What can bitcoin do that cash doesn't already do though? In order to actually improve an economy, it has to have some attribute that creates value (either a product or service that employs more people) beyond what cash does a function of value transfer, and I don't see how bitcoin does that better than cash. Bitcoin actually costs more to transact than cash does, because when I hand you fiat money, you have the full value of the cash. When I pay in bitcoin, miners take a transaction fee, and although generally a small portion of the overall transaction, that tiny drag actually makes bitcoin less efficient than cash and therefore worse for an economy to use.

At some point the law of large numbers comes into play. It's much easier to go from 1 to 5 (a 5x increase) than it is to go from 5 to 25 (also a 5x increase). At this point, bitcoin is already worth $100 billion. Exactly 6 months ago today, it was worth 20.6 billion. So it's true we've seen about a 5x increase in about 6 months, but another 5x increase from this level will require a lot more than we've gone through this year, and more than bitcoin has gone through in its lifetime total. It seems like it took mania to get to this level. But mania is not a sustaining force over the long term in my opinion.

What's wrong is that if they were truly trying to release bitcoin gold to fix a problem they viewed with the code or the way bitcoin operates, then you do that on idealistic principal alone. Pre-mining the coin is only about enriching yourself. As it is, the motivation behind any hardforks at this point should be viewed with suspicion, but add on top of that an action that is blatantly about enriching yourself and you have a scenario where you don't deserve to be trusted.

Bitcoin at its core is about decentralization and not letting anyone control the money supply, and now we have a group of developers that are basically giving that notion the middle finger as they alone control the ability to create BTC Gold right now, and are using that power abusively in the exact way that bitcoin was designed to prevent.

My main concern is that bitcoin specifically and crypto generally doesn't fulfill the function of money very well. As far as electronic money goes, it's a horrible option. It doesn't store value well and it has low utility for transactions (although the second is an extension of the first point, it would probably have more utility if it wasn't so volatile). Contrast that with electronic fiat, and there's no comparison. Electronic fiat is leaps and bounds above bitcoin in terms of how useful it is as a currency. I think people expecting bitcoin to replace electronic USD are really overestimating it's usefulness in the future. It's a pretty fine commodity, but a bad currency.

First, a word of warning: I think the valuation is overly optimistic, in the extreme, and I would take it with a grain of salt. May very well be a small analytics firm looking to grab some attention by making a splashy claim. That said, the report was published to the firm's paying clients, so their own credibility is on the line.

The company making the prediction is FundStrat, which describes itself as:


According to FundStrat, Bitcoin is following Metcalfe’s Law, which essentially sketches out the value of a network based on how many users it has.

“If you modeled something as simple as square the number of users plus transaction value, it’s explained 94% of [Bitcoin’s price appreciation] this year,” Lee said.



Now, as for the future valuation, Tom Lee, Managing Partner of Fundstrat, put a $25,000 price target for Bitcoin by 2022 in a note to clients published earlier this year. However, and this is important, this view is predicated on cryptocurrencies displacing gold in portfolios with Bitcoin serving a “digital store of value.”

Presently, I don't see that happening. I think people using crypto as a long term store of value are taking on immense risk, and I don't see something as volatile as crypto displacing gold, which is historically a hedge against inflation and therefore done out of safety. Bitcoin is pure risk.

A $25,000 price is fun to think about, even though I don't believe it's in the cards.

You can find bitcoin gold on coinmarketcap here:  https://coinmarketcap.com/currencies/bitcoin-gold/

Perhaps it doesn't show on the first page because the code hasn't been released publicly yet, so there's no way to independently verify how many coins exist, and without knowing how many coins there are, it's not possible to calculate the market cap. Since the front page of coinmarketcap is ordered by marketcap size, the coin with an indeterminable market cap won't be listed there. As of this posting, BTCG is down 40% since the fork, which makes me happy to see. Nobody wants much to do with this coin, and they shouldn't.

This isn't new. The IRS in the US announced years ago that bitcoin trades are taxable. In fact, anyone trading cyrpto should expect that profits from the trades are taxable as income. The IRS decided to tax it as property, which is puzzling to me since it makes more sense to tax it as a capital gain like other commodity sales. But in no respect is the idea of taxing gains on bitcoin new or surprising. The idea that everyone is joining bitcoin just to escape taxes has never made sense to me, since doing anything in bitcoin doesn't relieve you of any tax obligation or even make it easier to avoid paying taxes. Not even sure where that idea came from.

No, you cannot challenge the point that coins exist digitally. The coins only exist in the block chain. The private key on a drive is only an analog of a digital system, it is not the system itself. Further, trying to represent that the blockchain can exist as a physical structure is one of the dumber things you've written, and there's no shortage to choose from.  The blockchain is the decentralized network, dictated by the official code, and run by all the computers that keep it decentralized. If you build your system out of stones and pebbles, perhaps it can function in a way similar to a blockchain (not even sold on that since the physical system would have to be propagated in real space and necessitates centralization), but even if solving that, it cannot be the blockchain.

Government makes money from a robust economy, so I'm not too sure that any particular industry is safe if the alternative is a better economy which would result in more tax revenues. Now it's another case if you're talking about lobbying groups making political contributions to politicians. That's not money that's going to the government, it's going to politicians. Not the same thing. Nonetheless, btc isn't a real threat to banks. There will still be a need for traditional banking roles of lending and the underwriting, even if btc were to become a dominant currency. Odds of that though are slim to none.

Right, an increasing price doesn't necessarily make it a "strong" currency. Volatility makes it impossible to store wealth or transact business in a reliable manner because you don't know what the value of the currency is going to be from day to day, let alone for long periods of time. Both of those are important attributes to a currency, and missing either of them wrecks any argument that bitcoin is a strong currency, and bitcoin lacks both. Further, the fact that no one uses bitcoin as a currency is a major factor to consider. It's a fine commodity and speculative asset, but it's a horrible currency.

First, anyone who says some variant of "the mainstream media won't tell you this, but..." starts out with a deficit of credibility. Add to that "established economists" and it's even worse. Who more likely has a proper understanding of a very complex financial system, those "established economists" with all their years of intensive study, degrees, etc., or some random armchair quarterback on an anonymous internet board?

That said, I find some of the ideas you presented interesting to think about, as they're framed in a way I haven't thought about them before. One idea I've held for a long time is that there is too much debt in the world, but to tie that to necessitating that all new wealth created goes to a small number of people is interesting to think about. I don't at all buy the conclusion at this point. After all, the owners of the debt get richer through future value creation the debt enables, and the natural remedy for too much debt existing is that future value creation doesn't materialize fast enough to pay off the debt. What happens in that case? The owners of the debt lose their investment, and since they're the rich ones anyway and the two premises are mutually exclusive, one has to be wrong. Either there is not too much debt in the world, or the system is not predicated on all future wealth growth going to a small number of people. The average person has immensely more wealth now than they did 50 years ago, as the standard for what is "average" has risen substantially.

Also, no central bank is purposely using crypto assets as a way to inflate the debts away. What you have identified as a deliberate action by central banks is 1) something they have no control over and 2) not causally linked. Bitcoin price has exploded because it's a bubble because people are caught in a manic cycle. If it was central bank-caused, gold would also be exploding in price as a natural hedge against inflation. A central bank can't choose which hedges rise in value and which don't.

The conspiracy theory doesn't check out.

Gold has thousands of years of history as a store of value. It's reasonable to expect gold to continue to be valued by people in the future, which is why it retains value. Bitcoin has a history of 7ish years. Between the two, what would you trust more? Things only have value that everyone expects to have value. It's a self-fulfilling prophecy; the things we value are only valuable because we value them. Right now, bitcoin can continue to rise on the expectation that people in the future will be willing to pay more than what it's worth now. If you didn't believe that, you wouldn't be buying at $5700. The problem is we don't know this isn't a bubble. Bubbles don't become apparent until they pop, just like ponzi schemes don't become apparent until they crash. This commodity (it's not a currency) with only a 7 year history could be a new normal, or it could be an unpopped bubble. With only 7 years of history, and much of that not even meaningful, I certainly am not putting money into an asset with this type of valuation. The risk here is unquantifiable.

It was created to be a currency, but it has become a commodity. Nobody uses it as a currency (well, at least relatively compared to how many use it as a speculation vehicle), but it's been a smashing success as a gambling vehicle to allow people to speculate. As long as the price keeps going up and there's more and more people helping to fulfill the self-fulfilling prophecy, what's the worst that could happen? Well, that's exactly what the Tulip bubble was. And the tech bubble. And the housing bubble. See the problem? Bitcoin is on a parallel with all those disastrous bubbles where people deluded themselves into thinking that the price can't go down and you can only make money by buying it, just like tulips, dotcom stocks and houses before it.

After what bitcoin has become (a speculative asset/commodity), I'm not sure it can ever become a currency. To answer the the OP's question, nobody would be interested in it then.

I agree with just about everything you wrote, but want to highlight the bolded section. It seems to me that this is an impossibility, because nobody can afford to transact in btc or store value in it with such volatility. Any producer or merchant accepting btc as a payment option has to immediately convert the transaction into fiat or risk having their profit margin eaten away by the volatility. It seems impossible to me to have a parallel btc-denominated system grow along side the fiat-dominated system because everything to sustain a btc-only system is not produced presently. There will still be points where btc has to be converted in order to interact with the larger economy, and god help you as a businessman if btc is in a down period when you have to buy new supplies, because all the transactions you would have done in btc over the previous period would now be at a loss.

Bitcoin's dominance is a function of every other coin's collective market cap, so primarily what was causing the fall was the surge in ETH. When ETH was surging, it was more profitable to hop on that train for awhile, and new money coming in to the market was choosing that over BTC in the hopes of fast cash. The trend seems to be reversing now, as ETH is losing ground and new money is once again choosing BTC over the rest of the alts. This type of action is momentum-based and a sort of self-fulfilling prophecy. Everyone wants to own the fastest growing coin, and by chasing momentum, they help to create and maintain it. I would expect the pendulum to start to swing back at a point, unless the altcoins were just a fad that are on the way out. My opinion is everyone trading crypto is too addicted to this form of gambling, and they won't let altcoins die. Too much money to be made trading them, which is why I expect to see BTC dominance start to wane again at some point rather than increase or maintain its present level indefinitely.

I hadn't heard about this until you posted this article, and if you'll excuse the pun, this is GOLD. Even better that the DDOS is coming from China, which seems appropriate since the consortium of Bitcoin Gold developers is from China. It's an interesting to me that anyone forking off the bitcoin blockchain in the hopes of "saving it from itself" (as both bitcoin cash and bitcoin gold believe they are doing, BCH by increasing the block size and BCG by eliminating ASICs) would choose to do so in the most shady way possible (pre-mining and refusing to release the code publicly). Sadly, I don't even think that will doom the coin, because this market of sheep will latch on to anything that will turn them a profit, and if BCG can promise that, people will believe it and won't send it to the immediate death it deserves.

That description you provided is not a bubble. A bubble is an asset price that rises far beyond the fair market value and eventually cashes. The fair market value of a dollar is literally a dollar. Even if the currency devalues, a dollar is still worth a dollar, so you cannot have a bubble of a currency that is denominated in that same currency. Fiat may have zeroni nherent value, but that doesn't make the value we assign to it a bubble, because it's relatively stable over time. That's quite the opposite scenario Bitcoin occupies presently where the value has zero inherent value but there are people who assign ever-higher values to it in a cycle of mania.

And in fact you're already seeing this. We have a seeming unlimited amount of altcoins that serve zero market purpose, for starters, and now it appears we're entering the era of deliberate BTC derivative garbage coins. First there was Bitcoin Cash, and now there is Bitcoin Gold coming in the next 24 hours that is a blatant scam coin (the developers are pre-mining before they release the code publicly). Even if such a garbage coin doesn't gain traction, the ease with which garbage coins can be spun out and retain the name damage Bitcoin's reputation.

With the imminent release of bitcoin gold (another garbage, pointless coin) in the next 24 hours, it's a good time to remind everyone that the developers are shady. This is a China-miner lead fork, it serves no purpose other than the enrichment of the developers. According to Coinbase (https://support.coinbase.com/customer/en/portal/articles/2892196-bitcoin-gold-faq?b_id=13521), the developers are pre-mining 100,000 coins before releasing the code to the public. That's shady, garbage, self-enrichment behavior, and I hope this coin flames out because it's clearly designed to only enrich the developers. So essentially, after the fork happens, the only people mining will be the developers, and when they've determined they've made themselves rich enough, they'll release the code to the public while they probably dump their pre-mined coins.

Don't be one of the dummies buying.

The recent price appreciation seems less likely due to certain countries like China and Japan and more likely to be that the recent price rise is from people bidding up btc trying to acquire as much as possible before the bitcoin gold hard fork which is supposed to happen within the next 24 hours. Like bitcoin needs another derivative, this one certainly seems like the most shady out of them all. After bitcoin cash didn't immediately die a painful death, people saw how much money was to be made by partaking in these garbage forks, and thus bitcoin gold was born. Except in this case, the developers are pre-mining 100,000 coins before releasing the code to the public.