/wire transfers than Apple Pay.
> Most governments can now no longer make it illegal.
Ha. Wait and see.