Agreed, it's almost like the asset has no fundamental value, and is driven completely by speculation.

I am struggling to understand what currency you would define fundamental value - Loafs of bread?

Any currency that a:

1. strong entity circulates and

2. wants back

is fundamentally valuable.

> American dollars have value because the US Government taxes things, like land, and if you do not pay those taxes they will send you mean letters (trust me) before resorting to other means (trust Al Capone). You pay these taxes in US dollars. You just having dollars does not make them valuable. And dollars are not valuable because they are backed by gold or silver or sea shells. What makes dollars valuable is that the government wants them back.

https://hackernoon.com/the-guns-of-bitcoin-1f779309a718

Ways to destroy the US dollar value: Destroy the US tax collecting power, or have the US ask for taxes in a different currency. If the US started collecting taxes in Euros, the value of the US dollar would disappear instantly.

The US is a strong entity and has no incentive to ruin the value of the dollar. It will not start collecting taxes in Euros. Or Bitcoin. Why would it give all that power away? More likely is that Bitcoin gets made illegal or very difficult to use. At the end of the day, if you have US-protected assets, you will have to pay US dollars to the US gov and this will continue to give USD value.

Bitcoin has no such strong-entity backing, so it has no fundamental value. Bitcoin people are obsessed with the idea that mere possession is important. It's not. Ask people with loads of marks or Zimbabwe dollars.

Bitcoins' value is the inherent mathematical properties that makes it hard to forge. things that are hard to forge can be used as tokens for other, easier to forge (but valuable) objects.

hard to forge tokens can be used to denote things that are otherwise used to denote (such as ownership, and chain of custody).

being electronic, this makes Bitcoin quite useful.

Yeah, being hard to forge is necessary, but not sufficient.

There are a ton of electronic currencies that are difficult to forge, for example Flooz, Beenz, and the gems in clash of clans.

Things you can walk to a shop to and buy things with. Things employers will pay you for. Things that are backed by a government and guaranteed by a national bank. Things that are protected by laws and monitored to prevent large value shifts. Things that can be transferred in many transactions (like, more than four per second) Things that don't need the energy production / consumption of a small country just to function.

Cryptocurrencies can have all that, but they need to have a high transaction volume (tens of thousands / second), regulation, protected / monitored exchange value, etc. Which defeats the original purpose of an "open source", unregulated currency.

But you get what you ask for.

The cowry was used as an international currency for thousands of years and wasn't backed by any government. All it was was seashells that were a limited supply resource. In major usage, it was used all the way from Africa to Hawaii. I think most people look at currencies with an incredibly narrow view of history.

^ Worth noting, that this is relatively modern history. It's usage stopped as a currency in the mid 20th century. At the beginning of the 20th century, some african countries still accepted it as taxes

> Things that are backed by a government and guaranteed by a national bank. Things that are protected by laws and monitored to prevent large value shifts.

I'm no crypto-anarchist, but plenty of currencies do not meet this definition, and have failed as a result. Indeed, it's a time honored method of spurring growth to simply create money, and it's a time tested cause of instability. Certainly a well managed central bank is an asset, but it's hardly a reliable method of keeping currencies useful. There are plenty of reasons to be concerned with bitcoin's deflationary nature, but arguing that it's not as inflationary as government backed currencies is an argument that can damage both side of this debate.

Real estate (or land-backed currency if you want currencies in a narrow sense) is one classic example. Land has value beyond trading it for fiat.

Currencies don't need fundamental value they only need to remain stable something which bitcoin utterly fails at.

You cannot invest into a currency. If bitcoin rises by 30% is there a corresponding increase in fundamental value real value? No. It's a zero sum game. If somebody wins that also means someone else loses. It's pure speculation yet people treat it like a get rich quick scheme and think bitcoin cannot ever fall in price.

On the other hand you can invest into a stock. A stock will increase in price by 30% because the company has made 30% more profit or owns 30% more assets. Everyone who holds stock wins.

and a company's stock value could increase (or decrease) on a mere rumour. why isn't that equivalent?

Government backed currencies have value based on the network of people that use them. Theoretically, if Bitcoin was ever a currency, it could have the same fundamental value once millions of people used it for every transaction in their lives.

Why can't it be both? If you educate yourself about how cryptocurrencies work, you will see there is a lot of fundamental value. There is also obviously a bubble on top of it.

You mean, like the US dollar ?

U.s. dollar has the value of 20 aircraft carriers and enough nukes to glass the planet behind it. But otherwise exactly the same

But it's not like those aircraft carriers are going to show up if someone doesn't take your dollar. State backed currencies (backed by state backed armies) have failed plenty of times. History is dotted with governments who suffered by poorly managing their currencies, no matter what their military power.

Super pedantic, but I believe we have 11 active carriers and 2 under construction.

As well as the whole concept of the petrodollar.

Petro dollar is directly tied to the US military prowess. If you try to create all alternate Petro dollar they kill you. See gaddaffi for example

Like all dollars, yen, pounds, euros, silver, metal and gold?

None of these things, paper or earth metals, really have any intrinsic value. You can't eat gold. You can't put euros in your car. I guess you can burn money to keep warm, which is what happened to German Marks once people lost confidence in their currency prior to WW2.

The value of money is based off belief systems. When a very large scale economic or state collapse happens, the most important thing to have are a community of people around you who believe in each other.

> When a very large scale economic or state collapse happens, the most important thing to have are a community of people around you who believe in each other.

But isn't that one of the hopes of cryptocurrency -- that it can survive a state collapse, because the relatively normal currency manipulation leading up to said collapse would be less (or not at all) viable? I feel like that was the spirit of OP's tongue in cheek remark and it's going over everyone's heads.

Also (this is pedantic) but many metals _do_ have intrinsic value (ex copper wiring or gold plated connections). It's slightly meaningful because (among other things, like its relative scarcity) has helped those metals be used as relatively stable currency in the past.

> But isn't that one of the hopes of cryptocurrency -- that it can survive a state collapse, because the relatively normal currency manipulation leading up to said collapse would be less (or not at all) viable?

I've always wondered about this argument. It seems to me that a state collapse would be accompanied by the collapse of things that make bitcoin possible: electrical grid, Internet, mobile networks, and so on.

That's definitely a good point and I think it would probably apply in some cases. From my standpoint I"m most interested in the leadup to a collapse where governments start manipulating currency to greater degrees, destabilizing the countries economy (to the eventual point of temporary collapse) further than it otherwise would. I'm not sufficiently well read on the subject to argue deeply about it, just always seemed like if cryptocurrencies were viable they could perhaps alleviate or improve those situations. Maybe modern Venezuela is a good example. I'm not well read enough on either topic to take a strong stance but if it holds water, it's always seemed like a very promising thing for humanity.

I remember when many alt coins collapsed in 2013/2014 one problem was that with miners dropping off, difficulty stayed. Many coins with longer difficulty adjustments couldn't get back to reasonable confirmation times.

So let's say BTC difficulty drops 10x (China cracks downs on farms or simply miners moving to a different more profitable coin, who knows)

Currently this would be ruinous, as difficulty adjustments are every 2 weeks, so that would be 140 days until things get back to normal.

sorry for this but you can eat gold.

Also, why does our currency need intrinsic value? It represents a debt owed and can be exchanged for things with intrinsic value. The reason dollars, yen, pounds, euros, silver, metal and gold have value is both a social and a legal contract. Cryptocurrencies may have some social contracts that give them value but they lack the legal contract. That's why I think they are doomed unless they open themselves to regulation.

You can use gold (and other rare minerals) in electronics and such though, which creates a demand, and a demand = value.

The demand for USD is cyclic in nature (IANAEconomist, I just made that term up), in that, I need money to buy food, my employer needs me to make them stuff, my employer's customers need my employer's product for their processes, etc.

While you can’t eat gold, it does have a variety of uses.

Yes, but the dollar also has a very long history of being extremely stable. Said another way, the dollar has never had a 30% shock in a year (BTC did today...)

By what standard, exactly ?

The dollar certainly has had 30% "shocks" in a year compared to gold, which is the usual standard. Most famously, obviously, 1971, but there have been more normal years with such changes as well.

You could also say that the US dollar is really backed by the US economy. Well, the US economy is S&P500 + a few percentage points. Well that has dropped, and gained more than 30% in a year as well (depending on the foreign currency you use to measure this, or if you're talking in gold price, we've seen 60% drops happen. Of course the S&P 500 is worth more than all the gold in the world, so ... this is a bit of an artificial thing to do. Truth is that if someone started buying the S&P 500 using large quantities of Gold, that wouldn't work, so perhaps that is actually right).

Shocks is between quotes because they weren't really shocks. Everybody in finance was perfectly aware of the "real" price for the US dollar, in 1971, but political hubris and re-election factors did not allow the government and congress to admit to this, until every other avenue was exhausted, including lying, cheating (not charging the same price to everybody despite their own laws demanding they do so), fraud, and so on.

Or to put it another way, one might even make the comment that the dollar lost such amounts against gold for the worst possible reason : a refusal by the US government to settle debt for the agreed price (specifically, as has come out, the refusal of the US government and the congress to honor the agreed-upon exchange rate the French government demanded they pay). Surprisingly when I tell my bank that my loan is now only against half my house, such flexibility is not extended to me, and congress in fact has laws preventing this ... weird, since they clearly see it perfectly moral & valid to do this themselves, and even to do it to pay off (their favored) banks.

30% changes in the value of the dollar have happened before, and in all likelihood, will happen again. Granted, it's been a while.

Yes but will they happen 4 or 5 times a year, as with bitcoin?

Now ? No.

I wonder what happened when the dollar was 10-20 years old though. Can't seem to find good info anywhere.

You can pay taxes with USD. You can pay employees. You can buy millions of different kinds of goods, including any other currency.

Bitcoin can do none of these things.

The only thing you cannot do with bitcoin is pay taxes directly. You can do that indirectly by trading your bitcoin for USD. There are a lot of different goods you can buy with bitcoin, some of which you cannot buy any other way (many are illegal but that is a different matter). Bitcoin is traded for other currency all the time.

I tend to believe those who say bitcoin will not last are right, but right not it is a currency. Not the most useful one, but there are countries with a real currency that is not very useful.

That's like saying I can pay my taxes in barrels of oil, I just have to sell them first so that I can pay in my government's currency.

Like, what accountant would be capable of planning finances for a business where every single liability is denominated in a super-volatile asset? The whole thing is nuts.

People rarely do this. However a lot of accountants do this.

Nearly all large and even mid sized companies have customers who use a different currency and have to deal with it. Big companies hedge foreign currency risks. It is common for the press release for a companie's earning to say "we made $x per share driven in part by foreign currency values and ..." Which is to say when looking at a press release they believe their investors (perhaps a legal requirement?) will want to know that a significant factor wasn't sales but just currency trade.

Now bitcoin is super-volatile. That isn't relevant to a general discussion, but it is a major factor when discussing bitcoin in specifics. There are other foreign currencies that have similar considerations at times though, it isn't unique to bitcoin.

Euhm, almost every single country on the planet ? (granted, one or two exceptions)

Even the value of the dollar is significantly in the social contract with Saudi Arabia (not sure if "social" is the right word, but it's definitely not legal, as both sides are sovereign and thus free to change any law or contract between them)

Seems to work well, for the most part. Granted, on occasion disasters happen.

Could you please send me all of your worthless dollars?

There's also probably a set of people like me who got in when ETH was <$10 and want to get enough out to have at least something to show for it.

Or these are all people who need christmas cash, ie people playing with money they probably shouldnt.

11500 and not stopping. I wonder what fees are needed to execute a trade in the next hour. Probably countless people lined up.

When Coinbase became the #1 app in the App Store, you knew the bubble would soon burst.

This is far from the bubble bursting

https://coinbase.com/ is down.

"This page (https://www.coinbase.com/dashboard) is currently offline. However, because the site uses Cloudflare's Always Online™ technology you can continue to surf a snapshot of the site."

If only the coins were the only things that continued to crash in this saga.

It's up for me.

Working for me.

Christmas comes early for the cynic.

I find the cynics much less tolerable than the crypto-evangelists. HN is a haven for them: bitter, jealous people who never miss an opportunity to trash crypto when it's up or mock it when it's down.

This likely isn't the end of Bitcoin just as its numerous other 30%+ corrections didn't stop its rise. Whatever happens, I'll be proud to have participated in such an important new technology while avoiding the leagues of cold and timid souls who jeered from the sidelines.

Nonsense. It has been used in the past to refer to cryptography, but it's just an abbreviation, and it can easily change as our language evolves.

I guess, but unless you bought in past few weeks, you’re still way up. This is more likely a huge payday for those who held long and liquidated at year end.

You're still way up on paper.

The payday comes when you actually liquidate your position, and you get the funds out of the exchange.

Lot's of people were way up on Mt. Gox.

Yes, I assume the price drop is due to people selling off their positions, which is also known as “cashing out”. The “smart money” moves in at the bottom of the sell off, if you’re bullish on BTC.

One day later, and it looks like I was right. The buyers have chosen a bottom and the prices are rising again. Lots of people cashed out yesterday.

Ultimately I feel like the payday comes when you’ve bought something you actually want. Prices of all things can go up and down.

If you goal was to buy a house and house prices suddenly increase, even after you cashed out your bitcoin, you might still be disappointed.

Hindsight will tell how much cynicism was warranted, but given the historic exponential volatility anybody who invested and liquidated at opportune moments were probably just lucky.

Nothing wrong with taking risk, but dont pretend you're not gambling.

Considering that almost the entire time since the inception of BTC has been a “good time to buy”, and considering the price today is still twice or more what it was in September, I don’t really follow your logic. I don’t own any BTC, for the record.

And anyone who bought in at $15k-19k is left holding the bag, as expected.

Funny thing is not many that bought for 15k will sell below that, so price will drop (as did few times before, when bitcoin experienced rapid appreciation) but it won't drop to the before-bubble price but slightly higher.

It will either very gradually climb from there or stay steady for 3 years or so and then experience next crazy ride up.

Then most of the guys who bought for 15k will sell.

The point is, people buy bitcoin with money they don't need anyways so they can go long and most of them will because bitcoin apparently can't die no matter how many bubble popping it experiences.

I think this might explain short term behavior but not the long term one. The same argument applies to beanie babies and other speculative bubbles that eventualy did crash.

Funny how any pro-bitcoin comment immediately attracts downvotes. I'm considering posting opposite of what I think about bitcoin to get those sweet, sweet upvotes. :-)

from the guidelines:

>Please don't comment about the voting on comments. It never does any good, and it makes boring reading.

https://news.ycombinator.com/newsguidelines.html

Meta: but this is probably one of the rules I've broken most frequently.

Most times not because I was downvoted (and then only to ask for an explanation IIRC) but because it seems like people are misunderstanding or IMO abusing the downvote feature.

If your implementation of "posting opposite" were to include evidence, analysis, or other than blind assertion, perhaps those upvotes would flow.

I've been avoiding buying for this very reason. I know bitcoin well enough to know it's going to crash, it's always going to crash, so never touch it on an upswing.

Buying it now is fairly reasonable. Though, I wouldn't be surprised to see it crash yet again, even harder, but it felt like buying on that upswing to 20k was suicide.

> Buying it now is fairly reasonable.

I'd wait few months. If it is actually crashing not just backing up before next silly raise then you'd be better off waiting till it settles after the crash. It usually takes few months or a year.

If you don't want to gamble, bitcoin is rather long term investment.

I opened a bank account for BitCoin and put less then $100 into for investment. No way would I ever connect my real bank account to any crypto currency wallet.

Anyway I invested the $100 and I am down, but whatever it's like going to the casino and gambling/losing it all.

Yeah I mean it's just $100. Not much to go up or down on with it.

no matter what term you invest on it's a gamble.

Technically true, no matter what you invest in and for how long, but I suspect casinos would be less thrilling places and caused less addictive costly behaviors if you had to wait for the outcome of your gamble few years.

It's not even done crashing

Is there any evidence the price should have went from $1k to almost $20k other than hysteria and fraud? If not, why buy?

To be fair, it probably will be pumped to $50k some time in the future (before crashing again). It's what Bitcoin does. After ten years, it's all it does.

In 2011 (or something, I'm going by memory) it rose to $30 before crashing back to about $5. In 2013 (still the days when all people had to do was spam a few forums) it reached $10, $100, $200 before stagnating until MtGox and Willybot pumped it up to $1k.

ISTR some people back then were predicting $10k BTC by the end of the next year (end of 2014). Instead it was about $500 or something, and BTC didn't reach $1k again for about three years (the start of this year or end of last year).

I think this latest pump brought in a lot of Regular Joe speculators. Not sure if that can be repeated again, but I guess all those Regular Joes now have Coinbase accounts, so maybe.

A question for a recurrent neural network, maybe.

higher highs mean lower lows, probably...

FAAAAAAHHHKKKK.... I WAS a millionaire and just maxed out my cards, rented a jet and now I am in the shitter... what do i do?

I can help you out, just sign on the dotted line.

What? No 100% interest is normal. Do you want free money or not?

No don't worry about the breaking your legs part, just remember to pay it back when you're rich again.

Should have asked Marcum.