2015: "Most advantages of Bitcoin which matter are captured by, and improved upon by, a LAMP app which simply holds account balances."
2019: "I acknowledge that when Bitcoin was $17 I said it had no use case, should be worthless, and likely would be at some point in the future. No evidence has come up which would make me change my view. (Though my is it taking a while.)"
What has Bitcoin created?
I struggle to come up with an answer which isn't overwhelmingly just a way to fund illicit activities, for which sure there's always been a market, but it's a far cry of it's origins. Who actually uses bitcoin for transactions today other than extortionists hackers and drug dealers? Everyone who owns is just planning to HODL and hope that it will become equivalent to an infinitely high fiat equivalent. Had bitcoin succeeded we wouldn't be talking about insane valuations. We would be using it every day no different from a credit card.
I don't own any cryptocurrency and can't put a dollar valuation on such an achievement, but it's certainly not an everyday thing.
And then it was duplicated across 1000s of other coins. The only advantage Bitcoin has in 2021 is that it was the first and most famous.
The biggest impact on the world from bitcoin's creation was not a democratization of finance, it was a widespread mechanism to facilitate payment of blackmail.
I used it to buy the phone I'm typing this on:
https://news.ycombinator.com/item?id=25598831
Despite the run-up since, I'm still happy with that transaction!
Personally I think Bitcoin has at least two bubbles left before it pops permanently. So $1M price could be achievable.
The real question is what happens when it does reach a ceiling. At some point there's not going to much more potential interest for Bitcoin, and what then? Are people gonna start moving their pension funds to Bitcoin? I think the governments will crack hard down on that, because you really want investments in building the economy, not in a pure investment/gambling scheme.
If most people start thinking there's no one else interested in buying their Bitcoin down the line, it'll crash hard, and the crash will likely be permanent. Because there's no real value behind Bitcoin. The money you invested is already spent by someone on something else.
The reason why it's interesting that Bitcoin keeps having bubbles is that there's not much reason to think that will stop. Yeah, the value keeps growing over longer time periods, but eventually a bubble will be so large that it'll seriously disrupt the economy, and that's when you'll start to see governments and peoples attitudes change.
> I enjoy reading comments about Bitcoin here because even without any venture backing, it achieved a bigger valuation than all of the Y Combinator companies COMBINED, yet people still think it is unstable and has no future.
The problem is that the valuation is more imaginary than the valuation of any company except for those that are just Ponzi-schemes.
Most money put into Bitcoin has been cashed out or used for mining expenses. If everyone tried to cash out, the price would very quickly race back down to zero. If the same happened with a stocks in a corporation, at some price level someone would just buy up a controlling stake of the shares and liquidate all the assets for a profit.
By that logic, do you support government prohibiting pension funds from investing in Gold?
You post was very interesting (what happens to Bitcoin when it becomes so big it's capable of tilting G7 type economies) up to the argument above, which is:
a) wrong because Bitcoin does have some actual utility
b) wrong because "value" is only something that carries any kind of meaning in a supply and demand framework
c) parroting an argument that has been trumpeted on HN almost as much as "oooh, bad for the environment" and has also been thoroughly debunked.Truly is a paradigm shift and I think a big problem on HN is that VC can’t see they are being disrupted and have no way of avoiding it, plus they think they are untouchable geniuses, so being wrong this hard isn’t pleasant for them.
On the contrary, VCs are making bank on cryptocurrency. Retail investors are just along for the ride.
> plus they think they are untouchable geniuses, so being wrong this hard isn’t pleasant for them.
Again, VCs were all over cryptocurrency investments in recent years. They're ecstatic when the price goes up, because retail investors are pumping an investment they were in long ago.
I don't know how we arrived at this narrative that crypto was a win for the little guys at the expense of institutions.
It's not really the same relationship as investment in a company, but it's not absent either.
Notice how the trend is eerily aligned? Just because you couldn't find it doesn't mean you have to be snarky about it.
They say in the piece:
> Now contrast Bitcoin's dynamic stock-to-flow with Gold's, who's stock-to-flow of 62 is not likely in increase. As a thought experiment, try to imagine what would happen to the price of gold if were to be halved one day?
That did happen, in 1940! Gold production fell in half for years. And the gold price subsequently fell.
Can I see evidence of this? Using this[1] paper and this[2] article I can see gold production by no means halved and gold prices did not fall.
https://upload.wikimedia.org/wikipedia/commons/thumb/6/6d/Wo...
However, your first source indicates a drop substantially less than half, so perhaps the chart I looked at is not correct?
For the price I was looking at an inflation adjusted chart. In constant dollars the price seems to have stayed the same. Typing this out I now realized this must have been the gold standard and my comment was completely incorrect on this point re: gold. The price fell in real terms as it was pegged.
https://upload.wikimedia.org/wikipedia/commons/thumb/f/ff/Go...
What you said. The 3rd sentence in particular: I guess when enough people say something it becomes a "fact"
So that was just simply asking a question? No mocking or sarcasm? Without the last sentence you would have just been asking a question. With it, you are being snarky.
Stock-to-flow is based on assumptions, but they're not unreasonable.
The predictive power hasn't been half-bad either.
https://www.businessinsider.com/wework-valuation-falls-47-bi...
(I don't think WeWork was YC, but it does drive home that achieving a valuation is primarily a reflection of your ability to convince investors to give you money)
Counterfactual: asset prices and incomes have been rising, almost uninterruptedly, for 12 years.
Exhibit A is Tether being able to publicly admit that they don't have the cash they said they had and keep going.
This is the wrong metric. A million dollar market cap bubble is not hard to sustain, even a billion dollar market cap is a footnote to the rest of the economy. The entire worth of Bitcoin is still less than half of the worth of the market cap of one company such as Apple. At some point it becomes large enough that its real value has to be considered, which in my opinion is zero.
Stocks like pets.com had long runs in 2000, subprime mortgages had long runs in 2008 and people were saying then what you are saying.
Stocks and real estate are frothy now so Bitcoin and Dogecoin have company. I would rather own a house than 10 bitcoins though.
Let me give you my favorite quote, pulled from another HNer comment: "I enjoy reading comments about Bitcoin here because even without any venture backing, it achieved a bigger valuation than all of the Y Combinator companies COMBINED, yet people still think it is unstable and has no future."