Ask HN: Concerns about Bitcoin

https://news.ycombinator.com/item?id=5465553

by machilin • 13 years ago

3 4 13 years ago

news.ycombinator.com

Bitcoin has been on a tear recently with great potential, and I'm really excited about it. But I have some legitimate concerns that I can't quite figure out:

1. Is the rising price of bitcoin sustainable? Sounds to me like a bubble in making, with the influx of speculators and crazy buzz around it. How much further can the price go up, before it goes south and comes crashing to the ground, or will it be able to stabilise? You won't want to be holding any bitcoins when the bubble does burst.

2. Bitcoin has no governmental control which is a core strength but is also a weakness. Who's to stop you from creating your own 'high yield fund' ponzi and disappearing with the money? That's a big concern on its own.

3. Bitcoin is a great investment with high yields, judging by the rising prices, but not a great currency for spending. Until, Amazon starts accepting bitcoins, only then will consumers take it seriously. Otherwise, great currency to invest in.

Pretty big concerns but not too sure what you guys would think of these. Cheers.

paulhauggis• 13 years ago

Look at the history. It's not sustainable and will eventually crash.

It might be worth it to make a quick buck, but I wouldn't put your life savings in it.

mtgx• 13 years ago

1. Yes - in the long term

2. Not sure I understand this question. I do think governmental threat is real, but I'm not seeing anything too threatening on the horizon, and it would need to also be on the global scale. But even then, look how much luck they've had with piracy (not much).

3. There are two things here. I don't like that it's growing this fast either, since it does make it less useful for spending it, and this may seem counter-intuitive, but at the same time, it's raising a lot of awareness and I think it's making many businesses consider it as a "real currency" - perhaps not right now if it keeps growing at $5 per day or whatever, but when it stabilizes a bit more.

The second thing is that it will stabilize eventually, but I wouldn't expect it to be a "permanent stabilization" in the next few years. If this is indeed a bubble, then it will probably drop to who knows how much (probably still $20+ though, at the minimum), stay like that for a few months, or a year, and then start rising again as people start using it, and those companies who've heard of it during its "boom" now want to start using it.

I know a lot of people see the rise of Bitcoin's value as "unbelievable" and wonder how could this be. But as with any currency, what matters is if people trust that currency enough to transfer their hard earned dollars into it. It's not that different than people buying Facebook Credits (or some other virtual currency) because they trust Facebook to sell them stuff (whether virtual or real) for those credits.

With potentially millions of people wanting to put their "real" money into Bitcoin and trust into it, it's very natural for the value of Bitcoin to grow this much, especially with so few of them around (typical supply and demand forces here).

But as I said above, the fact that Bitcoin gets to be worth a lot of dollars, doesn't surprise me, just how fast it's doing it. If Bitcoin was worth $1 million by the end of the year, without any real changes in the ecosystem (like say China adopting it as its national currency, or anything like that), then I would be worried, because it would seem too much like a bubble, without any serious adoption behind it. But being worth $1 million/bitcoin within the next 20, 30, 50 years - then I could see that happening.

machilin• 13 years ago

Thanks for the quick reply. But one quick question just popped up. How can the prices be rising so fast? You don't see the USD having such magnitude of changes even in 10 years. So big issue is who's going to regulate the prices? Market forces? Are they up to the job with so many speculators just there to make a quick buck? Another big concern.

And it's a 'currency', meaning you are supposed to spend it to buy stuffs. But now everyone are getting all they can like skyrim hoarders, hoping to make a quick buck. I can't forsee any sane merchants using it as a form of currency. Who's to say that the price won't go up by $10 the next day or come crashing down? Your bitcoin can be worthless or a boost in revenue just because 'market forces' say so. Horrible form of currency but great form of investment. Cheers.

orangethirty• 13 years ago

1. No. It is a short lived bubble. Treat it like a penny stock.

2. Lack of regulation is a fundamental issue.

3. Bitcoins do not qualify as an investment. It is pure speculation. Like betting on who wins the 2015 World Series.

I would not put more than a hundred dollars into it. Nothing is keeping this currency safe from security and internatikn issues. Treat it like a penny stock.