I don't know where you get that.  In 2013, bitcoin reached nearly $1200.  In 2015, it has been falling down to $200.

In the summer of 2011, bitcoin was $30.  A year later, it was at $3.

I would like to draw one's attention to the thread I have elsewhere, which points to a fundamental problem with PoW.  

That is, for the proponents of PoW, what's the vision on that ?

https://bitcointalk.org/index.php?topic=2847680

It is not that it is illegal.  It is that I have to pay 50% taxes on it because of speculative gains.  I don't want to enrich the state.

2011: run up x 300 (from $0.1 to $30) and crash down to $3  /10

2013: run up x 400 (from $3 to $1200) and crash down to $200 /6 in 2015

2017: run up x100 (from $200 to $20 000) and crash down to ? 

/10 ?  /6 ?  /4 ? 

The run up was less violent, true.  It could go down /10 down to $2000, but I think it will end somewhat higher.

Exactly.  It is not because crypto currencies have the word "currencies" in their name, that they ARE currencies.  They are no more currencies, than the Deutsche Democratische Republik (former Eastern Germany) was democratic.  Crypto "currencies" are speculative assets.  You don't pay on Amazon with Apple options either.

You may join the submarine, though 

My problem is that the logical way would be to cash out, but where do you go with that fiat ?  My idea with BTC was never to cash out, but to use it to buy stuff, that's why I bought it.  I'm against speculation.  I didn't realize, when I got into this, that it was pure speculation.  If I cash out now, I have to pay taxes on it or get myself in potential trouble.  I don't want to.  So I prefer to hold even if it is a dumb move in the market.

I find that quite optimistic, but not impossible.

After all, the first crash was down a factor of 10 (in 2011, from $30 ATH down to $3 in 2012)

The second crash was down a factor of 6 (in 2013 - 2015 from near $1200 ATH down to $200 in 2015)

If the crashes become less and less severe, maybe this one will be limited to a factor of 4, bringing us down from $20 000 down to $5 000.

After all, the run up to the bubble was less spectacular too: x300 in 2011, x400 in 2013, this time only x100.

So maybe this bubble was less severe, and its crash will be less violent too.

Point was: it is not because you see a drop that it's a bargain.

I don't know how you can say that.  Historically, bitcoin went down already a factor of 10 between 2011 and 2012, and a factor of 6 between 2013 and 2015.

You are looking at relatively high frequencies (that is: the order of days or weeks).  You can say that bitcoin has a potentially high volatility on the order of days or weeks.  Volatility is to be seen as a frequency spectrum.

What is more interesting, I think, are much longer-range movements.  I can see 2 similar movements in the past, when you look over a range of the order of a year or longer, where we see retractions of the order of an order of magnitude.  Bitcoin has known essentially these long-range movements:

1) an upwards movement from $0.1 in 2010 to an ATH in summer of 2011 ($30), followed by a crash of a factor of 10 in the year that followed ($3).

2) an upwards movement from that low $3 up to an ATH in December of 2013 ($1100) followed by a crash of a factor of 6 in the two years that follow ($200) in 2015.

3) an upwards movement from that low $200 up to an ATH in December of 2017 ($20000) followed by ...

It is true that the upwards movement in (2) from $3 all the way up to $1200 has been seen a pause after a high of $150 in April 2013 by a correction back down  to $76 in July 2013 before the final uprun to near $1200 in December 2013.  Note that the correction was of the order of 50%.

So are we now in such a similar correction, before a next up run before the real crash, or is the next crash down by an order of magnitude already in motion, hard to say.

It seems reasonable to assume that the crash set in, because of the size of the up run.  The first up run was x300.  The second up run was x400.  The "correction" in Summer 2013 was after an up run of about x50.  It was followed by another up - run of x8 before crashing for good.

We have seen the last up run being a factor of x100.  Is that small enough to allow for a correction and next smaller up run, or is that big enough for a genuine crash ?

We've seen, on a shorter time scale, that the crash periods are long, and punctuated by a lot of bull traps.  

Bitcoin is not money, it is a greater fool token.  You "invest" in it, and that's a rational decision, as long as you have rational arguments to believe there will be greater fools with slightly less rational arguments that will pay more for it than you did.

And look, it worked out already marvellously 3 times in a row: in 2011, in 2013 and in 2017.  Each time, a new army of greater fools is rushing in, to spend their hard-earned money on tokens sold to them by the previous greater fools (except those smart asses that were there in 2010).  As such, they give their hard earned money to pay the gains of their predecessors (that's the "fool" part).   But if they are smart, they  can wait for another army of dudes to rush in, to pay THEM their gains.  (that's the "greater" parts).  Hell, those that were the fools in 2011, were the smart guys selling in 2013.  And the greater fools of 2013, were the smart guys selling last year, to the even greater fools (mostly Koreans I think ; let's call them that way).   But maybe these "Koreans" will be the smart guys selling to the (last?) army of greatest fools, I don't know, in 2021 or so.  And then it's over, because there aren't any more on earth.  Maybe we can sell to the inhabitants of Sirius then.  Or maybe it's over already, and the greatest fools were the "Koreans".  These games end always when they run out of greater fools, but there's still  3/4 of a planet to take.

This was seen from the beginning, in February 2010  https://bitcointalk.org/index.php?topic=57.msg390#msg390

Fool: you pay for the benefits of others

Rational: you'll find a greater fool, paying you a lot of benefits.

Is there a Bitcoin Inc advertising for bitcoin then ?  What are "advertisements for bitcoin" even meaning ?  Or do you mean scammy ICOs ?

Yes, this is true: the more the channel balance is towards the other side, the less you can be punished.  If the channel is entirely pushed one side, you have nothing to lose by publishing the initial 50/50 settlement. If your counter party succeeds in getting in the punishment transaction in time, you only get your normal balance which is in any case 0.  And if he's dreaming, the chain is congested or he's on a holiday, in any case, you can hope to get your coins back.

That makes me think of a potential attack scenario.  Imagine you're Jack, and part of the LN network, and you have a channel link with Joe. Both of you engage 1 BTC in the channel.  Now, you may set up LN nodes with yourself, and with Joe, and you call your sybils: Mary and Alice.  Alice is also connected to Joe, and has 2 BTC in a channel with Joe.  Joe doesn't know that Jack is Alice.  He thinks he's part of the LN network, but actually, he's essentially only connected to you and you, once as Alice, once as Jack.  Now, you pretend that Mary wants to pay Alice through you and Joe.  Of course, "you" being as well Mary as Alice as Jack, you're only paying to yourself, through yourself.  But Joe doesn't know.  Mary sends a lot of payments to Alice through you, pushing your Jack channel to Joe into exhaustion.  
Now you wait for Jack to go on a holiday, or you wait for chain congestion, you try to ping Joe to see if he's offline. and you publish the initial settlement 50/50.   If Joe sees it, he can "punish you" but there's no loss to you.  That channel was already exhausted.  If not, you get your 1 BTC back.  Next, you settle Alice correctly with Joe.  Alice having 2 BTC in the channel, Joe cannot play the same trick on you because he still has a potential punishment of 1 BTC.

Rinse, repeat, find a new victim.

My "lock in" and "lock out" are the same thing.

As long as the channel is off-chain, there is no specified time-to-live.  It can live on eternally.  The lock-out counter starts to count simply from the moment you settle on-chain, but that time has been agreed-upon at the channel opening transaction.  (I'm not sure if it can be modified at each off chain update by mutual agreement - I think so).

Look at it like this: we set up a channel, and we agree mutually that our lock-out time will be one week.  This time will start running from the moment that one of us decides unilaterally to settle the channel.  But as long both of us remain off-chain, we can send one-another mutually-agreed-upon modifications of the channel balance for two years if we like.   However, if two years from now, one of us decides to settle the channel (that is, to send out the last state of the channel on-chain), then from that moment on, the one week timer will start to count, and one week later, you have your coins back on chain.  In any case, the channel is dead from the moment someone settles, but the coins are still frozen during a week, to allow the counter party to send out a punishment transaction in case the settlement was not the final one.

When a resource gets wasted to the point of being exhausted, that's what we call "environmental damage" yes.


Indeed.  It would make electricity a much more expensive thing, in a relatively short period.  With all economic consequences of that.


Indeed.  Grossly, what you are saying is that the way out is a severe economical depression. True.  But if bitcoin is seen as a "safe heaven for store of money during bad times" it will only make it worse.  Often, people flee in collectibles like gold during depressions.  If bitcoin is seen as such (and with the hypothesis of its success, for sure it is), this will only compound the problem.

There's not only electricity.  There's hardware too.  The amount of hardware needed to make so much miners will most probably eat up a good chunk of the hardware industry's scarce resources like rare metals and so on.  Indeed, to be able to install a capacity of silicon that consumes 1 TW, we must be installing much more hardware in a short time, than all the existing hardware right now (I don't think that today, 1/3 of electricity is consumed by silicon: a lot is used to heat, for electric motors and so on.  So, I didn't do the calculations, but the necessary hardware to be able to consume 1 TW of electricity must be HUGE as compared with all existing hardware right now.  That sector will be entirely disrupted too. This can also be "solved" by making hardware expensive.  Yes.

Just a rough idea: if you need to make hardware that will consume 1 TW, knowing a smart phone consumes 10 W or so, that's 100 billion smart phones to make (the hardware equivalent of 100 billion smart phones: 15 smartphones to make for every inhabitant of this world, but in waster hardware).  Or if we take a PC at 50 W, it is the equivalent in hardware of 20 billion PC to make: 3 PC for each inhabitant of this world.

Just to indicate the scale of the hardware waste, and the scale of the hardware production needed.  We would forego to have every inhabitant having 15 smart phones they won't have, simply because we need those resources to make waste-makers.


That is true.  But the system is such, that it will require in any case to spend $700 billion a year on making waste.  And in a dwindling economy because of the depression it causes, if bitcoin is seen as a safe heaven, this may represent a sizeable fraction of the economic output, in sensitive sectors of electricity and hardware.  During times of depression, people often go into collectibles like gold.  If bitcoin at that point has reached the status of digital gold (it must be, with such a market cap), people may flee into it, pushing up its market cap even further.

People don't starve during gold rushes.  They almost starve.  Gold usually doesn't crash during depressions either.


Well, apart from government intervention or bitcoin and its PoW buddies dying, there's not much that can be done about it.  And of course, I didn't mean to say that ALL of our activity will turn into mining, but you shouldn't underestimate the danger that resides in a machine that spits out money if you make waste.  Especially in times of depression.

Also, depressions are often the breading grounds for un-tasteful political upheaval.   You never know how your political system gets out of a severe depression.


Indeed.  I think the only thing that can save us without killing crypto, is that PoS coins (if ever ethereum manages to switch to it, it may be a candidate) kill most PoW coins in the market.  But here too, once PoW has a solid market in the waste business, pressures to keep them going become more and more important.  The bigger a business gets, the harder it is to kill it because the more means it has to fight for its survival.  And there is a good argument for PoW: it is the only method that can "prove" consensus in a *perfectly* trustless environment and indefinitely long offline periods.  All other methods need a certain fraction of on-line presence, and a confidence in forms of digital signature holders.  This is in practice not a problem, but for the truly religious, only PoW has an absolute form of trustless proof.  Even if it is madness.

If previous bubbles (2011, 2013) are an indication, it must be in the range of $2000-$4000.

In 2011, the bubble of $30 crashed down a factor of 10, down to $3.  In 2013, the peak was near $1200 and it crashed down to $200.
So a factor of 10 the first time, a factor of 6 the second time.  Now we peaked near $20000, so a factor 10 gives us $2000, a factor of 6 would give us something over $3000, but we also see that it gets less severe.  

There are much better bargains out there: you can get bitconnect at a 99% bargain !  People bought it at $400, and now, it is on sale for $4 !

Honestly, this is the third time now.  People should start to understand how it works.
Look at the bubbles of 2011, 2013 and now 2017.   Same pattern.  We will bottom out at a few $1000, but it might take longer than a year, and there may be bull traps in between.  If the pattern of 2014 repeats, we might even go up a while to ~$13000 for a while before crashing lower.

The mechanism is quite simple.  A LOT of people have been buying during the run-up.  The "new army of greater fools".  This is the very army that has paid for all the gains of the older bitcoiners that has been selling to them.  If you look at the volumes of bitcoin when it rose above $10000, and you imagine that a sizeable fraction of that wasn't just trading (selling, buying, selling, buying....) but was genuine new buying-in, you can imagine the amount of money from the outside that has flown into bitcoin (and crypto in general).

All these people are burned now (especially those that bought near the top, near $20 000).  They have been holding a while (as long as you don't sell, you don't lose!), but at a certain point, they want to cut losses, so they sell at loss (with the idea never to buy again !).  Money is hence flowing outwards to these people (less money than came in of course, but it is not going to come back, these people are burned by bitcoin !).  This puts a sell pressure that pushes the price down.  There is a buying pressure of "buy the dips", but that's petering out when those "buying the dips" start realizing that the bottom may be much lower: better wait !

Before this trend can be reversed, first, all those that got burned, have to accept their losses.   That may take a time.  Some will still hold for a month.  Some will hold for a few months.  Hoping it will get around $20 000 again, but it won't.  As long as there are still lots of burned people around, that didn't accept their losses, the downward pressure is going to win.

Because suppose that enough of them are finally hodling, even though they are heavily burned.  They bought in at $16000, and now, say, the price is $6000.  They don't sell, but sweat it out.  Imagine now an uprun to $12000.  They are not going to miss that opportunity to cut their losses in a less severe way !  They won't be greedy !  They will get out from the moment they can get a sizeable amount of their investment back !   Also, those that bought at the beginning of the run-up, say, at $8000.  They have seen it go up to $20 000, were stupid enough not to sell, and now  they are at loss !  From the moment it reaches $12000, they've learned their lessons and they sell, with a modest benefit.

Only a small fraction is going to hodl.  Most of the people that got in during the run-up will sell, but at loss.  The amount of money that stays in bitcoin will be higher than before (they sold with losses!), so the bottom will be way higher than the starting point

Only when all these burned people got out, stability near the bottom is possible.  And then a new army of greater fools may come in.  Like the first army in 2011, the second army in 2013 and the third, last year.  If there are still enough unburned greater fools around.

But that will take way over a year.  I think we cannot expect a run-up at least before the next halving.  If ever.  The amount of new greater fools needs to be huge this time. 

That doesn't matter.   That 1% will then consume 1 TW.  That's the point.  You are considering that not every Joe will install a miner in his basement.  True.  I'm saying that mining is HIGHLY profitable as long as it doesn't consume 1 TW.  (or 5 TW, or 3 TW, depends on the exact end value of bitcoin).  As long as it IS highly profitable to some, these will enter that market, even if that market is not open to Joe, and they will take Joe's electricity, until 1 TW is reached.

Mining is not risky if you consider that you can buy a machine that cranks out money for electricity.  Hell, now that there are bitcoin futures, you can even protect yourself against bitcoin's volatility.    You essentially have a machine that prints money.  Unless one consumes 1 TW.

Compare it to ivory.  Not everyone is in the ivory market.  Not all of us go and kill elephants.  But ivory is so expensive, that SOME will find it useful to go and kill an elephant.  Until none remains.   Bitcoin is a power and hardware hog.  It is a waste maximizer.  It doesn't mean that everybody is going to produce waste ; it means that all available resources will be absorbed to produce that waste.

Earth's electricity production is highly limited - look at all the discussions concerning trying to limit somewhat our consumption for climate change and so on.  If it were so easy to produce tons and tons of electricity without problems, people would do it.   Well, bitcoin is gonna eat a VERY BIG CHUNK of the limited amount of electricity we can produce, taking it away from other economic activities.  Hardware also.