Maybe everything is in an economic bubble right now.
If you work in a big city and look around; there are tall office buildings everywhere; packed with millions of people. But what do these people actually do? Is that an efficient use of their time in terms of creating value for each other?
Maybe cryptocurrency is a bubble, but maybe also everything else is a bubble. Companies like Snapchat are worth billions of dollars, but they lose billions of dollars each year. At least most cryptocurrencies don't lose money (except some of them due to electricity costs).
Even companies like Facebook which are themselves profitable are deriving most of their profits by providing services to companies that are unprofitable.
Maybe the total value of all cryptocurrencies isn't actually going up, maybe it's the value of everything else around it that's hyperinflating. Maybe the current system is just begging to be dismantled.
While the mainstream argues about whether bitcoin is or isn't this or that, while bitcoin attracts all the attention because of its spectacularly high price, people are working on blockchain things all over the place, relatively quietly in the background.
Whether or not bitcoin does this or that is immaterial to growth of non-currency blockchain applications.
This article is probably true but this is just typical clickbait from CNBC.
The author begins by saying
> Admittedly I'm green with envy for failing to foresee the explosive rally in the price of bitcoin when it was first brought to my attention several years ago.
That should be enough to stop reading right there.
I don’t know how articles like this make it to the top of hacker news.
Just because Warren Buffet doesn’t think crypto currencies don’t have a future doesn’t mean they don’t. He also still uses a flip phone, and didn’t invest in tech stocks at all until recently. He admitted to not understanding crypto currencies at all.
Also the dollar as reserve currency is the weakest argument I can think of as to why Bitcoin can’t be a global currency. I personally trade crypto from time to time, and I care much much more about the Bitcoin (satoshi) value of my portfolio than the dollar value. In the crypto world, Bitcoin IS the reserve currency. Most other tokens trade vs. it. It’s not that insane to imagine a world where people’s net worth are expressed as a number of Bitcoin. Do I think that is likely? No, but it is certainly a possibility.
Just because CNBC and other mainstream media outlets use dollars to explain net worth “Winklevoss twins are first Bitcoin billionaires” that has less to do with Bitcoin as a currency and much more to do with explaining things in a way that is easy for regular people to understand.
I love this article. It just shows how mainstream is still clueless about Bitcoin.
Dolar denominated trades? (All but the largest are denominated in BTC or ETH on any serious exchange)
So small its insignificant? (Yeah, exactly like when it was 10M marketcap beginning 2017)
This is the best indicator tgat the bubble is nowhere near its bursting point.
Worry the day when CNBC starts talking about paradigm shift.
Its the first way to have a trustless, digital cash system as opposed to a digital payment system. In a payment system, people essentially exchange IOU's. Like writing a "good for $x note" or cheque. Payments always incur counter party risk, and thus can only happen among users who trust each other - or they must rely on a trusted third party (bank, paypal, credit card company etc).
Bitcoin allows peer 2 peer cash settlements, where users do not need to trust each other, because there is no counter party risk since they exchange something of value. Think gold, or although that is somewhat confusing, paying with bank notes (bank notes really are IOUs, but issued by a bank or central bank, so when we use them, we consider them valuable because we trust the bank, not the person paying with them). With cash payments, you dont rely on a third party, you dont take on counter party risk, you exchange things that actually have value, that you have to be sure can not be forged. Sounds trivial, but its a really difficult thing to pull off. Even in the real world, its not easy, bank notes can be counterfeit, gold may be fake, etc. In the digital world, its even harder because you also have to make sure each coin can only be spent once (its trivial to copy data). Bitcoin was the first solution to this problem. source: https://np.reddit.com/r/CryptoCurrency/comments/6ufksx/am_i_...
CNBC demonstrated "how easy it is" to buy Ripple via Poloniex exchange on television. They also often have a "Ripple watch" counter on the screen displaying current worth in dollars.
Also an article: https://www.cnbc.com/2018/01/02/how-to-buy-ripple.html
He's completely wrong. In his experience people talk about their value not in bitcoins but in dollars, that's because he's talking with speculators who are not interested in what decentralised and distributed ledgers mean. People who think that we're in a revolution of not just currency but also government talk about the value of their crypto in terms of bitcoins and not dollars.
Bitcoin is still young and the technology is immature. What we see today is not what we're going to end up with. But, at one point the idea of separating church and state would have seemed insane, now in a big chunk of the world having any religion associated with government would be unthinkable. Likewise in the future we could look back at the dark ages where centralised authorities managed currency and manipulated it for the benefit of the few.
The thing about revolutions is that people often don't see them coming.
Bitcoin will never be a currency in the traditional sense, as it fails the stable store of value test, which then impairs it's ability to serve the other functions money (unit of account, medium of exchange). However, Bitcoin and other cryptos are more like investments that also happen to be massively efficient global wealth transfer systems (relative to existing methods). CNBC's crypto coverage continues to be shallow, click-baity, disappointing garbage.
Since 2008, I personally know much more millionaires from the cryptoeconomy than from startups. Which makes me reorder the average guy lucky taxonomy from the luckiest "gambling" in descending order:
2/ Founding startups
3/ Working in startups (this item is from YC Startup School 2017 Episode 1)
5/ Just working in the IT field in a place with high salaries, and saving/investing the money.
In some ways it's already a significant currency. Just yesterday I changed euros to btc to buy some shares in Kucoin and used btc very much like I'd use US dollars to say buy shares in eTrade. Fair enough it's rubbish for buying a cup of coffee but btc and etherium are the standard currencies for crypto trading.
And that's not a small market - $50bn was traded in the last 24hrs according to coinmarketcap.
Why do people keep thinking about bitcoin as a currency? It was its original intent but these days it's more seen as gold.
The value of the bitcoin is the money invested in it that alone can be used for something where the need for transactions aren't high, as an example for large international contracts.
I don't know anyone with just the slightest understanding of bitcoin who believe it's a currency anymore.
Bitcoin is currently not what Bitcoin was when it was created. Slow peer-to-peer transactions and high processing fees. Average fees are hovering around 60 dollars. That's an average. Unconfirmed transactions has been at over 100k for months. The mempool is also hovering around an ATH. The Bitcoin is crippled. Sentences like "store of value" are now the term used to describe Bitcoin. Very far from what the Bitcoin used to be.
I think there is a real possibility of a "death spiral of the blockchain". Fees will increase and it will become impossible to move coins on the blockchain besides the upper 10% of bitcoin holders. For traders on exchanges bitcoin seems fast; because no transactions are taking place. When you actually decide to move your bitcoins to a wallet you own you'll pay high fees... if not your transaction could take months to clear or never actually clear.
The fork that occurred on 1st August created Bitcoin Cash. This fork is much closer to what the Bitcoin was. Bitcoin Cash is this today. Removal of the segwit code (which hasn't solved anything), disabling of RBF (replace-by-fee) enabling 0-confirmation transactions again. A new DAA (difficulty adjustment algorithm). Finally increase the block size to 8MiB.
The Bitcoin has been crippled on purpose by Blockstream deep in the pockets of bankers and insurance companies. Blockstream is the main contributor to the Bitcoin development. Look at the sponsors; https://www.blockstream.com/about/#investors
Before the bankers, and their followers, got indirectly involved in Bitcoin development there never was any discussion about limiting the block size to 1MiB; in fact the opposite was discussed. See; https://twitter.com/adam3us/status/636410827969421312?lang=e.... https://bitcointalk.org/index.php?topic=1314.msg15143#msg151.... https://np.reddit.com/r/btc/comments/71h884/pieter_wuille_im....
Now all of this has led to a complete divide and clusterfuck of the community. It is an very ugly and toxic environment and is sad to look at. On top of that we now have thousands of alternative coins and blockchains.
The current version of bitcoin is crippled and completely unusable as a currency as is.
With all due respect to Warren Buffett, I wouldn't listen to his opinion on Bitcoin. He doesn't even pretend to understand it. Who cares if Bitcoin does or doesn't have a shot at becoming a major global currency. There is a virtually infinite variety of valuable assets of which currency is just one kind. Bitcoin is an asset, and has value. Same for many other cryptocurrencies. As long as there's a use case for cryptos (currency or something else) they will have some value. End of story.
I'm not an economist, but the argument in the article seems a little constructed. There are plenty of places where cryptocurrencies can be exchanged against cash. On the other side, when did the author last try to buy a pizza with actual gold?
"Cryptocurrency wealth is valued in dollars, isn't that ironic?"
No, it's not. I don't get his point about this.
I don't know, right now it's easier for me to purchase BTC than for me to purchase ¥ or € online. If treated as a foreign currency and not a future, I think it has promise.
Most of the value of the US Dollar comes from international treaties that require barrels of oil to be sold in dollars. This gives the dollar an intrinsic, positive energy value, backed by the military. Contrast that with Bitcoin which has a negative energy value. There are no treaties requiring oil to be sold in Bitcoin.
Energy is what is scarce, has real value, and what drives the economy. At some point in the future, after the hype has died, it won't be worth the energy to mine bitcoin.
3 Crypto Problems:
#1 - Bitcoin. And Bitcoin's #1 problem is the 1MB limit. I expect none of the bitcoin developers (except Satoshi of course) anticipated that people would actually try to use it already (https://en.wikipedia.org/wiki/Tongue-in-cheek). The Noobs have been unceremoniously walked into that "slow and expensive" wall this winter and they are bitter.
#2 - The general immaturity of the "leadership":
#3 - China
But ripple (xrp) does. It may only be a slim chance, but it is real. It could be the first currency (like the euro, yen, swiss franc, etc.) backed by a private company. But unlike the sovereign currencies, xrp is totally transparent. No cooking the books like the banks have been caught doing with the LIBOR rates.
CNBC has little shot at ever being a trustworthy news source.
I think that cryptocurrency will take over eventually. There might be big booms and busts in the meantime but it will take over. For many people, cryptocurrency has become an ideology so they will keep buying back every time it drops.
I love how it states in the list:
"Anytime bitcoin is mentioned, it is expressed in U.S. dollar terms."
So ignorant. Do they even read articles in other languages (ex. Chinese), or just assume that universe orbits around US?
Most of the stuff I read about Bitcoin seems to be articles trying to make something positive or negative happen to it, rather than accurately describing what's happening with Bitcoin.
Being a major global currency is never the goal. Even if it's something people want to achieve, there are still many factors, how loose the central banks control fiat money flow is one of them.
You could agree with this title and still want to buy bitcoin, because even if it were true that bitcoin has little shot at ever being a major global currency, the expected value of owning it could still be higher than the current price. If bitcoin became a major global currency its value could easily be 100x what it is now, which means there only has to be a 1% chance of that happening for it to be worth buying.
I see a lot of value in Bitcoin, but strangely enough, I can see that value without looking at Bitcoin at all. Confused? Let me explain the non-obvious reasons why I think Bitcoin has a fair chance.
(I've been following Bitcoin since it was at $1, so I had a lot of time to think about it ;)).
1. I don't expect my kids to ever carry around wallets or keys when they are older. Everything will be in their smartphone. Passport, pictures, credit cards, VISA card, car key, key of house, etc. There is nothing there that couldn't (technically) already be in your smartphone.
When doing payments, I expect them to just physically hold their phone close to some shops terminal, or when doing personal payments, send it over chat.
2. What is the value of Dollar or Euro's nowadays? (I thought a lot about this, but think to have a proper answer). The value is in the network, just the same as with Facebook. In US, every shop supports Dollars, so it has value there. In Europe, Euro's, so that has value. Same with Bitcoin, the new technology might instigated it, but in the end, it's the network of people using and supporting it that give it value.
3. The world is bigger than the industrialized countries alone. Dollar and Euro might be considered more stable than Bitcoin, but not all currencies are like that. For a recent example look at Zimbabwe.
4. (A) A bubble occurs when people think something has more value than it actually has. (B) People think the numbers on their bank account is the money they instantly have available. (C) Fraction reserve banking multiplies money so that the number on your bank are not actually money that is available instantly.
5. Which do you trust more: (A) governments and banks or (B) math and algorithms?
6. A global currency would be very convenient for people who travel a lot.
Of course, there are still a lot of questions too.
1. How will government legislation treat cryptocurrencies in the future?
2. Will some cryptocurrency ever have a stable enough price (such as gold), so that goods can be expressed in it?
3. Will some app make it simple/easy/convenient enough and have a big enough network so all people can agree on starting to use it for making and receiving payments?
4. Will lightning network and/or sidechains be enough and a good solution for the limited payments per second?
Final conclusion: In the end, it will all come to which payment system will have the network. If people want to get payed in Dollars because everybody else works with Dollars, that will have the network. If people want to get payed in Bitcoin because everybody else works with Bitcoin, that will have the network. Is Dollar/Euros Facebook, or is it MySpace? Who can tell? I think nobody at this point. But it is fair to say that fiat money might be Goliath and crypto might be David. Only time will tell.
When I first saw bitcoin I loved the idea because for once we had a shot at a currency government couldn't print.
Bitcoin has shown us exactly why centralized monetary authorities are so important, and that alone was worth it. With a decentralized currency you end up with something that is neither stable nor easily liquid, because it’s not in the interest of those who hold the most to provide either.
It was an experiment worth playing out.
Money has/is currency when it is generally accepted. Bitcoin is unlikely to ever be generally accepted for various reasons. The transaction costs are too high, it's inconvenient for typical currency users, and you can't pay essential expenses such taxes in it.
It may never overtake USD, EUR, or other majors. But it doesn't have to, even just making it to the top 10 currencies would put it into the trillions. As more country's currencies fail or get reset, bitcoin becomes that much more trustworthy.
From the article:
> Anytime bitcoin is mentioned, it is expressed in U.S. dollar terms.
So this is a bad thing? If so, we should probably expect the demise of gold and oil barrels, and pretty much anything else in the world!
Two words 'derivatives trading'. There is no end of people willing to bet against each other.
Bitcoin has great use mostly beyond US borders.
"Bubble world", work grows to fill the population.
Why does Bitcoin need to become a major global currency? Even if were to attain a 0.01% global market share (very minor) that would still be a huge achievement.
It is not a currency today, just a source of endless speculation that is bound to end badly for many. Let's not forget that above all it's just a horribly inefficient way to trade value.
I suppose all the people who think Bitcoin is bs just wait and watch this ponzi scheme unfold while the others who have invested in it heavily defend each such article in the comments here.
Unless people solve the engineering problems underlying its inefficiencies there is absolutely zero chance it will become a currency, let alone a global one.
The author seems to go out of his way to demonstrate that he doesn't understand how cryptocurrencies work, and half the article is somewhere between factually incorrect and misleading. It's amusing that he felt the need to demonstrate that the dollar is the more established currency.
At the end he's pretty much correct though. Crypto has a long way to go before it's demonstrated to not just be a speculative bubble. I hope it gets there ... or at least I think I do.
It already is a global currency. It isn’t very useful but neither are bulk amounts of gold.
yeah, and Netscape isn't the dominant web browser, and I don't order pet food from pets.com, my grandma no longer uses AOL, and I don't listen to music with Napster anymore. What's the point?
My nephew works at [insert very large financial institution here]. He's been telling me for a long time that bitcoin is already dead. Financial institutions are already working on their own crypto-currency and, in two years, no one will hear of bitcoin again.
This is one of the most poorly written articles I've ever seen.
It doesn't matter if bitcoin becomes a global currency or not.
Napster never survived it was replaced with Limewire and then Bittorrent.
V1 of a technology as disruptive as this doesn't necessarily survive in the end. Version 2 or Version 3 is where it gets really interesting.
In the early days, detractors would said Bitcoin paper doesn't make sense. Then they admitted the paper makes sense, but said there is no value of the coins. Then they admitted the coins had value, but they said only criminals would use it. Then after many established legitimate businesses adopted it, then they said it is only usable by people with computer smarts but not for average folk. Then average folk started using it and they said it is not scalable. Then all these low transaction forks and innovations like the lightning network we're coming out, and then they say, "little shot at ever being a major global currency".
The bar has been constantly rasied, and the crypto currency community continues to pass it. The fact that this mainstream news article is making the high criticism that it won't be a global currency and not one of these earlier lower criticisms is evidence of success.
This is laughable. Bitcoin is already a major global currency. The sixth largest by circulation.
The whole point is not to be a major global fiat currency.
Opinions are irrelevant. People will store the value they generate by working in any medium that offers them the most security and long-term increase of value over time. If a cryptocurrency is more secure, convenient, and less deflationary than someone's local fiat counterpart, why would they not store most of their value in it? If we go through 20 years of seeing Bitcoin outperform the inflation of a dollar, no hijackings of the blockchain, no breaking of SHA or ECDSA, why would I not store a majority of my value in it?
People said the same thing about clay baubles with small markings impressed upon them!
The same Oracle of Omaha who said; "I was wrong on Google and 'too dumb' to appreciate Amazon"
Not exactly known for getting tech right (but right about nearly ever other industry)
I feel these are some articles written to get some traffic in which they are successful. Apart from that if anything i have learned by invsting in crypto is nobody is an expert, everything is an opinion.
As I see it, the major issue that Blockchain based technologies face is their scaling problem: they max out at about 2-7 transactions per second. Sure this can be increased by changing block size, but not that significantly.
Fred Ehrsam discusses this in his article (below).
Essentially, no matter how much we yell "We'll win!", cryptos won't be able to be adopted by the masses until this bottleneck has been alleviated - if that is even possible. That means that CNBC is correct, and this is simply a ridonkulous bubble. And trust me, I hate admitting that.
3 points. More nice bias.