I recall walking through an airport this year and seeing Crypto ads everywhere. That was my shoeshine boy moment (1)

(1) https://www.businessinsider.com/how-to-spot-stock-market-bub...

I visited Brazil recently (3-4 months ago), I got into cryptocurrency-talk or some shitcoin peddled by cashiers, Uber drivers, waiters in some restaurants, acquaintances that aren't tech-savvy at all, etc. That's when it downed on me how big this whole thing got outside of internet chatter, it downed how many vulnerable people are exposed to the fallout of a crypto implosion.

("dawned")

... but yeah. It's depressing. Countries with already bad economic conditions (like "we literally don't have functioning currency" level, not the things US residents complain about) seem particularly susceptible to it.

I really thought I had written "dawned"... I think it's the same issue I have when writing "ratio", I always end up writing "ration".

Thanks for the correction.

The older I get, the more errors my typing contains versus the mental stream of consciousness I intended to type.

The way I type compute always involves deleting the r at the end. :)

Because they're actually using it as a currency. Consequently, they probably won't feel as much of the pain speculators are feeling right now / will continue to feel; as long as the amount of $FOO earned from a day's work pays for the day's expenses, they have little reason not to continue adopting and using $FOO (for whatever value of $FOO we're using).

Put differently: when the options are "failed local currency" v. "hard to obtain foreign currency" v. "easy to obtain electronic currency", you and I would probably be inclined to use the third option.

It's so ironic how all those libertarian crypto-bros think they've got the inside track and they're so much smarter than everyone else, when actually they're just as gullible and common and deluded as random cashiers, Uber drivers, waiters, bartenders, used car salesmen, chiropractors, cosmeticians, shoeshine boys, and ordinary hoi polloi on the street, all being influenced by the exact same mass market ads and hype all over the world.

Well, people that got in early and got out about 6m ago (or now, still) might have made good money. Attributing it to a deep understanding of the technology is almost certainly wrong; attributing it to a certain street-smart understanding of bubbles, marketing, and hype might be correct. Though I'm inclined to just call it luck.

Yup, and seems to be getting worse:

“Families in despair over IM Academy: ‘The crypto-sect has kidnapped our children’”[1]

https://english.elpais.com/international/2022-04-18/families...

I had a few different moments, since I was always very skeptical of crypto.

However being pitched crypto by an old bartender in Stuttgart was probably the most obvious one.

Generally, crypto was not promoted to me by people who would understand either computer science or economics.

Not to be flippant, but nobody who I've heard promote crypto has any real, deep training in economics. Computer science yes, totally, but not econ. There are obvious problems with the entire concept of decentralized money if you've studied economic/financial history. We already experienced it back in the 19th Century and it's following pretty much the same pattern. Wildcat banks, frontrunning, wash trading, bank runs, and much more.

Some brilliant computer scientists created crypto and Dunning-Kruger'ed themselves into thinking that they were also experts in finance.

I saw the Crypto.com Arena as a Pets.com Superbowl moment.

This article is off by 3.5 years and I bet that most FAANG stocks are still above their values when it was published.

Tech “growth” companies has been overpriced but it made kind of sense as long as interest rates were negative and their revenue was growing… people believed in positive returns because they assumed the only way is up.

Truth is … in any healthy public market no company has any business being at a higher than 20 p/e ratio. Unless maybe for a transitioning period of time (market making)

Boom and bust seem to be the prevailing pattern for the development of complex systems. Happens in ecosystems, and in economies. I don't even think it's detrimental... That was how we get a lot of otherwise unthinkable infrastructure development. The dotcom bubble left a lot of very cheap fiber connections that fueled later internet adoption, for example.

I love that phrase, 'shoeshine boy moment'.

I've stayed away from crypto, but my shoeshine boy moment was when we went on a road trip around Wales last summer. We happened to wander into a small shop in a small harbour town in Wales, literally about 4-6 streets in total. The guy behind the counter had some 'pay with crypto' machine and was singing the praises of crypto to all of the old ladies, moms and dads that were ahead of us in the queue...

To be fair, he was likely being paid to sing those praises.

I often see the ads in advertising billboard. I usually go to a public park every other day, and the road will pass through a major intersection with large billboard. At one point, a billboard of cryptocurrency broker appeared every time I passed through that intersection. The particular broker also advertises into a convenience store (7-11), so I will be pretty much guarantee to see its ads every day.

Another broker dared to register the domain name "Join the Crypto Revolution" to promote its scheme. I wish we could have an enforceable rules on prohibition to market cryptocurrency to general public like Singapore did (see [1]). We did open for comments regarding this, but it has not been set in stone as cryptocurrency broker tried to game the rules.

[1] https://www.zdnet.com/finance/banking/singapore-cautions-aga...

I had a similar moment at the peak in 2017 when my non-financial friends asked me if I owned Bitcoin.

About a year ago I was chilling in my bedroom and overheard some crypto-bro shilling just outside my window. That clinched my conviction that it was just a matter of time for it all to collapse.

> I'd doubt BTC will go to zero, but I wouldn't be surprised if the entire covid rally gets wiped out and we see BTC 6k again.

I agree. We invest a small amount of money into $BTC and I feel pretty neutral on the topic and my comments come from an intention of neutral observation.

I think $BTC is in a bad spot that's about to get worse in the short-term. It's getting hit from both ends: expensive energy, and high interest rates. Many believe it's supposed to be a hedge, and I think it still is, but it's not a hedge against a high interest rate environment in which the dollar and fiat currency (primary reserve currencies: USD, EUR, YEN, GPB, etc.) are still normalized and valued. It's more of a hedge against low interest rates and the central banks printing money in that environment IMO.

Long-term I'm bullish because it's a deflationary asset. Eventually we'll get to the point where, similar to maybe Japan or South Korea a pack of gum costs 1000 units of fiat, which will necessitate $BTC being "worth" hundreds of thousands of dollars (or it's worthless, I don't think there is a middle ground here). Unless something crazy happens, deflationary environments in fiat currency will always be avoided, and if you target 2% inflation every year it's all but guaranteed that $BTC will simply be "worth" a lot of dollars (or $0).

So I wouldn't be surprised to see $BTC hit $6,000 or even less. I would be surprised if within, say, 15 years it's worth that amount and not $0 or $1,000,000 (or something).

Long term I'm bearish because it's a deflationary asset. Deflationary value stores have a tendency to cause all sorts of social ills by encouraging hoarding. There's a reasonable line of thought that observes that it's no coincidence that the end of the age of European colonialism coincided with the demise of the gold standard.

More concretely: if crypto is deflationary, then its value works similarly to how an Amway or Herbalife membership's value does. You get rich by getting in first and then convincing others to join after you.

> Long term I'm bearish because it's a deflationary asset. Deflationary value stores have a tendency to cause all sorts of social ills by encouraging hoarding. There's a reasonable line of thought that observes that it's no coincidence that the end of the age of European colonialism coincided with the demise of the gold standard.

It's definitely an interesting theory - any particular articles or books you've read on the subject? I find the story of money fascinating.

On the other hand, however, States are no longer constrained by how much gold they have. In the past you could wage war until you ran out of gold and then that was that - you couldn't print money out of thin air. Now you can just print money and at least up until some point (which we don't know yet) it works. I guess you could argue back to your first point that this is what caused wars - you needed to accumulate resources in order to have wealth so you'd start wars and take stuff.

I think deflationary economies have bad attributes - like why take risks when you can do nothing and the value of your assets goes up? On the other hand, (and someone else mentioned something related to this) inflation literally destroys wealth so how can someone working a non-high paying job store wealth when the value of that wealth is destroyed at a minimum of 2% per year?

> inflation literally destroys wealth

Inflation doesn't destroy wealth, inflation erodes the value of money. Wealth and money are two separate but related ideas. One shouldn't tie up the majority of their wealth in money, its non-productive.

> how can someone working a non-high paying job store wealth when the value of that wealth is destroyed at a minimum of 2% per year?

By investing in productive assets instead of holding pieces of paper under their mattress.

In my opinion mixing the functions of medium of exchange and store of value has caused untold amounts of needless suffering. You see 2% inflation is the middle ground. Rich people may want to save and increase their wealth but my mom just wants a job to pay rent and buy groceries, she has no grand ambitions to become super wealthy. When you mix the two functions into cash, one of the two is going to dominate the economy and with gold it was the rich, with fiat it is mostly average people because having a job is more important than maintaining purchasing power.

Maybe the issue is just that we no longer have a store of wealth that isn't tied to a speculative asset? Fiat currency is a fantastic currency - even terrorists who hate America use dollars. But it's a terrible store of wealth because it loses at least 2% of its value by intention (this fluctuates - just going off the stated Federal Reserve targets).

I think this is where things like houses becoming collateralized assets start coming into the picture. You can buy stocks or index funds, but those can lose value and they're definitely not guaranteed to increase in value. Houses are a pretty "hard" asset in physical reality and with inflation basically they go up in value while also providing utility. And to buy a house you need fiat currency so they're somewhat liquid in that sense. So what do you do? Buy gold? Maybe. Bitcoin is another option similar in some ways to gold (in function at least). Other cryptocurrencies are assets in my view more similar to a stock with products or platforms behind them. I'm just not sure what to do. If you make cash inflation neutral or deflationary that sounds ideal, but how do you do that? And would people be likely to take risk in such an environment? Do we need to? Is it bad that we are encouraging the use of fiat currency by threatening to devalue it over time? I'm not sure.

> Maybe the issue is just that we no longer have a store of wealth that isn't tied to a speculative asset?

You say speculative, I say productive.

Is a non-productive store of value actually a thing which exists in nature?

For most things, you can't store a thing itself: grain rots, chickens die, houses decay, iron rusts, water is fouled.

If you want to have a thing in the future, you need a way to produce the thing: fields of grains, lineages of chickens, maintenance and construction of houses, refinement of iron, the purification of water.

All investment in these future means of production is speculative; you have no guarantee the bet you made on how you will obtain a chicken in 20 years will play out.

> You say speculative, I say productive.

Oh I totally agree! Stocks in companies are absolutely productive assets. Though they are still speculative. I guess the first thought that comes to mind is well, so what? Does it make sense for individuals to plow money into the stock market even at all-time highs? Should you basically have to perform an investor level due diligence for buying these productive assets? Sometimes I think we are duped by the liquidity in ways we wouldn't be if we were deciding whether or not to buy a farm or a movie theater.

> Is a non-productive store of value actually a thing which exists in nature?

Gold is probably the closest we've ever gotten. Besides that I'm not sure. But then that begs the question I was responding to regarding savings for "regular people". Is it impossible to save money without buying into the stock market? Idk.

Gold famously doesn't decay, but why should I expect prices to remain constant in terms of gold? If I sell you a chicken today for 80 milligrams of gold, why would you be obligated to sell me an equivalent chicken for 80 milligrams of gold in twenty years?

Gold isn't a perfect store or value, it's just a perfect store of gold.

Yea - I was just saying it's probably the closest we have ever gotten. The chicken example is interesting b/c what would you actually compare gold to? Say chickens were commonplace today and could be had for 80 milligrams of gold but then some disease wiped them out and only 10,000 could be grown and sold each year. Obviously they'd be worth more than 80 milligrams of gold - but as prices for other things perhaps come down and become more plentiful (or new products/services emerge) 80 milligrams of gold may buy something completely different at a great price.

I mostly agree with you here. Keep in mind I was preliminary responding to someone else w.r.t stores of wealth. It may even be the case that storing wealth is nonsensical as a matter of physics (either natural physics or economic physics). Perhaps what we refer to as wealth storage is really just scarcity of a physical item, whether that be a house, a collector's edition widget, a car or piece of art, or in your example, a chicken. Maybe the goal in what we would call wealth preservation is to find assets that either do not decay over time, or that decay very, very slowly over time? One thing that comes to mind then is how fiat currency plays into this decay? What would it represent?

So the question is basically "How fast does credit decay?"

Let's switch from goods to services and favors. Let's suppose you're in a real bind one day, and need some help -- painting your house, moving cross-country, who knows -- and I step up and help you as a favor, and spend a solid week of my time.

How long do I have to redeem that favor and get a week's worth of time out of you? How does the intervening time affect the answer? If I disappear for twenty years and show up on your doorstep expecting the favor to be repaid in full, is that a reasonable expectation? What if we are close friends for those twenty years, trading favors back and forth?

There aren't necessarily right or wrong answers to those questions, but that's basically the question inflation answers -- it's the price for not participating. You do a job, you get your currency, and then you can roll your currency into participating in the shared risk for maintaining our systems of production, or you can stand back, and see the credit for your past contributions decay over time. Sometimes it decays slowly, when everything is going fine. Sometimes it decays quickly; if things begin going badly and you're not invested in the outcomes improving, your credit for your past contributions declines faster.

People say gold is a good store or value because it has relatively inelastic (hard to ramp up) supply and relatively modest and stable demand (jewelry, industrial uses etc).

The cost of chicken has actually plummeted over the last century, even adjusting for inflation, because we can battery farm them now and they produce way more meat than they used to due to selective breeding etc.

Gold is still a speculative asset! You're speculating what it will be worth in the future. Its current value varies a good bit compared to other goods and dollars.

You can very well sell these goods and buy new ones maintaining a fixed amount and using it to back your currency.

This would be my favourite currency.

So your proposal is, what, you have a warehouse of grain, and each day you sell your grain at price $X and buy new grain (N days more recently harvested) at the same price? Because you're trading nominally fungible commodities they're priced the same, but when you go back twenty years later you'd have an equivalent quantity of grain to withdrawal regardless of how the price fluctuated in between?

The main problem is that you'd need to pay for storage over the 20 years in between, which would take the form of selling some Y% of your grain each year to pay the storage on the remaining percent, which is basically the same as inflation.

> it loses at least 2% of its value by intention

How do you get "at least"? The target used to be "below, but close to 2%", but has been increased to around 2% (symmetrically). It has been less than 2.5% over the last 20 years (https://fred.stlouisfed.org/series/CPIAUCSL) including the recent spike, and has been 2.02% from Jan 2001 to Jan 2021, which I'd call precisely on target.

Needless to say, if you parked your extra money in the stock or housing markets, you handily beat inflation. And if you don't have money to invest in the markets, then you don't care about inflation anyway (but rather real wage growth).

The indexes used to measure inflation are picked to stay under 2%.

I kept track of my groceries and rent for 10 years up to last year and my perceived inflation was way higher than 2% (even allowing some margin of error). This year is being completely insane but it's hard for me to compare as I moved.

Wages don't grow with inflation (the sad 1% yearly raise) unless you job hop.

Stocks don't give you always the best window to withdraw your annualised 7-8% profit. If you'll need to buy a house or if you'll go to pension you may end up withdrawing at bad times.

Houses have been mostly going up. Good to beat inflation, terrible for youngsters who need a place to live without paying someone else's mortgage.

That's a common fallacy. Hoarding, saving, preparing for the future is one of most fundamental human needs and the bedrock for a functioning economy and society. There's no fundamental economic principle which would indicate that an inflationary money would do any good to a society. It destroys savings, which is opposite of what is good for an individual and a society.

Also, because you mentioned colonialism, read this to understand how colonialism and slave trade was enabled by inflation (counterfeit money): https://breedlove22.medium.com/masters-and-slaves-of-money-2...

Money isn't wealth. What you can get for it is. Hoarding casino chips does not prepare you for the future. It just makes the people running the casino richer with goods you traded for the chips.

Oh you say, I can trade the chips with other people. Also the chips are numbered and we have an agreement to never accept a casino chip numbered over 1 trillion. Then we pay the casino one chip every time we trade. So the casino always has some chips to trade.

The casino always wins. You're even paying their horrendous electricity bill.

Money allows optionality - instead of hoarding food and fuel, you can hoard money and buy the things you need in the future. If you know for sure that you need food and fuel, and hoard them in advance, they will rot and evaporate by the time you need them.

Inflationary money is like rotting food, instead of canned food. It makes no sense at all to store your wealth in rotting and evaporating things.

How do you know people will want to trade fuel for casino chips in the future?

Well, you don't really know, but you can make certain assumptions. Money is like a social network with network effects, which means that people want to hoard casino chips which are most popular, and thus they also want to accept them in trade and reject everything else. This keeps them in the most popular economic network, and also keeps the casino chips valuable.

However, if there's something wrong in the casino chips itself (like inflation), people start to switch to a better version of casino chips, and they can assume that everyone switches, sooner or later, to the best alternative available, with least issues and largest network. Network effects will keep the new casino chips valuable as long as there's no better alternative.

Network effects go to a certain point yes. Then having people who hoarded chips is a detriment to the network. Because after that, people with actual resources like food or fuel will just invent their own chips to trade.

It won't get to that point, because no one wants to hoard too much. Hoarding chips endlessly is pointless. It's basically just a riskless buffer for future spending or investing. People will either spend or invest all extra chips. Rich people would own all the factories that produce food and fuel. They wouldn't sit on a pile of chips.

If someone is endlessly hoarding chips, it means that they are producing more than they are consuming. This would be positive for the economic network, but negative for the individual (because they are working more than needed).

If someone has a lot of chips, but isn't producing anything, they'll eventually lose their chips, because they have to spend them to stay alive.

Well fine. But now you're contradicting what you said two comments up:

> instead of hoarding food and fuel, you can hoard money and buy the things you need in the future.

Again, how do you know people won't just start trading with other chips? That will devalue the hoarded chips.

The argument started with paper thalers being a poor store of value. Casino chips were pitched as an alternative. And now here we are. Turns out the chips too are a poor store of value. Both can be true at the same time.

More importantly it's only "bitcoin" because it's the first; even if everything crypto takes off the world could collectively decide to use something else (Etherium being an obvious choice, but there could be others).

> which will necessitate $BTC being "worth" hundreds of thousands of dollars

You'd need a two trillion dollar market cap in bitcoin to make each unit worth more than 100k USD.

(Currently there are 19m out of 21m coins minted; two trillion / 19million = ~105k)

What does Bitcoin provide that a cheaper coin doesn't? The only thing pushing the price up is speculation, all digital coins are worth pennies as they're all completely interchangeable from an end user perspective.

> What does Bitcoin provide that a cheaper coin doesn't?

Longer track record than the rest. More buy-in from people. Just like Gold vs other shiny metals.

The network effect is strong, if BTC actually was to take over for USD then people would have to have trust that BTC wouldn't evaporate the next day. BTC's incentive model and network effect provide that.

Assuming of course that BTC could outplace USD.

I see BTC in the same class as Gold (hard assets without any intrinsic value and valued only because everyone else values it). USD is a different asset type - Fiat currencies which are essentially debts owed by various governments to the holders of those currencies.

So BTC won't be replacing USD, imo.

Gold has some intrinsic value, you can turn it into fancy jewelry, teeth replacement or cutlery :)

And yet its market cap, >10T USD, is not at all commensurate to the uses you cited. Governments hold gold in their reserves because they see it as a hard asset.

> What does Bitcoin provide that a cheaper coin doesn't?

Good question, since it is trivial to clone Bitcoin.

Only answer I can come up with (except for psychological factors): hash power.

It sounds to me like you’ve said that BTC will both go up and not go up in an inflationary environment.

I’ve been wondering why a hedge wouldn’t be for this exact environment, so can you explain your thinking a bit more?

> if you target 2% inflation every year it's all but guaranteed that $BTC will simply be "worth" a lot of dollars (or $0).

FWIW, the BTC money supply increases at 1.7% p.a. right now (until the next halving).

> It's more of a hedge against low interest rates and the central banks printing money in that environment IMO.

Could you explain how /exactly/ it functions as a hedge? I don’t care about price, just the mechanics/logic.

From what I gather, and certainly someone may come in with a much better explanation or refutation is that Bitcoin is in a sense a finite resource (let's just look at the mechanics right now) and if appetite for Bitcoins increases you can't make more of them.

If a central bank is inflating a currency, it means each year that more of that currency exists than it did previously, so people can effectively bid for resources with more currency which increases the relative price. A pack of gum used to cost $.05. Now it's like $2.99 (or whatever). This is primarily due to inflation as far as I can tell.

Likewise the same is true for Bitcoin, except that it has an additional feature in that it's transmutable into a pack of gum, or a share of JPMorgan stock, or a house, or a car, or some service. It's also transferrable - you can move it (again let's ignore how well it works right now) from place to place without having to actually ship it anywhere.

So because Bitcoin is transmutable like a Euro or Dollar it can do similar things, except the difference is that more Euros and Dollars are effectively "mined" and created, whereas there's a limit to how many Bitcoins can ever exist. So as more and more Euros and Dollars are created, you can spend more of those to buy the same Bitcoin.

Granted, this is very much at face value and some of the mechanics aren't quite there - it's actually very expensive right now to move Bitcoin around and it appears to make for a pretty bad currency, but I think this should at least touch on the mechanics or logic.

tl;dr it's like gold.

Prices don't rise 'due to inflation'. Inflation is just another name for price rise. This 'transmutability' you speak of is called currency. Bitcoin has some but very little compared to cash. Also the so-called 'deflacionary' nature of bitcoin, supposedly caused by the supply cap assumes a constant or growing demand for it, which is far from assured. Bitcoin only needs to collapse once to become worthless forever, there will be no cold re-start. Whereas precious metals don't need one. That, IMHO, is the crucial difference that advocates seem to forget.

Prices rise for more than one reason. For example marble is more expensive because it’s more difficult to find and mine than it was in the past (just a contrived example). But prices also rise due to increases in money supply.

I agree that Bitcoin is a poor currency compared to fiat currency, but conversely a dollar is a very poor store of wealth while Bitcoin is looking like it may be a good store of wealth. The confusion comes when you (not you specifically) don’t recognize that you can assess the utility and value of these “things” across various traits. Gold is a decent store of wealth, but a very bad currency. Stocks are great at producing and storing value and are highly liquid but awful currencies.

I’m not a Bitcoin advocate. I’m a neutral investor. You are correct in my view that if Bitcoin collapses it may become worthless forever. We have examples of this happening with fiat currency as well, though, so it’s not a unique trait of Bitcoin.

Diversification and asset accumulation are what I focus on. Bitcoin could turn out to be totally worthless. So could Amazon stock. So could GBP.

I agree with most of what you said, except that Bitcoin looks like a good store of wealth. It has a very short track record, and has shown huge volatility. How does that indicate a good store of wealth?

Well I would just mention it looks like it to me but that’s an opinion, not a fact. I don’t think it’s dissimilar to any other financial advice though. Like some people think Amazon stock is a good investment. I personally don’t. That’s all :)

> I'd doubt BTC will go to zero

I think there's some serious liquidity issues coming up ahead. You need a buyer at the other end to sell, and I think there's an unknown point where there are effectively no buyers.

Right now there are still plenty of crypto-bugs out there that will provide some liquidity because they think things will eventually turn around, but even these people only have so much cash. There's a moment where all of these unsophisticated investors (people that bought crypto based on the ads you're describing) will panic and want to cash out (or need to for personal financial reasons).

We may already be seeing the crypto equivalent of a bank run.

So much of crypto's "value" is based on the assumption of the future success. A big enough of a collapse in the belief in this future and it will be "trading" back at the levels when BTC was just a hobby project for techies (because that's what it will become again).

The problem is, when does bitcoin actually crash? I agree it is a scam and should crash in a sane rational world. But I’ve heard these exact arguments like 5 years ago. It’s the scam that just keeps going!

Eventually it has to end, right? What is the thing that makes it end? Or will it just fizzle out with no real implosion? Maybe after 10 years to most people it would be just a distant memory?

> What is the thing that makes it end?

This is much easier to answer, at least in general, than many of the other "bubble" questions out there.

The growth simply requires a larger and larger pool of new investors. It first started with tech enthusiasts who were really interested in the principles of cryptocurrency and people who also knew how they worked. The was a time when everyone in crypto had read the original Bitcoin whitepaper.

Then it spreads to less savvy technical investors, people working at tech companies but not really able to understand it. This was the first bubble a few years back. The crypto boom could have ended here, relatively harmlessly.

But then a ton of money started flowing into the market and into individuals pockets as well. Suddenly the pool of potential "investors" opened up and crypto also appeared to be much more liquid than before with the rapid rise of crypto exchanges. This is when you start seeing TV ads for crypto and hear of people on reddit, with no technical knowledge or skills, pouring all their surplus income into crypto.

It ends when there aren't enough new "investors" to keep the illusion up, and it crashes as people start to need to liquidate that investment. During the artificial pandemic boom there was money flowing everywhere, people could throw tons of money into crypto and still eat and pay their mortgage. Very soon people are going to need to get that money out, or desperately want to, and then liquidity will be a problem because there aren't any people left to feed into the scheme.

The faster the price drops coupled with people needing that money, the more likely a panic is to happen which will cause a sudden crash.

I’ve heard this exact argument 5 or 10 years ago. Yet here we are.

Like I said, I totally think cryptocoins are all scams. I’m just amazed that the bottom hasn’t fallen out yet.

> I’ve heard this exact argument 5 or 10 years ago. Yet here we are.

We've had an unprecedented boom period and non-stop money flooding the market for the last 5-10 years so there's no way possible the argument could have come to it's logical fulfillment in that period of time.

As long as money is flowing insanely anything is possible, there is no reality. Look at how many startups there are with non-sensical products, insane hiring practices and out of control leadership. When the money just pours in the top of the funnel all kinds of wacky stuff happens.

We're starting to reality come back, and I think it may bite us this time.

You said it for years… but for years there hasn’t been a trigger.

There’s a trigger now.

The FED keeps raising rates. There’s a looming recession (or perceived to be. Same thing.). Markets, incl crypto are dropping hard. Several crypto projects are suspending withdrawals, locking peoples money away. “Stable” coins are getting dépêgged, which is destabilizing DeFi.

We’re starting to see dominos start to fall. Your broken clock may finally be right.

> The problem is, when does bitcoin actually crash?

It's impossible to predict.

> What is the thing that makes it end?

Regulation, sentiment, Tether falling apart, a serious recession... Anything, and nothing could be the last straw.

Precisely speaking, it'll end when people, on the net, will stop see buying it as a way to make money. When that will happen is anyone's guess.

Bitcoin crashes right after Tether does (which I expect to happen this year at 80% likelihood).

I was bored and had $100 lying around when BTC was at ~$39k so I dropped it in the machine and have watched the investment go all the way up to $150... Checking my investment today, it's around $50...

It's not that bad for risking tiny amounts of money if you're into losing cash.

If you're into losing vast amounts of money, I highly recommend dumping your life savings into BTC.

So many large companies have their hands in creating the BTC/Crypto cookie jar that it's guaranteed to fail, it's promoted in every setting because it is their drinking money generator. The factor (they didn't account for) that added a ton of volatility was that independent (whale) investors like Elon would jump in and screw up the entire works with tweets and strategic buying and dumps... Meanwhile, it's all the small people who saw the commercials and though it was legit that totally got hosed.

It's literally the rich and corporations robbing the poor, and on top of that in one of the most dire economic points in time ever... It's the pits of humanity I tell you.

Bitcoins reason d'etre is to permit an exchange of value without involving the banks/classic financial infrastructure. It could go down to fractions of a penny and still be able to do that.

I use it as an alternative store of value. That has gone badly for me in the past month. But its supply economics make me still want it.

No, because energy is not free.

Energy expended to mine BTC in the past is a sunk cost and so is irrelevant to the discussion. In the future, if the price of energy required to mine a BTC is below the value of the BTC there will be an incentive to mine BTC. There is no equivalent incentive in the opposite direction. You can convert energy to BTC, you can't convert BTC to energy.

What happens if the value collapses bellow the point where it's profitable to mine it then? Wouldn't this only reinforce the collapse as miners flee the system? Then once it goes below a threshold where it would be trivial to attack it and take it over it's a free for all for the remaining market value and that would be the coup de grace...

Real question, has anyone actually developed an attack that could be executed? I know “what it would look like” is easy to explain, but is there any implementation?

I’m not sure we’re super susceptible to an attack. Assuming you could spot an attack on the network post-hoc (anyone can read the blockchain), if an attack occurred it would destroy the value of bitcoin. This would probably destroy the value of the attackers coins and the attackers mining rigs… which seems like a net loss.

If no one mines, the difficulty decreases to where you can mine on a laptop again. People will do it then, like they did at the start. A 51% attack is designed to be less profitable than just mining it. But maybe some gov does it to try to shut it down, well then, the chain gets forked and we go on with our lives. That's the point of everyone having their own node.

So what? The value of making a transaction just needs to be high enough.

even if there is an energy cost, for some markets (illegal substances/darknet), it's "cheaper" to pay that energy cost than the cost of laundering fiat money.

Indeed, providing something money-like without central authority (thus circumventing regulation, so far) is the only innovation of BTC.

I mean, that's neither true nor what I said but good attempt.

> Crypto needed a tangible market/reason d'etre to be valuable.

The reason, as we have been reminded so many times, is that it's an inflation-resistant store of value.

Pay no attention to BTC tanking right after actual inflation started.

It's weird how, as an inflation-resistant store of value, it only seems to work when we have asset-inflation, but stops working when we have main-street-grocery-prices-inflation.

Perhaps it's some web 3.0 financial wizardry that I'm just not smart enough to understand, but it seems to me that the only reason it was going up in price was because printed money (USD or USDT) was chasing yield.

no, it's to buy drugs on the internet.

Both are very important functions for a currency or store of value.

As long as people want to buy illegal things online, I don't think bitcoin will go to zero. That has, and always will be, it's only rational use case.

Please please please don't use Bitcoin for crime. The tx logs are public so you're much more likely to get caught. Use Monero, or if you're cashing out a defi hack or scam or whatever then use Tornado Cash. Hope this helps.

Wow. I just learned that all the toyally legit things I've done with Bitcoin are all illegal.

You can use a helicopter to commute to work. It's just not a very rational thing for most people to do.

Your response has nothing to do with what I've responded to in the parent comment.

By rational, I mean the only time it is better than other methods. Buying legal things with bitcoin is slower, more expensive, dramatically more environmentally harmful, and dangerous to the consumer (no regulation). Truly no upside in real life applications unless you're trying to do illegal things.

You must be living in a perfect society with zero government/political corruption.

Good for you.

What “totally legit” things have you been doing with crypto? Curious to know more.

Donations? Purchasing stuff?

(And before you ask, NO, there were no other possible ways for me to do those donations to people in war or purchase those stuff where crypto and PayPal were the only way to pay and PayPal is blocked in my corrupted country)

So... you're saying that what you did is a crime in your country?

No, nothing I did was crime. If you reached that conclusion you need to re-read the entire thread.

Probably a sovereign citizen type who thinks that the existence of government is a crime to humanity. Gotta have some windmills to tilt at.

Existence of government? No. Corrupted government? Yes.

> The only difference between crypto and e-betting is that everyone got to be a winner on the crypto markets for a while.

Is also description of a bubble or a pyramid.

> Crypto needed a tangible market/reason d'etre to be valuable.

I have recently paid $40 for a $240 SWIFT transaction that I made on behalf of my father, as his bank (with most Russian banks) have been cut of from the world's financial system. Crypto is fulfilling a real need felt by many people all around the globe; it's just most of those people don't live in first world nations.

tbh, that example kind of underlines the lack of linkage between crypto assets' market value and real world use cases. A significant number of hitherto law-abiding, middle class and computer literate Russians who suddenly wanted to take all their money out of Russia and/or realised they needed a different way to continue to paying for services as their banks were hit with unexpected sanctions is pretty much the ideal real world use case for BTC.

But BTC actually fell in value sharply this year instead (and the spike in ruble/BTC trades was surprisingly small and short lived), because Bitcoin's peak valuation was more or less entirely unlinked to its theoretically increased usefulness for possessors of rubles.

I'd be careful about admitting to evading financial sanctions in public, myself.

What makes you think their father is a sanctioned person? It's not very likely, given the number of sanctioned persons vs. the number of Russians.

What is your nation? How the law is enforced varies greatly from country to country so it depends a lot.

>most Russian banks have been cut of from the world's financial system. Crypto is fulfilling a real need felt by many

skirting sanctions for unprovoked war targeting civilian population, got it

I think most people would prefer for the sanctions on Russia to be more rigorously enforced

I would prefer if Europe actually put in place oil/gas embargo and stop giving Putin's regime billions of dollars to wage war instead of blocking the people who have spent years protesting and are now trying to flee the totalitarian regime, but here we are.

That's a decent use case for real stablecoins, not for something that can go up and down 20% within a few hours

The systems that execute the code for and track the values of stablecoins are themselves networks that only work because of consensus systems designed around a cryptocurrency incentive. So if you want to be able to send some large amount of USDC you need some small amount of ETH or MATIC or AVAX or whatever to pay for the usage of the shared ledger, and that's where these cryptocurrencies then get their underlying value.

Why would one expect Bitcoin which is more-or-less trying to disrupt the world order to be stable at this point in its evolution? Maybe in 20 years it'll be stable, but now? Sort of like saying that there was political instability in US following the revolutionary or civil wars and that therefore the US would never be a country that could be depended upon for international trade.

Even those users still need price stability in order for your use case to work. And fiat on/off-ramps (as which Binance functioned for many).

> I have recently paid $40 for a $240 SWIFT transaction

That is way more than it should be, but could easily be solved with traditional methods (banks & fintech) with some competition and sensible regulation (like SEPA transfers in Europe being basically free).

I recently had to pay nearly 100$ for accidentally data roaming a few MB abroad, but the conclusion is not that the internet and 5G is fundamentally flawed and need to be replaced by web3.

> Crypto is fulfilling a real need felt by many people all around the globe

Yes, the need to circumvent regulations regarding money transfers.

So, what you're saying is that sanctions are in place and you're unhappy about them ? sounds exactly like what sanctions are for, and all crypto is good for is evading sanctions that a massive part of the world has agreed in.

What makes you think everyone has agreed to them?

You have elected a representative who agreed to them. Your personal opinion doesn't matter on the subject.

Many sanctions harm completely innocent people.

I think that there are missiles on the other side that are hurting people in more physical, fatal ways.

Of course. But fighting against the war shouldn't involve creating more harm.

That's a noble, yet completely impossible sentiment.

That is the point yes. We have collectively decided that assassinating heads of state was pretty bad, and moved on to applying sanctions, so that if they hit hard enough back, said innocent people do need to get rid of the leader or the system that got them in such a situation.

That's presuming that Russian people don't support they goverment, which is far from proved afaik.

It was the same thing for football (or soccer, as you call it in the US) over here in Europe, at some time late last year I started to notice that a lot of European clubs were advertising for this crypto thing, much of it related to Binance. It so happens that most of the tokens “released” by those clubs (yes, they also did that) are 90% or more bellow their peak value, there were a few threads about it on /r/soccer recently.

Crypto is having it's DOT COM moment right now. A lot of companies with not much value crashed and never recovered. After the dot.com bust, the internet didn't go away, it only grew and grew. And, I don't have to tell you what happened to amazon, if you had invested during the dot.com bust.

I predict Matt Damon's career will suffer greatly in the next couple years. Being the face of that crypto.com ad that played 5(?) times during the super bowl and regularly thereafter in prime time slots. I think many Baby Boomers invested last winter based on these ads and will forever associate Matt Damon with a scam that cost them dearly.

Bitcoin Core (and most of the rest) have been digital ponzi scheme since around 2017 when Blockstream and other corporate interests successfully temporarily hijacked control of the "BTC" GitHub repo and inject the malicious code know as RBF.

This attack effectivly killed the number one and tititular usecase of Bitcoin, Peer-to-Peer Digital Cash.

99% of the industry is a fraud propt up by Blockstream's parent company Bitfinx and Tether. Only a few actual real projects (out of thousands of frauds) remain, namly XMR, BCH and maybe a few others. If you are "investing" in any other cryptocurrency or NTF you are participating in a convoluted ponzi scheme.