I don’t consider it a bubble because we’re looking at it like a stock or commodity. Bitcoin is neither, it’s a network. When pricing networks you can’t use the same comparisons because networks aren’t linear their exponential. This means for every new person that enters the network, the value increases exponentially. Crypto had massive adoption last year and will only continue to do so over the coming months and years. Look at it like a binary play. Crypto is either going to go bust or to the moon. In the meantime volatility is the name of the game!
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There is one intriguing thing about this network though. Theoretically all the current transactions holders could lose access to their private keys and thus negate the value of the network. In fact, the more centralised the network becomes and the longer you wait, the lower the overall value of the network and it will slowly die out. This is assuming that no new tokens are created (which is still some ways off based on halvening times). What do you think?
Haha. Yes that's entirely true! Once the tokens have all been mined then I would expect bad things. That's why I personally invest in Steem. It's an inflationary token that will be mined at a long-term inflation rate of .95%. On top of that we have this and other social networks backing it up. So, there is some time left for bitcoin because I'm not sure too many people even understand your point and like you said we still have some years before this becomes an issue. Thanks for the comment. Any thoughts on Steem? Would love to hear. Mainly negative if possible. :-)
I 100% agree with you that the value of cryptocurrencies comes from network effects. However, there is also a force that counteracts that namely scaling (or the lack of it). Yes, for every user the value squares ("Metcalfe's law") but also for every user the network value decreases because of network congestion albeit not as much.
On a side note: That's why IOTA is interesting to me because counterintuitively the network becomes faster the more users join (not shilling, just arguing from a technical standpoint).
Adoption coming in so far has been the highest it's ever been, however, the rate of change of this phenomenon is nowhere near a justifiable correlation compared to the price action that we have been seeing over the past few months. As CI says, most people who even use crypto right now is using it solely for the means of speculation, and nothing else. Your argument of adoption is flawed and invalid.
I agree that adoption doesn't fully justify the price action. I believe what was more likely is the creation of the derivatives market and allowing strong hands to push everyone around. To me that makes more sense. But, I don't think the people doing it want to kill the market, they just want to cash in. This in my opinion, means the short trade will reverse when there are massive profits to be made. They're too greedy to kill the cash cow. They are just in the business of fleecing. Also, on a personal note I don't own andy bitcoin. I'm invested in Steem mainly because of the social aspect of the coin and the fact it has many great technical features. Steem has held up really well over the past 90 days when compared to bitcoin. What's your opinion on the future of the Steem blockchain? Thanks for your comment!
Valid point, using that kind of logic I can't really say that one school of thought is better than the other especially in the kind of market we're in. Only 1 way to find out...
STEEM is great, one of the few coins with a value that has the greatest ties with its objective value tbh. Im currently in the process of trying to buy some but my exchange isnt cooperating with me at the moment because flash crash and all -_-
It didn't really have mass adoption the past year though. Yes, the awareness increased drastically but the use of them really didn't increase nearly as much as it might seem given how much volume and new addresses are from pure speculators. Most of these folks, including myself, aren't using Bitcoin for payment processing. Also important to note that most bubbles can be discovered just by looking at the psychology of the participants in the market - and the behavior here is as bad as it gets.
I think so. The behavior is aweful for sure. Mainly because most people investing are here to get rich quick. Seasoned investors are still skeptical. It may be a bubble but it’s much less bubblishis at this prices. The underlying issue is do you believe in the technology. If so, then good buying opportunity, if not then you probably shouldn’t be investing at all. I personally don’t like bitcoin long term and have invested into Steem to get exposure to the crypto market. I will be keeping an eye out for any better opportunities in the future but for at least the first half of 2018 I’m going with Steem.
Described like that it's a decentralised Ponzi
It’s a speculative market all the way. New new money to prop up old money. But, I wouldn’t call it a Ponzi because it’s not fraud. It could be a bust but still wouldn’t call it a Ponzi. BitConnect on the other hand...that was a Ponzi!