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Author Topic: There is NO Bitcoin bubble, yet.  (Read 1850 times)
Pangia
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April 08, 2013, 11:20:21 PM
 #1

It's interesting to observe the media calling BTC a "bubble", when CNBC and the likes were pumping housing even as it was collapsing. I still remember CNBC bringing out David Lereah (National Association of Realtors Economist) to pump housing and lie and say that the overall housing market was healthy and would appreciate another 10% the following year. That was in 2007 and we all know what happened after that. The media dared not call housing a bubble for fear of enraging their corporate sponsors who benefited from the "bubble".  Bitcoin is different because it has no corparate master and as a result, the media isn't indebted to it. Additionally, BTC is a potential threat the the media's corporate sponsors (banks, financial entities, etc), so for now attacking BTC is a good thing for them to do. That might change in the future when the financial institutions get involved.

 

In this present time, nothing is a "bubble" until Wall Street gets its claws into it.  We haven't seen  "real" exponential growth yet. This in my opinion, is because we're missing 2 fundamental components of a "bubble". Those components being credit + the feed-back loop.  We don't have either one of those YET.

We will get credit infused into the BTC market when Wall Street jumps in.  They have to jump in, because there is no way that they're going to miss out on an opportunity to fleece the masses.  They will pump BTC up through hedge funds and the likes and then as the price soars, they'll publicize BTC's greatness to the masses. There will be BTC experts on CNBC spewing rhetoric as to why this is the new paradigm for commerce. 

Once the press gets rolling on BTC then the feed-back loop will go into full swing.  Your taxi driver will be telling you how great an investment BTC is. Let's face the facts, who outside of the IT world really knows what BTC is and how it works? Very few! Once the feed-back loop goes into effect, word of the price ascensions of BTC's will spread like wild fire. BTC will be the talk at the dinner table. Then a true "bubble" will begin to form (credit + feed-back loop). This will be unlike any "bubble" ever seen before because BTC transcends national boundaries. EVERYONE will be attempting to get rich. This will truly be a global "bubble".
 
What will the price of 1 BTC be then? $1,000 - $100,000 - $1,000,000

The price of a BTC when the true "bubble" emerges will be much much higher than it is today and when it is sufficiently high enough for Wall Street, that's when they will pull the plug and that's when the "bubble" will burst.  Until Wall Street gets involved, there is no "bubble".


 
 
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April 08, 2013, 11:33:44 PM
 #2

I bet few smart people from wallstreet are already in bitcoin even if only as a hobby. Some of them are tech-savy enaught and looking for any kind of gains. Now there are 20% jumps in one day... imagine what jumps there will be when wallstreet strikes with their money wagons...
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April 08, 2013, 11:36:21 PM
 #3

The only issue with that, I fear, would be that they would develop their own form of cryptocurrency, different although very similar, and market it to the mass, mimicking bit coin, but in turn, owning the shares from the very beginning.  They would have the media power to cause an explosion that would make them trillion airs, and I think its naive to think that a Wall Street Banker would be a huge part of a currency that is largely held by an underground computer network.
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April 10, 2013, 01:17:43 AM
 #4

Here comes the start of the liiquidity/credit that is needed for further price ascension.
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Borrowed from Vladimir's post:

https://plus.google.com/app/basic/stream/z12ngbcr1s2derigh04cc1ugwuzgexgb0vo0k



 
 
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Trommie
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April 10, 2013, 01:21:34 AM
 #5

The only issue with that, I fear, would be that they would develop their own form of cryptocurrency, different although very similar, and market it to the mass, mimicking bit coin, but in turn, owning the shares from the very beginning.  They would have the media power to cause an explosion that would make them trillion airs,

Certainly they would market it as a 'trusted version' of bitcoin and get regulators in to try to tarnish bitcoins image. Then maybe try to DDOS nodes such as MtGox to shake peoples confidence in bitcoin and boost how 'safe' there ersatz one is.
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April 10, 2013, 01:24:43 AM
 #6

A bit coin can be only worth a total of $2000. Its part of the formula.
Pangia
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April 10, 2013, 01:27:32 AM
 #7

A bit coin can be only worth a total of $2000. Its part of the formula.

How do you figure that?


 
 
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Shaban
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April 10, 2013, 01:33:17 AM
 #8

A bit coin can be only worth a total of $2000. Its part of the formula.

How do you figure that?

+1, where did you get that from?
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April 10, 2013, 01:37:54 AM
 #9

A bit coin can be only worth a total of $2000. Its part of the formula.

How do you figure that?

+1, where did you get that from?

That doesn't make anysense whatsoever. The deflationary nature of BTC and the inflationary nature of USD means that it's only a matter of time before BTC goes past $2000 (sure that time may be tens or hundreds of years but you get what I mean)
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April 10, 2013, 01:39:12 AM
 #10

lol just check the source code for '$2000' you'll find it there </sarcasm>

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April 10, 2013, 01:50:46 AM
 #11

A bit coin can be only worth a total of $2000. Its part of the formula.

It's worth what someone will pay for it.

That can be any amount.

If it is capped at $2000, what would you say if I offered you $5000 for a bitcoin? If you said yes and we did a transaction, then how much was that bitcoin worth?
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April 10, 2013, 01:51:33 AM
 #12

A bit coin can be only worth a total of $2000. Its part of the formula.

It's worth what someone will pay for it.

That can be any amount.

Yup! Anything is only worth what people will pay for it
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April 10, 2013, 02:05:02 AM
 #13

By my estimation at around 1000 dollars we will start to see ~1 dollar fees to get your transactions included in a block. If they increase the block size to 10mb instead of 1mb than mb we could get a 10,000 dollar bitcoin with ~1 dollar tx fees. The devs wont be able to increase the block size higher than 10mb though or people with slower internet connections will begin to be cut out of the network, unable to download blocks fast enough.

So then the question becomes, would people still be willing to dump more capital into bitcoin once tx fees become 10 dollars? what about 100 dollars? it seems bitcoin would loose a great deal of its utility at that point. Doesnt this create something of a soft cap somewhere around 10,000 dollars.

i know this math is pretty rough but you can substitute your own numbers, the specific numbers arnt that important its the basic idea of the mechanisms at work here that matter.

what im saying is that we will never see a 100,000 dollar bitcoin unless someone can figure out how to address this issue, and i just dont see how they can.

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April 10, 2013, 02:48:23 AM
 #14

That's quite interesting thought. I hadn't considered the effect of value increase /use on the block size.

Maybe opportunity for the smaller Altcoins then.
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April 10, 2013, 03:04:38 AM
 #15

I agree with this completely, there isn't a sign that bitcoin is in a bubble state right now or that it'll burst. But what we could see is it go down slowly and even out, but once companies look at this (Which I am sure they are after the quick rise) they'll start implementing bitcoin into their buisness practice, that is when we could see this truely skyrocket and go into whatever price it wants.
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April 10, 2013, 05:27:09 AM
 #16

A bit coin can be only worth a total of $2000. Its part of the formula.


lol    Cheesy

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April 10, 2013, 05:39:09 AM
 #17

A long time ago, I remember learning something in a computer science course about simulations. It was something about how you really cannot predict whether some simulation program will crash or end, or really what will happen. I contend that there is absolutely no way to predict accurately what will happen with Bitcoin. Governments could come down hard on it. Or, places like the USA might just tax profits like a capital gains and ignore Bitcoin. Or, it could get widely accepted and Amazon and Google and Lenovo might end up accepting payments in Bitcoin. Or some government might allocate resources to building ASIC miners and try to take over. My point is there is no way to predict. 2140, when the end of mining new Bitcoins is scheduled to end will be long after many of us are dead. There are still many people who have not yet heard about Bitcoin, so the market is far from saturated. Therefore, there is no way to know if it is a bubble, just rising in price until it finds a stable point, or whether something better will replace it.

 

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April 10, 2013, 05:52:26 AM
 #18

Actually, there is a feedback loop...  Avalon ASICs cost BTC to buy, thus driving people to convert to BTC to get one.  I think this is actually the correct thing though as it actually drives their hardware to actual USD value, instead of under pricing it in USD.  There is a reason to actually need BTC now, to own the printing press to get more BTC.

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April 10, 2013, 06:03:14 AM
 #19

It's interesting to observe the media calling BTC a "bubble", when CNBC and the likes were pumping housing even as it was collapsing. I still remember CNBC bringing out David Lereah (National Association of Realtors Economist) to pump housing and lie and say that the overall housing market was healthy and would appreciate another 10% the following year. That was in 2007 and we all know what happened after that. The media dared not call housing a bubble for fear of enraging their corporate sponsors who benefited from the "bubble".  Bitcoin is different because it has no corparate master and as a result, the media isn't indebted to it. Additionally, BTC is a potential threat the the media's corporate sponsors (banks, financial entities, etc), so for now attacking BTC is a good thing for them to do. That might change in the future when the financial institutions get involved.

 

In this present time, nothing is a "bubble" until Wall Street gets its claws into it.  We haven't seen  "real" exponential growth yet. This in my opinion, is because we're missing 2 fundamental components of a "bubble". Those components being credit + the feed-back loop.  We don't have either one of those YET.

We will get credit infused into the BTC market when Wall Street jumps in.  They have to jump in, because there is no way that they're going to miss out on an opportunity to fleece the masses.  They will pump BTC up through hedge funds and the likes and then as the price soars, they'll publicize BTC's greatness to the masses. There will be BTC experts on CNBC spewing rhetoric as to why this is the new paradigm for commerce. 

Once the press gets rolling on BTC then the feed-back loop will go into full swing.  Your taxi driver will be telling you how great an investment BTC is. Let's face the facts, who outside of the IT world really knows what BTC is and how it works? Very few! Once the feed-back loop goes into effect, word of the price ascensions of BTC's will spread like wild fire. BTC will be the talk at the dinner table. Then a true "bubble" will begin to form (credit + feed-back loop). This will be unlike any "bubble" ever seen before because BTC transcends national boundaries. EVERYONE will be attempting to get rich. This will truly be a global "bubble".
 
What will the price of 1 BTC be then? $1,000 - $100,000 - $1,000,000

The price of a BTC when the true "bubble" emerges will be much much higher than it is today and when it is sufficiently high enough for Wall Street, that's when they will pull the plug and that's when the "bubble" will burst.  Until Wall Street gets involved, there is no "bubble".

The only people who didn't think the housing bubble was a bubble were people invested in real estate.  Just like the only people who think bitcoin isn't a bubble are the people invested in bitcoin and making money from it.

It's very hard to be non objective and honest with yourself when you're making money at something. Almost all humans like to believe good things never come to an end,  this is part of the reason why you see so many pro atheletes or celebrities end up broke, they simply can't fatham that at some point the checks will stop rolling in.

I believe 99% that BTC is in a bubble. It's nearly impossible to say it's not, it has every single symptom any bubble has ever had. Right down to a T.

Now that doesn't mean BTC will crash tomorrow....plenty of bubbles take YEARS before they crash. People were warning about the dotcom bubble for years 7rs before it finally people. People were warning about the real estate bubble for about 6 years before it popped.  So I wouldn't be at all shocked if bitcoin continues to grow over the next few years.  That still doesn't mean it's not a bubble though.

I want to add that I own BTC and have stocked up on more BTC's during the recent spike in value. And I'm a huge believer in bitcoin and I believe 100% that the technology of p2p crypto currency is here to stay and will be with us LONG into the future, weither it's bitcoin or something even better that comes along int the future.  But it is certianly possible to be a fan of bitcoin and an owner of bitcoin and still use soem basic rationale and see that the only reason bitcoin has shot up in value so quick is because of a speculation bubble effect.

I have friends calling me up left and right now asking me "how do I buy bitcoin". They don't want bitcoin to use it as a currency, they don't want bitcoin to avoid the government backed systems or bank. The only reason they want bitcoin is because they've seen it going up in value in the news....they want to get rich quick. Nothing else. That is pretty much the exact definition of a bubble in many ways. And when these friends of mine end up buying bitcoin it only makes the value go up more and makes their friends want to get in on it... again a bubble affect.

I believe bitcoin has gone up about 1300% recently,  yet bitcoin services, companies accepting bitcoin, the security of bitcoin, and the ease of use of bitcoin probably hasn't even gone up 2% during that same time period.  When something shoots up in value that much, but the practical usage and serviecs aren't growing anywhere near the same right....THAT IS A BUBBLE.

The only advice I can give to people I care about is don't put in more money than you would be willing to lose. If you could accidently drop $100 bill on the ground and it's not going to ruin your life or affect you too heavily then by all means put $100 into BTC.  But if losing that $100 bill would cause a lot of stress and finincal problems in your life, DON'T put it in something as risky as BTC because you very well could lose it all (you very well could make money as well though, thats benefit of taking a risk).

In the end I think a lot of people in the bitcoin community are blinded by their love for bitcoin so much or are blinded by the amount of money they are making that they can't view this situation objectivly. And that's fine, it's almost human nature to behave that way.


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April 10, 2013, 06:06:38 AM
 #20

BTC at $10,000 now. THAT would be a bubble.

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