Hello Vladimir,
I'm gonna be honest with you all , i have been trading/investing since 2017.
I earned about 110.000 by trading and basically lost it all, i decided to sell the rest and just quit. I'm gonna explain why, this cryptocurrency market
is very manipulative and can easily be controlled and it will never stop. The icos/alts will always keep sucking all the btc cash so it will always be hard for btc to grow and
dominate.
This market is made to make money and profit from noobs it's like a bitconnect scheme. Every dollar that is made by someone, someone will lose money.
You are right of course.
I will also tell you my story. As I'm libertarian-inclined, free/liberty money is something that always interested me, and I was quite close to the developments of David Schaum's e-cash in the 1990-ies. That was a total failure, and when I heard about bitcoin in something like 2011 or 2012 for the first time, my idea was "been there, done that, silly stuff that doesn't work", and I didn't give it any further attention.
However, for totally unexpected reasons, I looked deeper into it in 2014, and I found the cryptographic scheme quite brilliant. I believed the "currency on the internet" stuff, I was acquainted with the Austrian school, and most importantly, in 2014, bitcoin had its bubble just before, which I didn't take part in.
My idea was that an asset that had known a speculative bubble and burst, would be "cured" of all speculative temptation in the future, and as I believed in the "money of the future", I bought some (around, on average, $300 per coin). But it continued to decline slowly. So I tried to estimate the "fundamentals" of bitcoin, which, if it is a currency for real, can be estimated by Fisher's formula (total amount of money, velocity, and total amount of stuff bought with it). There was Silk Road of course, and some other stuff.... and my estimation came out to something like $10 or $20, as the fundamental, Fisher-formula induced price of bitcoin. I thought to myself, I'm an idiot, I sell everything, and buy back when it is a few tens of $. So I sold... in January 2015, the lowest point, around $200. I lost $100 per coin. I expected the down trend to continue until bitcoin hit its fundamentals. But no, it started rising again ! So I thought that my estimation was wrong, there was more bitcoin usage than I realized. I bought back in around, yes, $300. The very slow rise seemed to go on par with its currency usage adoption... until the slope became too steep. That was not on par with reality. In the mean time, I learned about Nash ideal money theory, and I realized that bitcoin, being a collectible, can never be a good currency. In fact, it is not a currency at all. It is a speculative asset. It is one of the purest forms of speculative asset.
I also had another problem with bitcoin. When there was the bitstamp hacking, and people were chasing the thieves, I realized that bitcoin's transparency was extremely dangerous. I looked into more privacy-oriented coins, Darkcoin (now DASH) and Monero, and bought some at ridiculously low prices, because my idea was that bitcoin was now a dangerous form of money, where all your actions are graved into stone forever and visible to anyone.
But if bitcoin is not a currency, and if its price is not made by the tension of offer and demand for its usage as a currency (that's what Fisher's formula expresses), then where does the value of bitcoin come from ? The answer is: "from a greater fool's belief". Bitcoin is the purest form of recursive belief. I don't believe that bitcoin has any fundamental value, but that doesn't matter, as long as YOU believe it has value, I can rationally accept bitcoin against value, because I can sell it to you. And you maybe don't believe honestly in the value of bitcoin, but as long as Joe believes in it, you can do so too, because you can sell your coins to Joe. And so on.
Now, there are two solutions to this game: a bubble, and a "store of value" version. The bubble version is that you think that you will find people that will pay much more for the asset than you have to pay for now. In other words, you're a fool buying the stuff, but you hope to find an even greater one. That's like a pyramid game: in the end you run out of greater fools, but it is the last layer of fools (the greatest fools) that pay for the benefit of all their predecessors.
But there's also a steady-state solution to it: you're not expecting MORE than you put in it, but you consider that it is a safe heaven for the value. You're not looking for a "greater fool" but for a "same fool". Gold is like that. Nobody expects to make benefit by holding gold. But you are convinced that if you buy gold now, it will still hold that same value 60 years from now (give or take a small factor). Gold that will buy 10 houses now, will most probably also buy about 10 houses 60 years from now (maybe 3, maybe 30 houses). You do not expect that gold to buy you a whole town 60 years from now, nor do you expect to being able to buy simply a bicycle with it. That's a sustainable form of "equal fool".
Now, bitcoin seems to play in the "get rich quickly" scheme, that is, the greater fool stuff. Almost the only reason why people buy bitcoin, is to sell it later at a higher price, not, like me, to try to use it on Openbazaar or buy their VPN/VPS services with for privacy. That's pure "greater fool". That has to end one day, because, as you say, it is a pyramid game that stops when one runs out of greater fools.
I don't know if we just witnessed that. Are there still enough greater fools on earth, that will make the people that bought at $17 000 rich ? That is to say, are willing to pay $170 000 for a coin ? With what hope ? To sell it for $1 700 000 a coin ? Seriously ? Who would buy it at $1 700 000 a coin ? A fool thinking that he'll be able to sell it at $17 000 000 ? Really ? In fact, maybe. I'll tell you why: alt coins.
If bitcoin were alone, the above phrase should make you think that nobody is going to buy bitcoin at $170 000. But then, why did some idiots buy at $17 000 ? What were they hoping for ? But that was already the case at $1700: who was expecting, one year ago, that you would find idiots buying at $17 000 ? But without that, what's the point of buying at $1700 ?
But now, there are alt coins. With alt coins, you can continue to play this greater fool game without ends, because one day, bitcoin rises, the next day, bitcoin falls, but ethereum rises, and the third day, ethereum falls but cardano rises, etc....
You don't have an *asset* any more, but you have a *market*. With a market with several assets, rising and falling, newcomers jumping in, oldies dying, the "greater fool game" can continue forever, with limited market cap, because the capital that is in coinX today, can move to coinY tomorrow, and to coinZ the day after, without the need of NEW greater fools.
That's exactly what the financial world is. The derivatives market is 10 times bigger than earth's economy. So all that is hot air, but nevertheless, big finance plays in this since years.
It is, as you say, a big zero-sum game. It doesn't create any value, but it is a casino. There are losers, that pay for the winners. But the losers continue playing, with the hope of being the winner one day. And all economic value produced by people is eaten by that monster.
Well, the whole crypto market is evolving towards that finance market, but "on steroids". Why would financial gamblers (big banks etc...) be satisfied with a volatility of half a percent per day, if they can have 20% in the crypto market ? Crypto is way, way, way more interesting as a big finance casino than "real-world derivatives". It is international, opaque, decentralized, you don't know who the participants are....
And that's why I think that this market will grow. I think the crypto market will eat the derivatives market in the long run. That useless, dangerous beast that fucks up all of sensible economic action, and dictates human and political action by its shear financial muscle will get doped by crypto. Its booms and busts will make a crisis like 2007 pale in comparison. And the control will be entirely opaque, international, and without any oversight. This is going to go sky-high, and destroy everything on its way.
Every dollar that
is made in this system will be sold to fiat and if there is low btc buy power it will mean that btc will only keep going down. This market is basically made to make
money from new users like a scheme. For example can you actually believe that if you would've put 10k usd into bitconnect you would have a monthly return of about 4500
every month by lending? This is unbelievably high which again means for every btc/dollar you lend out into this cryptocurrency system = someone will lose money that's
the main reason this market won't be there for long. Because it's basically a pyramid scheme.
It is much more sophisticated than that. The whole derivatives market of big finance doesn't make sense either. But it is what dictates our society. For the moment, there are still legal restrictions on those markets, but crypto will eat all that.
This is why I think that bitcoin at a million $ is thinkable - except if bitcoin dies earlier with its clunky devs.
