Crypto is more like “a psychological experiment than a serious investment"

[eternalgloom]

I really wonder why the comparison to tulip mania always pops up in discussions like these, as though Bitcoin has absolutely no real-world value.
I mean, here you have a professor of economics who appears not to have done any basic research on the underlying technology of Bitcoin.

Just gets a bit old reading the same shit over and over again, especially when it's so easily dis-proven.

[kryptqnick]

Robert Shiller, professor of economics at Yale University and co-founder of the Case-Shiller Index, expressed his idea about cryptocurrency.

"I'm interested in bitcoin as a sort of bubble.
The bitcoin craze reminds him of tulip mania in the 17th century, the event which is considered one of the first recorded speculative bubbles where a buying frenzy and lofty expectations replace rational justifications for an item's value.

The price of bitcoin grew so fast.
A lot of people have benefited from the cryptocurrency investment.
Bitcoin held above $8,000 on Friday morning after topping that level a day earlier. The two-day rally comes after a weak start to April likely tied to tax-related selling.
Will the bitcoin disappear? What's the true value of bitcoin? What essence in bitcoin are we paying for?

This guy sure has the right to express his opinion, but witth all due respect I believe he is wrong. Bitcoin is not a bubble. I mean, its price might be more than it deserves, but blockchain tech is real and potentially useful in many situations. Blockchain can cooperate with neuron networks to help with recognition, identification of solid and fake products etc. Not to mantion that it embodies the idea of the free economy, when it is up to people to decide the prices with all thw advantages and disanvantages it leads to.
There already was a thread about tulip mania once on bitcointalk and people there wee explaining the differences of bitcoin from that phenomenon. I think among the obvious differences is that fact that tulips differ from each other a lot less than fiat from cryptocurrencies. The fashion of btc might not be justified, but the product is kind of real and thus shouldn't be treated as a merely weird psychological phenomenon.

[haroldtee]

And there we go again, with some old men trying to school us what they have no idea about. I wouldn't blame them, since they have been so accustomed to the traditional system anyway and it takes a lot getting used to the new age since it is not what they can easily get to learn about by just visiting the library.

It baffles me though that they call themselves expert and only tend to look at one side without looking at the other before making a case. He may be an economics expert, but not a technology expert and comparing bitcoin to tulip bubble is just way absurd. Apparently, there was no doubt we had a bubbled price last year, and we have even had before then, but that does not make bitcoin a bubble. As long as bitcoin is giving solution to the problem centralization has caused, that gives it a real value and that would get it sustained in the long run which is a characteristics a bubble can never have. Maybe it is high time they started getting that to their old thick skulls before sharing their opinions.

[TUGUANL]

Indeed, I feel that as long as it is a transactional investment, it is a psychological experiment, because all investment operations in the trading category are personal psychological battles.

[daarul50]

I do not agree if bitcoin investment is considered a psychological experiment. Investment of any form requires a psychological analysis because with such analysis a trader or investor can make speculation about the price to come. We will not know the price will move in any direction without us knowing the most emotional person when looking at the current price conditions. But, if bitcoin is regarded as a psychological experiment merely it impressed as an investor's psychic game alone and that's a bad thing for an investment.

[amishmanish]

His point about "Computer Science department not being able to explain it" is probably just harmless jesting or simply an off-handed comment. The kind we have come to accept from the Noble prize fraternity (shameless URL to one of my posts).

As can be seen from his past statement of "It’s such a wonderful story. If it were only true.”, He has used this belittling tone before. I view him calling it a psychological experiment an improvement. Bitcoin must be getting on his nerves because the student community and young people are so fascinated by it.

On his cue, we should expect more statements from the Nobel fraternity (mentioned earlier) in the near future. You cannot just expect them to turn around their views at once. They have to do this gradually. If they turn it around suddenly, they'd look like fools for their earlier statements. This is just them putting the fut through the door to our side..

[Ashleybarnes2]

I was reading an interesting book regarding bubbles recently and he actually highlighted the positive aspects. The hype and speculation brings with it huge investment in infrastructure, once the bubble pops people buy up the infrastructure at a much lower price and build from the foundations. He also highlighted the mental infrastructure that is left behind, in the sense that all the crazy marketing campaigns trying to raise awareness. He says this goes nowhere and more often than not money eventually falls back into the valuable projects.

[Ewox]

True it could be like a psychological experiment than merely an investment because some would jump into investing bitcoin without any knowledge or whatsoever and because of its popularity. We must admit that's how our society deals with almost anything lately. And anything you see on the news or internet or whatever is hyped a lot, people would swarm in and join it. I think that's what Shiller probably had in mind, so if the hype goes off then most probably bitcoin and the other cryptocurrencies would be far gone as well.

[Paka1]

Yes investing in crypto market involves a psychological aspect also. But it’s wrong to address crypto only as a psychological experiment. It’s much more than that. I think crypto is definitely a serious investment because it needs a lot of experience and exposure to the market to trade profitably. Only experimenting with it will not yield favorable results. On the hand how much profit a trader can earn depends on the psychology of the investor like how he responds to the losses, etc.

Certainly,  it is not a psychological experiment rather it is an investment that assured investors  that their money would return. When we say it is an experiment it is sort of a trial and error but with cryptocurrency we know what we are doing and where we are heading.  We don't need to have hypothesis to conclude whay will happen with our investment. Thus,  it is a serious investment that needs us to be knowledgeable and capable of investing in. An investment that is not a bubble.

[Jlimao28]

What is the connection of psychological experiment through the essence of cryptocurrency?
Essentially, cryptocurrency is a serious investment. We lend our money, time and effort not just to experiment whether we gain or lose it. We applied technical analysis to predict the price because we want to earn. And a mentality of earning is not a psychological experiment rather it is talking to a serious investment.

[taiwww]

Will the bitcoin disappear? What's the true value of bitcoin? What essence in bitcoin are we paying for?

No bitcoin will not disappear after looking at the huge investment that is being made into it in the first place. The volume that drives into it daily is crazy enough to change the face of bitcoin forever. Its also already happening and we can see the major changes into its use. The time wont be long when the real use of bitcoin will be made by the government itself and lets not forget about the block chain on what it really working. Thats the leading role which we should be looking after and the bitcoin will follow and its real value will follow too.

Now speaking about your main point, whether bitcoin is psychological one or not? Off course no.

[dollarneed]

Do you know why most of the time educated man is physically and mentally absence in reality? Because they have a world of its own. This is why most of the time they’re outdated and technologically ignorance. They’re mostly using book rather than ebooks or computers. Not all, but most of them.

If this man is my professor I would rather home study than hearing lectures that is in old fashion.

I hate those who give an expert opinion on things they don’t know or close minded because of self interest. Most probably he invested in stock market and find bitcoin as a threat.

Exactly. Sometimes this type of person prioritizes their opinions than others opinion, in fact not 100% of what they say is accurate even though they are experts in their field, and also their prediction is something that maybe can't happen.

He said bitcoin is more psychological rather than a serious investment, I'm really sorry I disagree with this statement the reason why bitcoin is still alive because bitcoin bring innovation to the world.

[audaciousbeing]

Robert Shiller, professor of economics at Yale University and co-founder of the Case-Shiller Index, expressed his idea about cryptocurrency.

"I'm interested in bitcoin as a sort of bubble. It doesn't mean that it will disappear, that it'll burst forever. It may be with us for a while," said Shiller.

"To me, it's interesting as another example of faddish human behavior. It's glamorous," he added. The bitcoin craze reminds him of tulip mania in the 17th century, the event which is considered one of the first recorded speculative bubbles where a buying frenzy and lofty expectations replace rational justifications for an item's value.

The price of bitcoin grew so fast. The cryptocurrency hurtled above $1,000 in early 2017 after trading at less than a $1 at the beginning of the decade. It even hit an all-time high north of $20,000 in mid-December. (recommend FuninUSA for updated data about cryptocurrency)

A lot of people have benefited from the cryptocurrency investment. But Shiller would still like to see it as a psychology experiment. “It is more psychological than something that could be explained by the computer science department,” He said.

Bitcoin held above $8,000 on Friday morning after topping that level a day earlier. The two-day rally comes after a weak start to April likely tied to tax-related selling. Prices dipped below $7,000 earlier this month.

Will the bitcoin disappear? What's the true value of bitcoin? What essence in bitcoin are we paying for?

For thoughts like this, the only explanation would be based on perception and there are some valid assumptions made here but one thing I have come to know is that aside from the Tulip Mania in the 17th Century that he made reference to, since I was not there and haven't read any literature on it, I have not seen any ponzi scheme that have survived for a decade and covered the amount of grounds that bitcoin covered in such short time. The most successful of them have been the one that spends one year while others crashed in a matter of months.

On the issue of psychological experiment, I think that he was ill advised because he focused on only the currency part of bitcoin without considering technology behind it which is real and not a figment of imaginations this has been attested to be one of the best invention in the 21st century. I have even read about PWC opening a new line of audit based on blockchain and they already have clients in that field.

[Palmerson]

Indeed, I feel that as long as it is a transactional investment, it is a psychological experiment, because all investment operations in the trading category are personal psychological battles.

Any financial instrument has a psychological impact on participants. All that is associated with the receipt of prizes or winnings or income due to psychological stress. This is how the human psyche works. Therefore, a good investor can only be a person with a stable psyche. But bitcoin attracts many different people. Therefore, we often witness panic in the market.

[torch2121]

I myself I don't believe that Crypto is a psychological experiment. Psychological maybe because of the volatility of Bitcoin. As the exchange rate goes up it also has bear trend. That is why you have to be good at hodl. For you not to lost your investment we have to be good at hodl. Check the flow, check the market, set your time frame and see when is the right time to exchange  to have a profit. For me I'm seeing it as a investment. I always set my goal as I invest. I think it is not right to compare Bitcoin to tulip mania. Bitcoin is Bitcoin, we are all winners here.

[Mpamaegbu]

Well, Shiller may be right. The whole blockchain thing started as an experiment (psychologically) by Satoshi. But we can't say it is still driven by mere psychology now as several investments have taken to the blockchain tech and are achieving results. It is an investment but surely it will take more years for this to sync and sink in with people. Cryptocurrency is the new business module and just like what the E-mail did to the postal services, it will expectedly do same to banks.

[carlisle1]

Do you know why most of the time educated man is physically and mentally absence in reality? Because they have a world of its own. This is why most of the time they’re outdated and technologically ignorance. They’re mostly using book rather than ebooks or computers. Not all, but most of them.

If this man is my professor I would rather home study than hearing lectures that is in old fashion.

I hate those who give an expert opinion on things they don’t know or close minded because of self interest. Most probably he invested in stock market and find bitcoin as a threat.

Youre getting harsh to the old man,lets show some respect as we dont know the man will be gone for tomorrow lol..

This is why i hate reading those "damn expert opinion"because they talked as if they really know everything and what comes to theyre mind will become reality..

Now in listening to my instincts atleast if i fail i have no one to blame..

[jseverson]

A lot of people have benefited from the cryptocurrency investment. But Shiller would still like to see it as a psychology experiment. “It is more psychological than something that could be explained by the computer science department,” He said.

Bolded: it sounds like Robert Shiller is claiming blockchain has no real world application in computer science, security, finance or otherwise legitimate software engineering fields. Almost as if Shiller doesn't realize shipping firms and many others are utilizing blockchain technology in ledgers and banks are being forced to rollout faster transactions with lower fees to better compete with bitcoin, after decades of industry wide stagnation. Perhaps this serves as a real world example why armchair economists should not comment on things they do not understand or have experience with.

I'd say interpreting it like that is a stretch. He was talking about cryptocurrencies specifically, and while it is a product of computer science, it's more of an application of a technology rather than the technology, which is the blockchain. He's also probably commenting about its effect as a speculative asset on people (as evidenced by his theory that it's a bubble and a mania), rather than its application as a technology -- in which case, he's correct that it cannot be explained by computer science. Even the most rabid Bitcoin fan can't deny that it's being treated more like a speculative asset/investment vehicle rather than its intended use of a currency by most people, so it's not like his opinion doesn't hold water.

Not that I agree with him of course, but this argument has already been beaten to death by other traditional economists and some very influential people on both sides of the fence. I personally don't believe it's a fad nor a bubble, but only time will really tell who's correct.

[European Central Bank]

the tulip mania thing is soooo damn tired, but overall i think he's right.

the only thing fueling this is the desire to sell for more than you paid for it. that's why 99% or more of the people here are here. hardly anyone understands it or why it's important.

hopefully before everyone gets bored and goes away there are gonna be some very compelling real use cases that attracts a large amount of people who have a genuine purpose for it. if not then things could get a little rocky.

[hugeblack]

But who said that Bitcoin is a serious investment. Bitcoin is a way of transferring money from P2P as well as being a currency at the same time.
If Bitcoin is not an investment tool "serious investment" from which it draws its high value?
The strength of the algorithm built on it, the trust of users and the willingness of people to buy Bitcoin are the reasons why bitcoin sold with this high price. This high price is what turned it into an investment tool.
It is not expected to end any of the factors that made the Bitcoin valuable so there is no risk of a return to zero, but this is does not mean it is a powerful investment tool.