Is Bitcoin A Bubble? Why many people are looking at this through the wrong lens

[undertheradar48]

Pretty good points about the current valuation and prospects for rising bitcoin values!

https://www.youtube.com/watch?v=4bSLCQ1P0CU

[whatisgoingup]

Currency =/= equity, you're right that many are confused...but I'm not sure this justifies a faster run-up in price, however I'm certainly no economist.  Thoughts? 

[undertheradar48]

Yes, so the video briefly goes over the pricing aspect too. Currencies are a positive feedback loop until one of two situations: widespread acceptance or obsolescence.  There is no equilibrium middle ground for similar currencies.  The ones with more support prevail in the long run. 

[pinkflower]

The argument that guy in that video is giving solidifies that BTC is indeed a bubble. Hes saying that BTC's price depends on the law of supply and demand. Doesnt he realize that most of the demand in Bitcoin comes from speculation? Theres also some reason to believe that the new ICOs that have accumulated millions have helped increase the price of BTC. There are no fundamentals, its mostly speculation.

That guy just maybe wants to gain followers for his channel.

[undertheradar48]

Not quite, he is saying that it depends on # of buyers vs. # of sellers at any given moment.  Speculation creates value, and this in turn creates more demand, mainstream media attention, etc. A fast run-up in price doesn't make a bubble. Bitcoin has and will continue to attract media attention and more of the general population.  It's healthy to have these waves of price increases, it means that the media is influencing a larger number of people and turning them into buyers aka demand-creators

[CryptoBry]

Personally, Bitcoin is not actually a bubble because as we see now there is that mechanism involved which corrects the price of Bitcoin when it reached a certain level. Bitcoin is self-regulating  itself and this can be verified in its history. Now, when Bitcoin will soon new heights we will see what can happen by then. A bubble will usually burst leaving many people holding empty bags.

[Nagadota]

Not quite, he is saying that it depends on # of buyers vs. # of sellers at any given moment.  Speculation creates value, and this in turn creates more demand, mainstream media attention, etc.

The amount of Bitcoin being bought is always the same as the amount being sold.  All that "more buyers" or "more sellers" means is that the prices are changing to reflect what people are willing to buy/sell it for.  Shortening it to buyers vs. sellers would be an oversimplification.

There are no "fundamentals" in Bitcoin in that nothing really pegs the price down and it does what it wants.  There could be a very slow increase over several months which was still a bubble, and there could also be a very slow decline which was not a death - you're right in that regard - but if merchant adoption doesn't match these trends, the increases are speculation-fuelled and are not "real" growth.

When the price just doubled in the past couple months, which of those buyers actually intended to spend Bitcoin in stores?  If the answer is not a lot, then the price growth is just a self-fulfilling prophecy, and will end as soon as people feel like they won't get rich.  That kind of media attention is extremely unhealthy because as soon as Bitcoin's price is going down, they turn on us and so does the market.

[undertheradar48]

Good points, and I think we were on the same page with buyers vs. sellers, you just phrased your argument better. 

One thing you brought up is merchant adoption, is that really necessary at this stage?  Bitcoin is the best currency for store of value, but everyone knows its weak as a medium of exchange.  Gold also sucks as a medium of exchange.  Is there a healthy path forward for Bitcoin without short-term merchant growth? 

[mindrust]

Good points, and I think we were on the same page with buyers vs. sellers, you just phrased your argument better.  

One thing you brought up is merchant adoption, is that really necessary at this stage?  Bitcoin is the best currency for store of value, but everyone knows its weak as a medium of exchange.  Gold also sucks as a medium of exchange.  Is there a healthy path forward for Bitcoin without short-term merchant growth?  

It is already there, called "segwit". Segwit is an upgrade which can make bitcoin great again.

It will basically allows you to purchase coffees very fast with a little fee.

But there is one problem. It needs to be activated by a miner consensus because it is the most secure way but the biggest miner company Bitmain evil Corp. is blocking it.

Yes, antminers' ceo Jihan Wu is against bitcoin's development because he wants high fees, so he can keep milking the cow (us)

Proof: https://twitter.com/JihanWu/status/868896110760181760

Don't buy antminers from bitmain.

[Mometaskers]

Not quite, he is saying that it depends on # of buyers vs. # of sellers at any given moment.  Speculation creates value, and this in turn creates more demand, mainstream media attention, etc.

The amount of Bitcoin being bought is always the same as the amount being sold.  All that "more buyers" or "more sellers" means is that the prices are changing to reflect what people are willing to buy/sell it for.  Shortening it to buyers vs. sellers would be an oversimplification.

There are no "fundamentals" in Bitcoin in that nothing really pegs the price down and it does what it wants.  There could be a very slow increase over several months which was still a bubble, and there could also be a very slow decline which was not a death - you're right in that regard - but if merchant adoption doesn't match these trends, the increases are speculation-fuelled and are not "real" growth.

When the price just doubled in the past couple months, which of those buyers actually intended to spend Bitcoin in stores?  If the answer is not a lot, then the price growth is just a self-fulfilling prophecy, and will end as soon as people feel like they won't get rich.  That kind of media attention is extremely unhealthy because as soon as Bitcoin's price is going down, they turn on us and so does the market.

Yup, that's the disadvantage of it. Like how they say you'd know which alt would be crashing soon when you see it being shilled here in the forum as well as trollboxes.

I just try to be more optimistic as I can. Though I probably wouldn't be able to buy in bulk during crashes, I just keep telling myself that somehow, others manage to buy low and stay for the next cycle.

I'm not sure about the microtransactions. I know very little of how most of the tech works but it really would be helpful if people can also freely spend their bitcoins without much worry of delays and high fees. That could actually encourage more merchant to accept them, increasing penetration in the mind of the public.

[Hypnosis00]

Bitcoin is not a bubble because the price now is pumping and if it is bubble then the scenario that will happen is dumping but now it is pumping and i think the price is now getting back to a high price and soon we will see a good price again and people will start getting into bitcoin again because of the good price of bitcoin again.

[pinkflower]

Not quite, he is saying that it depends on # of buyers vs. # of sellers at any given moment.  Speculation creates value, and this in turn creates more demand, mainstream media attention, etc. A fast run-up in price doesn't make a bubble. Bitcoin has and will continue to attract media attention and more of the general population.  It's healthy to have these waves of price increases, it means that the media is influencing a larger number of people and turning them into buyers aka demand-creators

So meaning all that value comes from speculation, like the dotcom bubble. Thats a very dangerous spot to be in because it could all start going south. What we would rather much be seeing is the growth of unique users and the growth of transactions or usage instead of the growth in price.

[panzerdeni]

As the dude in the video said it is a Currency not a Investment or Stock.
In my opinion it is more like long term investment like some hold on to the family gold.
Bitcoin is much much more better because it haves only 21M not more then that like USD or EUR. It does not have inflation. The price is based only on demand and supply, and the supply could not get more then the daily / yearly available from mining.

[deisik]

Not quite, he is saying that it depends on # of buyers vs. # of sellers at any given moment.  Speculation creates value, and this in turn creates more demand, mainstream media attention, etc. A fast run-up in price doesn't make a bubble. Bitcoin has and will continue to attract media attention and more of the general population.  It's healthy to have these waves of price increases, it means that the media is influencing a larger number of people and turning them into buyers aka demand-creators

So meaning all that value comes from speculation, like the dotcom bubble. Thats a very dangerous spot to be in because it could all start going south. What we would rather much be seeing is the growth of unique users and the growth of transactions or usage instead of the growth in price

That's why Bitcoin can hardly be called an investment

I guess many would disagree with that statement but is there anyone who would call pouring your money into a Ponzy scheme or HYIP shebang an investment? Unless Bitcoin becomes a currency in its own right, it will remain in the state of a "financial pyramid" mainly. As long as it expands, its price could rise as well, but it can't expand indefinitely if it is set to remain only that, i.e. a highly speculative asset. That's likely another reason why we see so much confrontation in the Bitcoin camp right now

[btcton]

Not quite, he is saying that it depends on # of buyers vs. # of sellers at any given moment.  Speculation creates value, and this in turn creates more demand, mainstream media attention, etc. A fast run-up in price doesn't make a bubble. Bitcoin has and will continue to attract media attention and more of the general population.  It's healthy to have these waves of price increases, it means that the media is influencing a larger number of people and turning them into buyers aka demand-creators

So meaning all that value comes from speculation, like the dotcom bubble. Thats a very dangerous spot to be in because it could all start going south. What we would rather much be seeing is the growth of unique users and the growth of transactions or usage instead of the growth in price

That's why Bitcoin can hardly be called an investment

I guess many would disagree with that statement but is there anyone who would call pouring your money into a Ponzy scheme or HYIP shebang an investment? Unless Bitcoin becomes a currency in its own right, it will remain in the state of a "financial pyramid" mainly. As long as it expands, its price could rise as well, but it can't expand indefinitely if it is set to remain only that, i.e. a highly speculative asset. That's likely another reason why we see so much confrontation in the Bitcoin camp right now

Well, then many other things people call investments, such as investing in startups and businesses, can hardly be called investments as well since their value is mostly speculative. Before a business actually starts profiting, it is as much of an investment as bitcoin is right now. Both are based solely on speculation and promise of future value or return of investment. Once bitcoin becomes more mainstream and transacted more often and its shortcomings are addressed, we will be able to see solid, actual value in bitcoin as a currency and not so much as an investment.

[matuson]

Personally, Bitcoin is not actually a bubble because as we see now there is that mechanism involved which corrects the price of Bitcoin when it reached a certain level. Bitcoin is self-regulating  itself and this can be verified in its history. Now, when Bitcoin will soon new heights we will see what can happen by then. A bubble will usually burst leaving many people holding empty bags.

You say that bitcoins are involved in the mechanism of compensation rates and then hope for a price increase. You decide what you wish for. I don't really understand the economy of bitcoins, but such growth rates can only be a soap bubble.

[deisik]

Not quite, he is saying that it depends on # of buyers vs. # of sellers at any given moment.  Speculation creates value, and this in turn creates more demand, mainstream media attention, etc. A fast run-up in price doesn't make a bubble. Bitcoin has and will continue to attract media attention and more of the general population.  It's healthy to have these waves of price increases, it means that the media is influencing a larger number of people and turning them into buyers aka demand-creators

So meaning all that value comes from speculation, like the dotcom bubble. Thats a very dangerous spot to be in because it could all start going south. What we would rather much be seeing is the growth of unique users and the growth of transactions or usage instead of the growth in price

That's why Bitcoin can hardly be called an investment

I guess many would disagree with that statement but is there anyone who would call pouring your money into a Ponzy scheme or HYIP shebang an investment? Unless Bitcoin becomes a currency in its own right, it will remain in the state of a "financial pyramid" mainly. As long as it expands, its price could rise as well, but it can't expand indefinitely if it is set to remain only that, i.e. a highly speculative asset. That's likely another reason why we see so much confrontation in the Bitcoin camp right now

Well, then many other things people call investments, such as investing in startups and businesses, can hardly be called investments as well since their value is mostly speculative. Before a business actually starts profiting, it is as much of an investment as bitcoin is right now. Both are based solely on speculation and promise of future value or return of investment. Once bitcoin becomes more mainstream and transacted more often and its shortcomings are addressed, we will be able to see solid, actual value in bitcoin as a currency and not so much as an investment

I understand that it is a bit controversial and counterintuitive

The difference between investing in a startup or something which would be as risky, on the one side, and Bitcoin, on the other, consists in the prior knowledge about your investment asset. Basically, when you "invest" in Bitcoin, you already know that Bitcoin is a sort of a pyramidal scheme, you know that beforehand. This is not the case with investing in new businesses. They may well turn out to be outright scams in the end (like dotcoms), but you don't know that in advance

[jtipt]

As the dude in the video said it is a Currency not a Investment or Stock.
In my opinion it is more like long term investment like some hold on to the family gold.
Bitcoin is much much more better because it haves only 21M not more then that like USD or EUR. It does not have inflation. The price is based only on demand and supply, and the supply could not get more then the daily / yearly available from mining.

Yes exactly, bitcoin is a currency not just an investment. But 90% of bitcoin users think it as of an investment venture and treat it like a stock, that's the primary reason why we see such high price fluctuations. Bitcoin will never be able to attain glory unless people accept it as a currency, what it was made for.

[pinkflower]

Not quite, he is saying that it depends on # of buyers vs. # of sellers at any given moment.  Speculation creates value, and this in turn creates more demand, mainstream media attention, etc. A fast run-up in price doesn't make a bubble. Bitcoin has and will continue to attract media attention and more of the general population.  It's healthy to have these waves of price increases, it means that the media is influencing a larger number of people and turning them into buyers aka demand-creators

So meaning all that value comes from speculation, like the dotcom bubble. Thats a very dangerous spot to be in because it could all start going south. What we would rather much be seeing is the growth of unique users and the growth of transactions or usage instead of the growth in price

That's why Bitcoin can hardly be called an investment

I guess many would disagree with that statement but is there anyone who would call pouring your money into a Ponzy scheme or HYIP shebang an investment? Unless Bitcoin becomes a currency in its own right, it will remain in the state of a "financial pyramid" mainly. As long as it expands, its price could rise as well, but it can't expand indefinitely if it is set to remain only that, i.e. a highly speculative asset. That's likely another reason why we see so much confrontation in the Bitcoin camp right now

Thats true but BTC is already a currency in its own right. There are already many people using it in the darknet. All the commerce happening in there could only expand with the help of cryptocurrencies. But having said that, theres still a lot more speculators in the market speculating and making BTC overpriced.

[deisik]

Not quite, he is saying that it depends on # of buyers vs. # of sellers at any given moment.  Speculation creates value, and this in turn creates more demand, mainstream media attention, etc. A fast run-up in price doesn't make a bubble. Bitcoin has and will continue to attract media attention and more of the general population.  It's healthy to have these waves of price increases, it means that the media is influencing a larger number of people and turning them into buyers aka demand-creators

So meaning all that value comes from speculation, like the dotcom bubble. Thats a very dangerous spot to be in because it could all start going south. What we would rather much be seeing is the growth of unique users and the growth of transactions or usage instead of the growth in price

That's why Bitcoin can hardly be called an investment

I guess many would disagree with that statement but is there anyone who would call pouring your money into a Ponzy scheme or HYIP shebang an investment? Unless Bitcoin becomes a currency in its own right, it will remain in the state of a "financial pyramid" mainly. As long as it expands, its price could rise as well, but it can't expand indefinitely if it is set to remain only that, i.e. a highly speculative asset. That's likely another reason why we see so much confrontation in the Bitcoin camp right now

Thats true but BTC is already a currency in its own right. There are already many people using it in the darknet. All the commerce happening in there could only expand with the help of cryptocurrencies. But having said that, theres still a lot more speculators in the market speculating and making BTC overpriced

Most people care only for the speculative value of Bitcoin

Apart from that, Bitcoin is most likely already crowded out from the DarkNet transactions. Many genuinely anonymous currencies have appeared since Bitcoin had been actively used in the dark web at the dawn of its life. Obviously, Bitcoin won't be able to make it back into the DarkNet. The throne is never empty, and it's already taken. So if Bitcoin speculative part is removed, how much will remain of its price? Even with respect to merchants, Litecoin is ready to take Bitcoin's place, and if Bitcoin becomes toxic thanks to disagreements and confrontations in its camp, merchants will likely stop using it