Bitcoin is living up to it's reputation as digital gold.
The Chinese are running away from RMB and buying bitcoin, Venezuelans are running away from Bolivares into Bitcoin. And to a lesser extent some Indians are escaping the Rupee.
It'll be really interesting to see how governments try to deal with decentralized currencies if they really take off. Governments lose a lot of control when they can't control money.
The Chinese are running away from RMB and buying bitcoin
Not just bitcoin. Chinese money is buying whatever assets they can get their hands on; purchases of real estate in Canada alone last year significantly exceeded the entire market capitalization of bitcoin.
It's hard to get reliable numbers of the number of Venezuelans having bitcoin. According to [1], surbitcoin.com had 85,000 users in November 2016 (on a population of 30 million). Quartz reported in November 2016 a weekly bitcoin volume below 400 bitcoin on localbitcoin.com. That is not bad, but I would not call it Venezuelans running away from Bolivares into Bitcoin.
One of the problems is that you would have to be crazy to want to sell bitcoin for Bolivares if you can't immediately spend them.
You are an old man who thinks in terms of nations and peoples. There are no nations. There are no peoples. There are no Russians. There are no Arabs. There are no third worlds. There is no West. There is only one holistic system of systems, one vast and immane, interwoven, interacting, multi-variate, multi-national dominion of dollars/bitcoins
I thought about creating a syllabus of essential biz/capitalism/media movies for new grads tonight. "Network", "There Will Be Blood", "Office Space", etc.
A part of me wishes I had bought back when it was still only a few hundred. At the same time, I still really don't see a future for bitcoin. Sure it can be good for hedging against currency falls, but that's not a good long term prospect. For it to succeed on the long run it needs to be a currency which needs stability and the willingness of a large group of people to exchange it for goods and or services. Progress in that area has been slow.
Not to mention the community debates over hard forking which threaten the future of the currency entirely.
But isn't governments having monetary policy a good thing? I thought government control of currency leads to more stability and ability to help the economy without having to use fiscal policy
That's not true at all - just paid marketing via questionable news sources. When you look at the volumes, which haven't increased much, this is all speculation so prepare for a sharp dump soon!
That site has some numbers as far as exchanges go but there really isn't any place you can go to see a definitive trading volume number.
You also can't rely on volume numbers for any exchange that offers trading at 0% fees. The big three exchanges in China all have inflated volume numbers.
You could also look at value of Bitcoin transacted on the blockchain itself. Transaction volume had been steadily growing until it hit the current theoretical maximum in the last half of this year. The thing to look for now is increasing total transaction value. Hopefully the blocksize gets raised soon so total transactions can continue to grow again.
Volume denominated in what? If you are looking at volume denominated in BTC then in an environment of rising prices that means your volume is actually going up if the volume stays the same.
Don't think so. Looks like there are still the idea of blocks that should be verified by every single node in the network. I really want to see some "scaling solution" but that's not it
When the block rewards decrease, the transaction costs will necessarily have to increase. Right now, the block mining reward dwarfs the transaction cost (effectively subsidizing it). So what increase in transaction volume (relative to capacity) will have to happen in order to keep transaction rates so low? Right now, it looks like there needs to be an order of magnitude volume increase for mining interest to remain.
Miners costs are denominated in their local currency so you need to look at the USD or CNY value of the transaction fees over time not the BTC amount to understand the financial picture as seen by miners.
In USD terms transaction fees have increased more than 7x over the course of 2016. [0] The block reward only halves roughly every 4 years so total USD denominated fees are growing much faster than the coinbase reward is shrinking.
Long term either the block size will have to be raised or the average value transferred per transaction will have to go up to increase fees. Either way rising Bitcoin price isn't bad for the cost of transactions. If anything it makes the coinbase more valuable and causes miners to care less about transaction fees.
That's true, but it's also the only thing you can expect if Bitcoin succeeds. Eventually the volatility should subside somewhat, as the market grows. It already has, although obviously it's still a roller coaster ride. How much volatility an uncontrolled currency exhibits should be interesting to see if Bitcoin sticks around for good.
Currencies that are considered stable are not magically so - this is the result of a careful balancing act by central banks. Bitcoin doesn't have an equivalent entity managing the rate of increase in the money supply.
I'm not saying it will go away, I'm just saying, as the trading volume and usage of BTC increases, the amount of money it takes to move the market grows higher. This should result in lower volatility than we have now, but how much lower is an open question we'll see answered if Bitcoin keeps growing.
During the adoption phase the value needs to appreciate. Think about if you wanted to use a currency to do a $1 million USD transaction. If there is only $500k of that currency in USD terms you are going to have a hard time. So the value of the currency needs to be an order of magnitude or more above the largest transactions it will accommodate.
The hash rate securing the network is currently at 2.5 quintillion operations per second which is really 5 quintillion SHA256 operations every second: http://bitcoin.sipa.be/ Speaking of pennies... if every operation was a penny laid flat on earth, you could cover the surface of the earth, land and sea, twice over every second.
Bitcoin surpassed the penny stock phase a long time ago.
If you can't buy drugs with it then I'd argue it isn't money. In Baltimore you can trade a bottle of name brand laundry detergent for drugs. I guess that is a clean secret though.
My belief is that after the crashes, few weak hands remain. Brexit's speculation bubble was extremely tame and corrected back to modest growth after only days. Only in the last couple weeks has the growth looked particularly bubbley. Fully unqualified speculation from a casual investor: I suspect the correction goes to no lower than $800.
I'm more than happy to read technical matters, but it's gone up and down over and over. It's no more interesting that posting Google or Apple stock prices. It's becoming a dead horse with these price posts.
There has been so many critics of cryptocurrencies on HN that hopefully this 3-year high makes people stop and ponder on why Bitcoin has succeeded beyond anyone's wildest expectation over the last 8 years...
"It hasn't succeeded anywhere over the past 3 years except in price."
You must have been living under a rock :)
In 3 years, the daily transaction rate grew 8x(!)—clearly a sign that Bitcoin use is growing: a combination of more users, more businesses, etc. An interesting aspect of looking at transaction rate is that it naturally excludes "simple speculators": those who purchase BTC on exchanges and leave the coins stored at the exchange (because a trade never even leaves a trace on the blockchain.)
In 3 years, the global network speed grew from 10 to 2000 petahash/sec. Millions of dollars were poured by many vendors into developing cutting edge 16nm mining ASICs—clearly a sign that at least multiple tech businesses are betting on a long-term success of Bitcoin.
Bitcoin commerce is no longer driven by "sin" activities since Nov 2013 but instead legitimate commerce is growing and now accounting for the bulk of transactions: https://ssrn.com/abstract=2808762
I've been following it fairly closely though not as much over 2016.
>a combination of more users, more businesses
Or the same users using it more, or the increase in tumbling services or anything really.
>Millions of dollars were poured by many vendors into developing cutting edge mining ASICs—clearly a sign that at least multiple tech businesses are betting on a long-term success of Bitcoin.
Miners increased their investments though given the arms race at the moment we have no indication if these are wise investments.
>The number of Bitcoin ATMS is doubling every 18 months
I don't believe they remove inactive/removed BTMs from those stats. It's pretty common on /r/bitcoin to have posts about going into shops where a BTM should be only to find it removed or unplugged and pushed to the corner.
>Bitcoin commerce is no longer driven by "sin" activities
That paper says nothing about legitimate commerce only of exchanges.
>The largest publicly traded company, MSFT, started accepting Bitcoin
Microsoft isn't even in the top 20. And they haven't really done anything since then.
>March 2015: largest funding round ever for a Bitcoin company for $116 million
Who released an overpriced raspberry pi and have not done anything since.
At the start of 2015 through to the end of the first quarter it was claimed that 1b in vc would happen in 2015. The year ended with less than half of that with half of that being funds raised by 2 companies.
In 2016 it's dropped back below 2014 levels with 1/3rd of the claimed bitcoin VC going to non-bitcoin companies like Ripple.
>Bitcoin economic activity/interest has never looked so healthy.
~2 years ago we discussed Overstock and our expectations for it. Go back to around that time and look at your expectations for now.
We still have no bitcoin companies reporting MAU though I'm hoping the Coinbase lawsuit makes them show actual user numbers.
Your points are valid. But let me give you my opinion (or why I invested heavily in Bitcoin in 2015)
While the West Bitcoin Bubble has almost died, the number of transactions is real. And users currently are paying $100k every single day to transact on the bitcoin blockchain.
$100k in transaction fees for a sustained period is not some users tumbling their coins, spam or some guys writing data on the blockchain. $100k everyday is a huge money amount. So there is some real economic activity going on.
In my opinion, Bitcoin just got its killer app. And no it's not drugs (though evading capital controls is not completely white hat though one can make the point that free capital flows are synonymous to free speech).
Countries that can follow next: India, MiddleEast (pakistan), North Africa (algeria), South America ( Vez and Brazil). These are countries with terrible economies, but they are Huge.
"Or the same users using it more, or the increase in tumbling services or anything really."
Ludicrous. There is no way this 8x tx growth is due in its entirety to the same userbase using Bitcoin 8x more. Or the same userbase somehow deciding their bitcoins need 8x more tumbling. For starters, tumbling leads to long tx chains and even when ignoring these long chains the tx rate has still increased by the same 8x amount: https://blockchain.info/charts/n-transactions-excluding-chai...
We are not talking about 20% growth, or 50%, or even 2x, where your argument of "the same users using Bitcoin more" might hypothetically be valid. But EIGHT X growth. If Bitcoin is so useful that its userbase uses it 8x more over a span of 3 years, it is impossible that Bitcoin gained ZERO new users in that period.
At the very least, you can't be aware of this 8x growth and write matter-of-factly that Bitcoin "hasn't succeeded anywhere" (or no one will take you seriously.)
Note: I'm not claiming an 8x tx rate growth means an 8x userbase growth. Maybe the userbase grew 4x and existing users use it 2x more, but even that would be a sign of success for Bitcoin.
Brief replies to your other most important points (going to bed): ATMs: they do account for decommissioned ATMs (the stats may be delayed eg. updated only after a user reporting the ATM as no-longer-existent). But even assuming the stats failed to report say 100 ATM decommissioned per year, the # of ATMs would still be increasing quite nicely... MSFT: I meant the "largest publicly traded company to accept Bitcoin" with my point being that attracting very large companies to accept it is, again, a sign of success for Bitcoin. 21 LLC: here my point was that attracting VC investment (even if 2016 investments are down compared to 2015) is a sign of success. Overstock: yes they report very low Bitcoin payments. But does it mean Bitcoin "hasn't succeeded anywhere"? No! See above.
Bottom line, with the tx rate increasing, # of ATMs increasing, # of merchants increasing, investments in companies, etc (even accounting for error margins for your concerns) you can't stick your head in the sand and claim truthfully that Bitcoin "hasn't succeeded anywhere". This was an untrue statement for you to make.
PS: I doubt seeing an upward trend in the Coinbase MAU numbers would convince you. You are the "climate change denier" of Bitcoin, so you would probably claim their users are speculators and not legit users :)
We're talking about 200,000 transactions per day. If the estimates of a userbase of 1 million 3 years ago were correct then it only takes one transaction every 5 days per user for their to be no need for new users.
I don't mean to imply there have been zero new users I just don't believe there is much actual growth in users when accounting for churn.
>But even assuming the stats failed to report say 100 ATM decommissioned per year, the # of ATMs would still be increasing quite nicely
% increase because actual numbers are so low but I'll reserve judgement on this for another year since we're talking about less than 1000 machines tops world wide in 3 years of creating them.
>MSFT
There was a stage there where everyone was promoting that they were accepting bitcoin for a bit then it all died off again when companies realised that bitcoin = no sales.
>here my point was that attracting VC investment
Attracted VC investment in the past tense. None of the VC has paid off or even looks particularly promising at this point and as such has fallen off a cliff.
>Overstock: yes they report very low Bitcoin payments.
Along with every other retailer that has made any comment about volume since starting to accept bitcoin. You claim that non-black market volume has taken over but I've yet to see a single success case in bitcoin retailing.
Bitcoin has a long history of things that were killer apps or going to take it mainstream and all of them have failed. From changetip, to lighthouse, to OB, to 21inc.
>I doubt seeing an upward trend in the Coinbase MAU numbers would convince you. You are the "climate change denier" of Bitcoin, so you would probably claim their users are speculators and not legit users :)
Seeing real numbers would definitely convince me. I've never hesitated to admit where I've been wrong when it comes to stuff in the space and I've been wrong about a number of things(especially wasting time arguing about this stuff which I did improve on dramatically last year and I think I'll go back to improving on so last reply). But I've also been right about a lot. Anyhow hope your travels are going well if you're still on them which I assume you are as it appears you're near my timezone.
"I don't mean to imply there have been zero new users"
Yes, you literally wrote "[Bitcoin] hasn't succeeded anywhere".
"I just don't believe there is much actual growth in users when accounting for churn."
? I honestly think you are trolling now... You can't seriously be thinking that out of this 8x tx rate growth, there isn't "much growth in users". Even being very very generous with your argument and assuming the average user transacts 4x more, then it still means the userbase grew 2x which would still be a significant success.
"Attracted VC investment in the past tense"
False, investments are still taking place. Here are some deals from 2016: http://bravenewcoin.com/news/bitcoins-biggest-venture-capita... Over the last 3 years (which is the period of time where you argued "Bitcoin hasn't succeeded anywhere") there has been $0.5-1.0 billion invested in Bitcoin companies, directly contradicting your claim.
"take it mainstream and all of them have failed"
Again, again, and again: tx rate grew 8x, # of ATMs grew, # of merchants accepting Bitcoin grew, price shot up, VC investment are being made, userbase grew, etc. But despite this growth which directly contradicts you, you continue to make statements like "EVERYTHING HAS FAILED"... Bitcoin going mainstream will take 10-20 years or more, and so far it's growing very nicely. The world is not a dichotomy. It's not either "Bitcoin is completely mainstream" or "EVERYTHING HAS FAILED". Sorry I think you are either (1) intentionally trolling or (2) have an issue with admitting when you are wrong (despite you stating otherwise).
I appreciate you attempting to be friendly. But I don't know if you are doing (1) or (2) so I can't afford to waste any more time in this discussion :-( I came back from my trip and started a company. Busy times ahead.
I'm not trolling I just don't agree that any of those things indicate success only that some people hope it will be successful(and are betting on it) which is the same as the price to me.
I do agree that we shouldn't interact anymore though. Good luck with your company.
> beyond anyone's wildest expectation over the last 8 years...
Some people were saying it was going to take over the world and replace fiat currencies. That hasn't happened yet. And when it crossed $1000 for the first time, some people expected it to keep going up exponentially.
It's gone beyond the expectations of many sceptics, I give you that.
You'll find a lot of such dismissive articles about Bitcoin throughout its existence. Here's a collection of 'Bitcoin obituaries' if you want to reinforce that view: https://99bitcoins.com/bitcoinobituaries/
It's not an obituary, it's a fact. I am tired of rehearsing how a currency is enforced to be accepted in the issuing country, has a monetary authority etc. Otherwise while theoretically it could be called a currency, that's a thing for dictionary writers, it's just not usable in everyday life therefore anyone pushing for it has a not-entirely-straight agenda. There's no killer app for bitcoin yet and it's hard to even imagine a (legal) one.
It's possible future blockchains will be better but so far, this is not.
By that rational, any publicly traded commodity is a ponzi\pyramid scheme. Anything with a finite supply and demand will command a price. The market doesn't care if you dislike the speculative nature of bitcoin; it is simple supply and demand at work.
You could make the exact same arguments against gold but that doesn't stop central banks of the world from hording it: https://en.wikipedia.org/wiki/Gold_reserve The only differences are 3,500 years of history and... teleportation.
The Chinese are running away from RMB and buying bitcoin, Venezuelans are running away from Bolivares into Bitcoin. And to a lesser extent some Indians are escaping the Rupee.
It'll be really interesting to see how governments try to deal with decentralized currencies if they really take off. Governments lose a lot of control when they can't control money.