It’s not clear to me if we go directly to the $trillions mcap or have another crypto winter interim. The arguments for the former are somewhat compelling. A phase-shift transition normally moves to much greater extremes. Also worry about ICO crackdowns, SegWit attacks, etc, would be indications of not yet being near the top. Near the top, everyone will entirely forget those precautions (and that is when they occur in order to steal from the most people, i.e. the vast majority have to be on the wrong side of the trade). So my precautions are usually premature, as I am highly contrarian.
I’ve been hearing from others (since roughly $2000) about them hearing from other investors (from outside our ecosystem) asking about Bitcoin. And here is the reason:
I found this discussion with Marc Andreessen to be very interesting (points I more or less already know yet focused my attention):
http://ritholtz.com/2017/05/mib-marc-andreessen-venture-capitalist-a16z/(Btw, at the 36 min point he entirely validated
my Knowledge Age thesis).
So then the question becomes, if the serious money is coming, where will it be treated best (if at all)? Who will be shown to have been full of shit? Where will the enduring opportunities exist for investors and what are just speculative gambles? Or is it all just a gamble on an unknowable future?
It’s worth reminding ourselves, as Marc Andreessen has, that all of the big internet ideas from the late 1990’s ended up coming true. The thing is, the companies that made them happen weren’t necessarily the original stocks we traded. For every horrible investment during the boom and crash, there was the kernel of an idea that ended up becoming precisely true.
We laughed at Peapod and Webvan, but then a generation later we saw the rise of Fresh Direct and then the purchase of Whole Foods by Amazon.
[…]
Anyway, there is a possibility that all of the online currency stuff of today will be a bust for investors, even as the idea proves too irrepressible to be killed off by a speculative crash.
And the follow-up and notice the one-sided viewpoint driven by Coinbase and Lightning Networks representation not balanced by anyone from China or other viewpoints (they openly deride Roger Ver and by implication Bitmain and China, not that I think that highly of Ver):
Rounding out the panel is someone who, in my view, could become the most important person in the room of things develop the way I think they could. Her name is Elizabeth Stark, the co-founder and CEO of Lightning Labs and she is undeniably a rock star. Elizabeth is building the so-called second layer on top of the block chain for Bitcoin, the user interface that will allow for transactions to be more facile for the masses. “Right now, every transaction in Bitcoin gets recorded on 100,000 computers around the world. That’s the power of the decentralized network – the proof of ownership of the currency. But does that make sense for me buying a cup of coffee? Do 100,000 computers have to use their computing power to update the chain for something like that?” She’s building the solution for this problem.
[…]
Which coin?
So which coins or tokens are worthy of investing in? The consensus still seems to be that Bitcoin is the one. The original Bitcoin people look down their noses at the Ethereum people. “What’s your problem, why do you need to do this?” they sneer, referring to ETH people as “Eth-heads” in message boards, from what I’m told. Ethereum’s fatal flaw as a bet on upside is that the amount of ETH will not be capped. Bitcoin will only ever have 21 million outstanding units, hence the scarcity bet being made now. With Ethereum, there isn’t going to be scarcity. Which is why some people are saying its current price “makes no sense.”
From what was explained to me, the only reason for the run up in ether is that you need it to participate in ICOs (Initial Coin Offerings – an alternative to a traditional IPO where a company raises money via Ethereum). Bitcoin is “dumb” in that it can only be used for exchange or storing value. Ethereum is said to be “smart” because it can be used to codify one party’s responsibility to another, like a contract. So all the hedge funds and traders flipping ICOs need to first buy ETH coins. Bitcoin doesn’t get used for ICOs. Yet.
I won’t spend a lot of time on Bitcoin Cash, which was created from the fork this summer, other than to relay to you that everyone says it’s shit.
When someone talks about an unproven rock star, they usually have drunk some Koolaid. Btw, I listened to this Elizabeth Stark in a few YouTube videos and she has errors in her remarks (e.g. that LN can be decentralized, etc).
(Frankly I got so bored by her verbiage, I couldn’t listen for very long)Okay, so here is my thought.
The Chinaman got together with the WallStreet folks and did the NYA to foster a bubble. But I have posited in this thread (and the companion thread) that the Chinaman has a scheme up his sleeve (and he is backed by very very powerful players behind the curtain who play both sides of the coin).
We’re obviously in a phase transition right now, and the big money is starting to notice. But how long will this phase transition go on before it reaches nosebleed and needs to take dive? $8000 - $10,000 within a month? Then we’ll get some exhale (not dive) into altcoins because of
the risk of the 2x fork in November (and my bets are still on LTC and BCH for the reasons I already explained because I
expect 2X to fail to be adopted). Then $25,000 by Q1 2018? That would take us to ~$0.5 trillion market cap (perhaps $1 trillion overall including all altcoins), which would presumably set the gears into motion to insure the institutional players want in. And will the catalyst for any subsequent dive be dire (e.g. the SegWit attack I posited) and create a winter? Will the big money get the “custodian insurance” they need in time to come in and support this phase transition before any such crypto winter?
And whether SegWit,
Lightning Networks, and ICOs (i.e. the current paradigms that the current phase transition are hinged on) are the paradigms that will take us to this future?
It seems the vehicles are being created to allow more speculative players into the market, but afaics the institutional players will not be able to buy into this bubble within the next few months:
My only though is that with LedgerX (CFTC regulated) derivatives now here, I'm especially hesitant to say we'll see a crypto winter, at least not before we see much higher prices.
That seems to be a significant development. I was not aware of that. So indeed more leverage means a greater possible swing to the upside […]
Everyone thinks Lightning Networks is coming and Bitcoin scaling is on the way. It’s the Dot.com bubble redux, but the Warren Buffetts aren’t buying yet (and he was correct about Dot.com yet he admits he missed the boat on 2.0 and not investing in Amazon).
But what if
as I had explained that LN is fundamentally flawed and will damage the security of Bitcoin (not just the “pay to anyone” theft potential but also the garbage collection spikes, Mt. Box centralization, fractional reserves, and other issues I explained
in the companion thread)?
What if Bitcoin will be the reserve currency (of both altcoins and eventually the nation-state Central Banks) and some other altcoin and technology will end up being the medium-of-exchange for this sector
(and yes I am specifically thinking about my decentralized ledger technology!), i.e. Bitcoin will be the Fat Protocol and reap most of the benefits any way (even if it does not directly scale transaction volume, it scales economically as the reserve currency):
There’s a
concept called Fat Protocols, which goes something like this: Tim Berners Lee, who effectively invented the World Wide Web in 1989, didn’t really reap much of the financial benefit for his creation. All the monetary rewards went to the companies who built things on top of the HTTP protocol or the FTP protocol etc. Yahoo, Google, AOL, Facebook – those were the winners. The protocols that actually run the web didn’t retain any value in and of themselves. The Fat Protocols theory says that in crypto currencies it will be the other way around – most of the value will accrue to the network itself (in the form of the coins’ values) and there will be a very thin layer of value on top for companies that create things. I don’t know if that will be true, I’m just passing it along.
What
if SegWit is destroyed (and miners profit and are heros for it), ICOs are destroyed, Bitcoin’s immutability and security is retained and we ride off into the future with a huge ecosystem that works better. This scenario is a long-term positive outlook, but with a potential crypto winter bust along the way.
Most of the early returns of the web came from speculative, hype-driven bubbles and a lot of (effectively) scams. After the bust comes sustainability, just as most legitimate Bitcoin businesses came after the 2013 crash. So I'm actually encouraged by the presence of speculative bubbles, not for their destructive power, or for the opportunity for easy, early profits (which is not interesting to those like you and me who are focused on long term change), but because our pattern recognition tells us "retail" bubbles at a stage in the cycle when the new technology is underdeveloped are often a strong indicator of long-term deployment.
Seems there is a lot of expectation of the BIG MONEY pouring in sooner, but what if it doesn’t arrive in time?
It is very difficult to make ANY prediction right now, because financial and investor institutions, also BIG ones, are at the starting line.
Once one will begin to offer clients Bitcoin, the others will simply HAVE TO FOLLOW. That's when another big boom will come.
It's a matter of months. May happen on November, may happen on December, but it may also burn the fuse on January or February, very difficult to say.
Edit: I just saw this which then concurs with what I wrote:
