Currently on my Facebook feed there is a kid I know who is a tech support agent but now posting pictures as a "Bitcoin daytrader" and now offering classes on the subject. There is another girl who is a model for rap videos in Detroit and she posts screenshots of Bitcoin prices to show how well off she is now. I've read about hackers walking away with millions of dollars in a cryptorobbery (now a real thing). The next thing is an Ocean's 11 sequel where George Clooney and Brad Pitt pull off a cryptoheist.
I think the real innovation is blockchain and that there will be a major cryptocurrency to rise out of one of the smaller markets. I get the feeling (just a hunch) that Bitcoin will be lycos/altavista/yahoo that will inspire a Google. Maybe that company already exists (Ethereum?), maybe not.
Electricity Backed Currency: https://papers.ssrn.com/soL3/papers.cfm?abstract_id=1802166
They're not motivated by the actions of the central banks, they likely have no idea what the central banks do. They see "Bitcoin increases 100% in a day!" on the news or on a website and want in on that sweet money making. Coinbase makes it so easy, they have to do absolutely minimal research, don't even have to wait for transactions to be confirmed.
You think its lack of faith in the current banking system and belief in the new tech that's driving the price up as high as it is now, when it's mostly greed and ease of access. Taking that into account it's naive to not believe there is a Bitcoin bubble.
I guess the people you know are not the average joe.
Do you really think the majority of purchases (as in tranfers from fiats to BTC or another) are done so with intent to pursue political and economic advancement? I mean, is it theoretically possible? Perhaps -- but do you truly believe that the majority even understand the technology at a cursory level?
I agree with you that there is legitimate innovation happening. I enjoy reading a lot of blockchain research and the cryptographic advancements that go towards improving consensus algorithms.
With that said, I really do not believe most people buying cryptocurrencies want to explore a “brave new world”. I doubt most people buying cryptocurrencies could explain to you 1) what the word “trustless” means, 2) what their investment thesis is, 3) why they’re buying one cryptocurrency over another.
They want to sell to a greater fool. Just as real estate was a legitimate investment vehicle during the 2007 bubble, cryptocurrencies (and bitcoin in particular) can simultaneously enjoy legitimate utility and extreme irrational exuberance.
> The vast amount of bitcoin is paid for from savings, not debt.
Holy crap, got any evidence for this statement?
And when one of the big Bitcoin whales cashes out, there will be a crash, and all those people's money will be gone. Or will they be? I guess you can argue they will still have their bitcoin money, but sadly they won't be able to pay their rent or buy food with that...
Some people are opting to change their dollars to btc. Some are opting to hedge a small amount into this new system in case recent monetary experiments explode. Most people are speculating (as they do in forex markets today).
And there is nothing wrong with speculation, but when Coinbase is adding 100k accounts every few days it is not people thinking fiat money is about to implode.
As an aside, if you listen to the hardcore BTC people and replace BTC with gold it is the exact same arguments. Over long periods gold has been a terrible investment compared to something like the S&P [1] so keep that in mind when hyping BTC.
[1] http://www.marottaonmoney.com/since-1979-the-sp-500-grew-13-...
The next time a significant market correction happens, those of us who value honest saving will have a place to hide. The fed won’t be able to save you at our expense next time.
What’s your point?
But if more people want to explore this brave new world _too quickly_ it may be a bubble. As it happened several times already. Yes, the price is much higher at the end of each bubble than at the beginning, but they were bubbles nevertheless.
People look at bitcoin and see money that can be sent anywhere without needing approval from anyone. They can store their money themselves. They can program their money. They know the supply of their money can’t discretely change underneath them.
Some people are opting to change their dollars to btc. Some are opting to hedge a small amount into this new system in case recent monetary experiments explode. Some people are speculating (as they do in forex markets today).
Just because more people want to explore this brave new world doesn’t mean it’s a bubble.