Is Bitcoin the Next Big Thing?

[ian]

Buying and selling Cryptocurrency is like the Cyber Wild West, I wouldn't trust any of the exchanges and only put money in to cloud mining that I'm willing to lose. After a month or so learning as much as possible, I've only now moved my coins to local storage; every day there is another hack, or a complete server melt down, or an exchange taking ages to process transfers because fees are increasing and speeds too. I feel for those going into this with little knowledge, chasing media headlines, because most will get burnt, more so from these unregulated exchanges and companies disappearing, rather than a sudden 'bust' situation of BTC. Be careful out there.

 

[Edwin]

Isn't mining more expensive than using money to buy Bitcoin for everyone except the miner who happens to crack the latest block of the blockchain (sorry if my terminology's a bit shaky)? If you're a small-time miner, isn't it like buying a lottery ticket? You might happen to be the one who discovers the block, but somebody with a thousand times the resources is a thousand times more likely to do so.

 

[Edwin]

It's so odd looking at something as volatile as Bitcoin. It's down $1,000 since I started my little stream of posts about an hour and a half ago. Bitcoin investors must ride roller coasters for relaxation!

 

[websaway]

I ask myself a serious question. Why would anyone pay 10 times the average annual wage of a skilled craftsworker for a tulip bulb. I can't get my head around that.

 

[websaway]

This is the kind of situation in which Bitcoin starts getting really scary...
https://www.coindesk.com/futures-industry-association-blasts-new-bitcoin-derivatives/

Basically, regulation hasn't caught up yet, so if there's a global Bitcoin crash all sorts of people will be left holding the can who realistically shouldn't. There could be untold repercussions (probably like the global financial crisis of 2008) while some of the entities that should be punished won't be because of the magic "too big to fail" mantra.

I read that at the moment with only 200 billion invested it would not have any impact on world economics. Of course their are not thousands putting millions in but millions putting only small amounts in. I suspect it's simply the multitudes of accessible people that have driven it. Can you imagine trying to sell the concept to people in the 90's without social media, it would collapse in a short time without new money.

 

[Edwin]

I read that at the moment with only 200 billion invested it would not have any impact on world economics. Of course their are not thousands putting millions in but millions putting only small amounts in. I suspect it's simply the multitudes of accessible people that have driven it. Can you imagine trying to sell the concept to people in the 90's without social media, it would collapse in a short time without new money.

It’s not the small players who will cause the biggest damage, but the institutional gamblers (sorry, “investors”). This is sobering reading...
https://seekingalpha.com/article/24...big-banks-quadrillion-dollar-financial-casino

Now imagine them betting on something fundamentally volatile as Bitcoin! With your money and mine and everyone else’s...

 

[websaway]

It’s not the small players who will cause the biggest damage, but the institutional gamblers (sorry, “investors”). This is sobering reading...
https://seekingalpha.com/article/24...big-banks-quadrillion-dollar-financial-casino

Now imagine them betting on something fundamentally volatile as Bitcoin! With your money and mine and everyone else’s...

Derivatives as I understand it was the bundling of dodgy loans . I'm not an expert and it's a while ago, I don't think this is any where near the capitalisation of that crash although I know what you are driving at. What is exceptional about bitcoin and why people are not being scared away is that there is unlimited amounts of global gamblers, sorry investors, who actually think the massive movement in price is a positive thing in making money. I think what we have to agree on is that if it was not genius and so complicated that even those that pretend to understand it delude themselves, it could not possibly have worked. My hats off to the inventors and more so for the one's who got in early.

 

[Edwin]

Derivatives as I understand it was the bundling of dodgy loans . I'm not an expert and it's a while ago, I don't think this is any where near the capitalisation of that crash although I know what you are driving at.

Not now, no. But the new derivatives are coming in a week or so that will allow for exactly the kind of institutionalised gambling that created such a mess last time around. Different product, same potential for mess. Except this time it's worse, because the regulators are nowhere close to being ready to deal with something that fluctuates crazily on "Bitcoin time".
https://www.coindesk.com/cme-begin-trading-bitcoin-futures-december-18/

 

[dee]

I think there's still huge upside to go. I'm just waiting for a big retracement to get in, although won't be putting much in. Its here to stay i reckon. People use it every day in Asia apparently.

It will pop at some point though when blockchain matures into whatever it will become

 

[Edwin]

I was reading a prediction earlier that Bitcoin could go to $1,000,000 by 2020.
https://www.cnbc.com/2017/11/29/james-altucher-predicts-bitcoin-will-reach-1-million-by-2020.html

Apart from the sheer hubristic absurdity of the prediction, it also (by implication) means that 15% of the world's total wealth would have to be accumulated in Bitcoin at that point.

It doesn't take 10 seconds of casual pondering to realise just how daft that sounds!

 

[davedevelopment]

Isn't mining more expensive than using money to buy Bitcoin for everyone except the miner who happens to crack the latest block of the blockchain (sorry if my terminology's a bit shaky)? If you're a small-time miner, isn't it like buying a lottery ticket? You might happen to be the one who discovers the block, but somebody with a thousand times the resources is a thousand times more likely to do so.

When I was mining, you could join a pool, so everyone in the pool got a proportional share of the reward.

 

[Edwin]

When I was mining, you could join a pool, so everyone in the pool got a proportional share of the reward.

Thanks. So there's gambling of a sort involved, but less, because if you're in a massive pool you're almost bound to solve lots of blocks (as a pool, I mean, not individually)?

 

[ian]

Thanks. So there's gambling of a sort involved, but less, because if you're in a massive pool you're almost bound to solve lots of blocks (as a pool, I mean, not individually)?

Individual miners tend to join pools to split earnings, so it is possible to still do ok from it, though with the way BTC is going, investing directly into crypto likely yields much better results; however, some like having both, investment and regular sources of income.

 

[jbworldwide]

There are so many interesting psychological factors in play that is driving the price up, similar to when a sexy company launches a share offering. The only problem is that you cannot really analyse the behaviours until after an 'event'. Everyone is expecting a price drop and I think it will not take long for people to begin exiting the market to convert into real cash which will likely cause a crash. As seen in share offerings it is normally the retail investors that boost the price and then also lose the money. This has all the hallmarks of a bubble.

Interestingly, the fact that it is a limited resource and the fact no more bitcoin can be issued past 21million (if this is true) introduces an interesting dynamic around supply and demand. It also suggests that other accepted coins such as Litecoin will likely go the same way as people chase the dream. The gamble now is in those where the next big money can be acquired.

 

[davedevelopment]

Thanks. So there's gambling of a sort involved, but less, because if you're in a massive pool you're almost bound to solve lots of blocks (as a pool, I mean, not individually)?

That's right yes, less risk for less reward. For the pool to be successful with the current difficulty, it needs to grow large and the software service to remain stable at that scale, which costs a fair bit, so there are fees for using the pool.

 

[ian]

There are so many interesting psychological factors in play that is driving the price up, similar to when a sexy company launches a share offering. The only problem is that you cannot really analyse the behaviours until after an 'event'. Everyone is expecting a price drop and I think it will not take long for people to begin exiting the market to convert into real cash which will likely cause a crash. As seen in share offerings it is normally the retail investors that boost the price and then also lose the money. This has all the hallmarks of a bubble.

Interestingly, the fact that it is a limited resource and the fact no more bitcoin can be issued past 21million (if this is true) introduces an interesting dynamic around supply and demand. It also suggests that other accepted coins such as Litecoin will likely go the same way as people chase the dream. The gamble now is in those where the next big money can be acquired.

I'm fairly well invested now, but do get the feeling crypto as a whole is one big ponzi scheme of the modern day. Yes there are huge merits to what is being achieved, and blockchain, tangle, whatever, is the future of communication, not just in terms of payments, but data, email and even Internet browsing. However, I do feel that profit needs to be taken at intervals, and the last left holding the ball will get seriously burnt...kind of reminds me of the LLLL.com's and a certain country pumping them!

 

[ausername]

And elections / referendums (eliminate voter fraud, and need for manual counting).

 

[ausername]

A 70% weekly increase in insane, great news for bagholders (good chance to convert a bit into cash), but I think its suicidal for the people who jumped in at $16k / $17k, especially if they went in with all their cash reserves and will be panicking and selling again at $11k.

Genuinely happy for the winners, but we always hear more about those who win and little about those who lose - and there will be plenty of those, too many inexperienced investors who act on short term emotions.

That said, I may invest a little after the next correction.... when it goes back down to $9k or $10k which I'm sure it will, and then I'll wait for the next wave of mania to make myself a few quid.

I'll only be in for a couple of grand though, not enough to have to tell my wife

Feels very much like the LLLL.com craziness that we saw a couple of years ago, fueled by the Chinese middle class.... quite a few people got stuck with loads of those when that died out, same will happen with Bitcoin. And that's the risk element isn't it, never know whether you are buying at the top or the new bottom.

 

[mat]

but I think its suicidal for the people who jumped in at $16k / $17k, especially if they went in with all their cash reserves and will be panicking and selling again at $11k.

Genuinely happy for the winners, but we always hear more about those who win and little about those who lose - and there will be plenty of those, too many inexperienced investors who act on short term emotions.

So true, I learnt so much when gold start rapidly rising, media and forums started going mad and unfortunately there were young people at the time literally putting $10-20k of it on credit cards and loans etc, as at the time it seemed a 100% cert that it would keep on rising. If they were buying what they could afford as a long term investment and for the right reasons, they would probably be fine weathering the ups and downs over the years, but for them it was a short term get rich quick scheme.

Bitcoin is taking this to a whole new level though and although I can't predict the future, I really think there will be some kind of pretty big pull back at some point, which may then keep a steady lower price from then on in for years and years. Imagine if the price rapidly drops back to say $3k and then increases at a rate of $200 a year from then. Many people will be stuck.

 

[mat]

Imagine buying 500 @ $2 each in December 2011 and then selling them for $25 each in February 2013 and you made $11,500 profit - at the time you would be elated and think you done very well. Today those same Bitcoins would be worth over 600x more and $8,000,000 and I imagine you would be feeling you sold at the wrong time and beat yourself up for the rest of your life for it.

I fully agree with this mate.

Even most people buying at around $250 would probably cash out at $500 thinking they have doubled their money in such a short space of time. I think the only people who would go from rock bottom and still be holding it now, are either people who are far to rich anyway and fancy the gamble, or those that have really really believed from the start that the price could be this high and strictly planned that they will only sell for this kind of price.

What about the people selling now and glad that they lasted so long, it could then be $100k in 6 months.