Bitcoin’s Price Breaks All-Time High: Here’s Why It Happened

https://decrypt.co/49508/bitcoins-price-breaks-all-time-high-heres-why

by timcc50 • 6 years ago

37 54 6 years ago

decrypt.co

pretfood• 6 years ago

cos people have nothing else to spend their money on?

rillxx• 6 years ago

going up up up up

seibelj2• 6 years ago

Here is the easiest way I can explain it:

Bitcoin is a social phenomena - no government or company backs it. The only reason it has value is if people value it. Bitcoin promoters have convinced people it's a store of value, like gold except digital. As the Cult of Bitcoin spreads, it doesn't take that many new enthusiasts to push the price up, as unlike literally all other commodities on earth, the supply of bitcoin is truly constrained and there cannot be anymore made in response to demand above the normal rate of inflation.

This time, big money, institutions, and the very rich are coming in addition to the widespread purchase by retail. The price is going to rise a lot.

solotronics• 6 years ago

This is a really good interview by Michael Saylor who was an early investor in FANG companies on what his thinking was for investing his companies reserve cash of $400mil in Bitcoin https://youtu.be/Cg10yYZjK94

His conclusion is that Bitcoin is a disruptive currency. It is equivalent to how Facebook disrupted and captured social, Amazon disrupted retail, Google disrupted info. Bitcoin is disrupting centralized controlled currency. It is replacing central control with something democratized and decentralized.

Jasper_• 6 years ago

Then why hasn't it done any of those yet? Bitcoin came out in 2009, Facebook opened its doors to the public in 2006. One achieved world dominance, the other still can't get out of being darknet money.

mym19902• 6 years ago

The only reason anything has value is if people value it...value itself is a social phenomena, and this includes any type of monetary vehicle, whether a government backs it or not. And maybe I have been living in a fantasy world, but your comment about literally all other commodities on earth not being constrained is literally wrong. The study of economics and wealth is rooted in scarcity and the ability or inability to get more of something.

seibelj2• 6 years ago

I disagree on both points. The US government has deemed US dollars to be the only thing that can be used to pay taxes, so therefore it has some root value.

On commodities, if there is strong demand for gold, uranium, corn, etc. the market can respond and invest more capital into creating them. Bitcoin - not so. No matter how much more capital is invested in mining, the rate of inflation is fixed, and the pie is just split differently. But there cannot be an influx of new Bitcoin above what is specified in the protocol.

navaati• 6 years ago

The only reason anything has value is if people value it...value itself is a social phenomena

That's not totally true, certain things have a more fundamental value in that if you don't get them you die, such as food and shelter. If we were ethereal economic agents living on a free and infinite compute substrate you could say that, in the meantime the Maslow hierarchy makes certains things have intrasical value that other things don't have.

jiveturkey• 6 years ago

so wrong.

unlike literally all other commodities on earth, the supply of bitcoin is truly constrained

BTC is not a commodity, so there's no point comparing it to "other" commodities, of which in fact there are true constraints.

cannot be anymore made in response to demand above the normal rate of inflation.

above? BTC does not track "normal" rate of inflation.

the only reason BTC has value is because it can be swapped for fiat currency. it will never be its own "thing".

Bitcoin is a social phenomena - no government or company backs it.

This is almost correct. China controls >50% of mining resources, much more in fact. 65%. If and when it suits them, they can ruin it.

alwillis15• 6 years ago

There have been major investments to bring bitcoin mining back to the US, including partnerships to use natural gas and oil to power such mining: https://www.coindesk.com/us-becoming-bitcoin-mining-power-ag...

the only reason BTC has value is because it can be swapped for fiat currency. it will never be its own "thing".

Bitcoin is a non-sovereign, hard-capped supply, global, immutable, decentralized digital store of value. It’s an insurance policy against monetary and fiscal policy irresponsibility from central banks and governments globally.

This makes bitcoin it's own thing. It's early days, but satoshi's (1/100,000,000 of a bitcoin) are already the standard for a variety of transactions.

Bitcoin is already a store of value and we can transact in it; it's just a matter of time before it becomes a unit of account.

pmiller24• 6 years ago

This is my view exactly. I've been telling people I know who are trying to ride the crypto train that BTC has no fundamentals, by which I mean exactly that "the only reason it has value is if people value it."

Think about it: the way BTC is created is basically by expending energy to solve some contrived math problem. So what? Who should ever care at all that someone, at sometime in the past, happened to be running a computer that hit on the solution of a silly math problem? It gets even more absurd when you consider that mining pools became a thing, so that even if your particular computer hits on the solution, you didn't actually do all the work that goes into the so-called "proof of work." (Yes, I know, in this scenario, the new BTC is split among the pool members, but, that doesn't really matter very much.)

So, basically, BTC is the recording of the fact that someone, somewhere contributed to the solution of a math problem. Why should that have value at all, over and above the inherent value in solving said problem, which is essentially nil in this case? Well, it shouldn't. And, yet, it does, for the reason you've noted.

Although I hesitate to call BTC "money," there is an actual form of money that also has value for the same reason, is a true digital currency, which has a durable and distributed transaction record, and is much easier to manipulate for the purpose of managing an economy based on it. That would be the USD, and other such fiat currencies. And, the USD fundamentally is just the recording of the fact that a bank somewhere has managed to create $9 by turning $1 in reserve into $10 in loans out into the economy at large (or, whatever the ratio exactly is -- I forget.)

In other words, if you accept that BTC is a currency at all, it's little more than a worse version of the world's de facto reserve fiat currency, with the added bonus of generally not being able to transact using it, along with extreme volatility relative to the USD, which one actually can transact with.

That's not to say I don't wish I had bought some BTC back when I first heard of it and it was trading at under $1. Had I gambled even $500 on it back then, I would have somewhere in the neighborhood of $9M now, and, essentially be set for life. But, I was a poor graduate student who already realized most of what I previously mentioned and decided that I'd rather pay rent for a couple of months in the dorms than buy an expensive lottery ticket.

mariodiana3• 6 years ago

I would hesitate to call it "money" as well, as apart from its use in place of money, it has no value. Even paper currency is, at bottom, worth the paper it's printed on.

ur-whale• 6 years ago

The only reason it has value is if people value it

The only reason anything has value is if people value it.

unmystic• 6 years ago

People are getting tired of banks and money printing

beamatronic• 6 years ago

But they trust bitcoin more than plain old gold. That’s interesting.

AuryGlenz• 6 years ago

I’ve never liked the idea of investing in gold, purely for the fact that I could see a big disruption happening to it in my lifetime. Asteroid mining, some advance in fusion that makes “alchemy” commercially viable, etc.

I don’t trust Bitcoin either, of course. If something were to happen to Coinbase or some attack on the network itself it could tank awfully quickly.

alwillis15• 6 years ago

Gold isn't easily divisible. You can't use gold for daily transactions. People do and have used Bitcoin to buy the proverbial cup of coffee.

Gold isn't easily transportable. If you had $100,000 in gold and wanted to leave the country with it, that would be quite a hassle.

A bitcoin wallet can live on your smartphone or a USB stick. Or you can memorize 12 words and gain access to your wallet anywhere there's an internet connection.

If you wanted to send $1000 of your gold somewhere, that's another hassle.

A bitcoin transaction can be sent in minutes anywhere in the world.

The supply of gold grows each year; the higher the price goes, the more gold is produced, therefore decreasing gold's buying power.

Bitcoin is on a fixed schedule that can't be changed. There will only ever be 21 million bitcoin, making each one that much more valuable.

drchopchop• 6 years ago

That Michael Saylor tweet is hilarious:

"#Bitcoin is a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth, exponentially growing ever smarter, faster, and stronger behind a wall of encrypted energy."

Certainly it's that, and not rampant Tether printing / fraud / lack of exit off-ramps / institutionaland retail investor ignorance

Lutzb2• 6 years ago

Ok, so I've heard that tether printing story over and over. Is there a reputable source for these claims?

davidgerard• 6 years ago

Any that isn't in the crypto press.

If you want Tether explained, this is the best article I've seen (I wish I'd written it).

https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/

This is a year old; it's only gotten more blatant since then.

The NYAG's inquiry has been slowed by COVID, but is grinding on.

runawaybottle• 6 years ago

Classic pump and dump.

root_axis• 6 years ago

It's the same rinse repeat cycle, it'll crash back down to 8k in a few weeks.

alwillis15• 6 years ago

I wish HN has built-in DLCs [1] for this… I'd bet that's not going to happen.

[1]: "Using DLCs, Bitcoiners can make bets based on events to which the oracle is attesting. Last week, we saw one of the first of these done by Suredbits Founder Chris Stewart and creator of BTCPay Server Nicolas Dorier, betting on the result of the U.S. election."—https://bitcoinmagazine.com/articles/dlcs-are-on-bitcoin-bri...

vannevar• 6 years ago

It's not a coincidence that Bitcoin is hitting highs at the same time as the stock market. Both are highly speculative at this point, and historically correlated.

From back in June, a prediction that Bitcoin would catch up with the S&P 500 based on the historical correlation:

https://cointelegraph.com/news/bitcoin-sp-500-correlation-me...

postalrat• 6 years ago

More like: Here's why I want to be right

nallo• 6 years ago

Good thing about Bitcoin is that it might push for next gen computers (quantum computers etc.) to break it. It forces us to invent something even better. Until then I don't see Bitcoin going anywhere but up.

alwillis15• 6 years ago

Good thing about Bitcoin is that it might push for next gen computers (quantum computers etc.) to break it.

Bitcoin will switch to a quantum resistant encryption algorithm long before that becomes a threat.

rcxdude• 6 years ago

Bitcoin couldn't even change a constant which would allow the system to actually be used for a slightly more reasonable number of transactions. Why do you think it can do a more fundamental change?

Bitcoin’s Price Breaks All-Time High: Here’s Why It Happened

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