Bitcoin is close to becoming worthless

[Roland99]

https://www.marketwatch.com/story/bitcoin-is-close-to-becoming-worthless-2018-12-03

ust one year has passed since bitcoin enthusiasts forecasted that the cryptocurrency would hit a price of $1 million.

But that was then. With the price of bitcoin BTCUSD, -8.53% having fallen almost 80% from its peak, and now trading well-below the support level of $6,000, everyone is wondering where it goes from here.

The answer is, a swift and painful drop to zero.

...

So, it appears bitcoin is now entering a death spiral: If the price continues to drop and the cost of mining does not fall correspondingly (the cost of mining will algorithmically decrease, but not necessarily to same extent as the decline in prices), bitcoin will quickly go to zero.

It was just about a year ago that I overheard a co-worker on a phone conversation trying to talk a friend into investing into Bitcoin with him. it was about $13,000 per back then.

Today it sits at about 1/5 its value from the beginning of the year. Under $4,000 and dropping precipitously.

[Tommy_Carcetti]

1. Not true.

Just yesterday I used it to buy Boardwalk and four hotels!

[Roland99]

5. .....

[central scrutinizer]

10. I bought Beanie Babies and tulip bulbs

[Volaris]

37. I hope you bought them cheap lol, and welcome to Galts Gulch...

Now get back to your sewer-home, SERF!!!

[jmowreader]

24. Who do you think you are, Donald Trump?

Everyone else only gets to put ONE hotel on Boardwalk!

[brush]

44. That's about right. Give me real cash anytime instead of make believe, ponzi scheme, internet coin.

Last edited Tue Dec 4, 2018, 09:03 AM - Edit history (1)

[samnsara]

2. we bought like 1/4 of one just to watch the fluctuation in price...

[exboyfil]

3. I never really understood it

The concept of money is a fascinating one. How can you convert all those digital bits into the goods and services you need for the rest of your life. Somehow I think that the 8x my annual salary that I have built up in retirement is not going to convert to goods and services I will need in the future.

[Hortensis]

7. :) Me too, and same for several paper $100 bills in my desk,

but those, which wouldn't plant much less dig a single potato, are backed by a government so stable that most nations still link their currencies to it.

Someone recently offered to purchase a boat motor from us with his fabulously valuable bitcoins. Supposedly our top offer, but we declined, understanding only that we'd not be comfortable and anxious to offload them in turn. We're not exactly players.

[Ms. Toad]

4. Odd notion of wortless . . .

It is at roughly the price it was a year ago, which is roughly 500% more than it was 2 years ago.

[BannonsLiver]

23. How much are you in?

[localroger]

38. I agree with the parent, and the answer to your question in my case...

...is I have about .078 of a BTC, which as I write this is around $300. Yeah, it was around $500 two weeks ago. A few months ago I divested $1000, which was about half my position, by buying gift cards online. Much simpler than using an exchange, etc. A few years ago I put a bitcoin donation link on my website, and a few people donated what was then about $50 total in equivalent BTC. I can't complain about the return so far.

[Ms. Toad]

68. Not at all.

I used to work with someone who mined them for fun - he had some fraction of a bit coin the last time I talked with him. So I know a bit about them.

But if my investment had grown that much over the same time frame, I'd be pretty happy 0 even with the dip over the past year. (I might be getting out soon, though, to save the earnings.

[Tiggeroshii]

77. "dip" is a bit of an understatement, no?

[lostnfound]

6. Good, it's a huge waste of electricity. Nt

[central scrutinizer]

8. Algorithmically decrease?

That doesn’t make any sense. Did they mean to write logarithmically? Or exponentially?

[xor]

17. I'm going to assume it means something along the lines of decreasing the complexity of the

algorithm used in the calculations. I'm not a blockchain person, but I going to say even that seems like a weird way to put it. Still, I'm pretty sure they meant something along those lines.

[Sgent]

31. Mining difficulty will decrease

by an amount set by an algorithim in the bitcoin software.

Simplifing:

1) Mining is solving a difficult math problem, and every time someone solves the problem a new block is created.
2) Every 125 blocks, the math problem is made harder or easier based on how long it took to solve the prior 125 blocks.
3) The algorithim used to reset the math problem has a multitude of variables which it takes into account

[wasupaloopa]

9. What does mining bitcoin mean?

Glad it’s going the way of The Edsel. I never understood it. Now I never need to.

I think it was basically a techie sopported thing. When it first came about some DUers were so gung ho because banks were not involved.

I thought at the time it was going to be worthless eventually.

[Tommy_Carcetti]

12. I've heard it explained to me multiple times and it still sounds like the dumbest thing ever.

Apparently they sell "Bitcoin miners" which do nothing but quadruple your electric bill.

Seriously, it is insane.

[Roland99]

14. PCs loaded up with high end video graphics cards

The GPUs crunch faster for “finding” a coin

Read an article months ago that all the mining PCs combined outrank the power consumption of Iceland!

[jmowreader]

25. This will tell you

https://www.investopedia.com/terms/b/bitcoin-mining.asp

It won't become "worthless eventually." It started out that way.

[Azathoth]

72. Here's the short answer

Bitcoin maintains a public ledger of all transactions. This means it's decentralized, not dependent on banks to coordinate and guarantee transactions.

But how does everyone agree that the public ledger is legit and doesn't contain fake entries? Bitcoin mining. Bitcoin users get together and pool their computing resources to solve certain very difficult mathematical problems to "sign" entries in the ledger. This is called mining. Each signed entry includes a reference to the transaction block before it. Therefore, in order to create a fake entry, you would need to have enough computing resources not only to sign your fake transaction block, but also to sign all subsequent blocks up to the immediate present time, thus creating a new transaction chain linking backward to your forged transaction. This requires an extraordinary amount of computing power, and bitcoin depends on the fact that a majority of the computing power on the network will always be signing legit blocks, therefore guaranteeing that it is impossible to go back and fake or modify transactions.

So what's the incentive for Bitcoin miners? Every time they solve a signing problem, they get paid a small commission in Bitcoin. So if they mine enough, they can make money -- as long as Bitcoin itself still has value.

[C_U_L8R]

11. Was it ever actually worth anything?

Sure a lot of people put their money in, but did anyone ever get anything out?

[wasupaloopa]

13. It may be like Las Vegas. People returning from Vegas tell me about the

hundreds of dollars they won.

When I ask them how much did it cost to win it, they are not so willing to talk about.

[Initech]

16. John Oliver did a huge piece on bitcoins and overnight millionaires:

[Moostache]

20. HODL GANG HODL GANG HODL GANG!!!

That dude screaming BitConnect made me spit my drink...too funny!!!

[Major Nikon]

51. It's worth what people believe it to be worth, which is true for just about anything

...including the bills in your wallet. The difference is no central bank is managing its worth, so it's utterly defenseless against all forces that can and do affect its value. When confidence in it inevitably erodes it goes into a death spiral from which it can't recover, which is what we are seeing.

Bitcoin was supposed to be the panacea for New World Order believing dipshits. In the end all it was really good for was allowing people to buy illicit goods online.

[Initech]

15. Guess the doomsday preppers have a new form of untraceable end times currency?

[localroger]

42. BTC is the opposite of untraceable

Every BTC transaction ever conducted is permanently recorded in the blockchain, and can be traced. Using BTC anonymously requires careful use of intermediaries to isolate you from the accounts that actually touch the blockchain. That adds expense and risk, but it can still be worthwhile versus alternatives. The big "advantage" baked into it for the libertarians is that it can't be inflated by a government arbitrarily deciding to print more.

[brush]

45. How does one write a check or cash out to buy something?

[localroger]

50. You essentially trade it to other investors who give you "real" money for it

I had what started out as about $50 worth of BTC -- at the time about .250 BTC -- given to me via a bitcoin donation link. After the price exploded I cashed out $1000 by buying gift cards from an online site that decided to take BTC. They aren't actually taking the BTC though; they hire an intermediary who takes the BTC, and almost immediately turns it around for the e-commerce site. Just like when you pay online with paypal, the intermediary's site comes up when you click Pay, and it sends you back to the retailer when your transaction is confirmed. The retailer is obvoiusly not holding the BTC; the intermediary is converting it back to cash for them before the price can change too much. So it's a medium of exchange whose absolute value doesn't matter to the site selling me gift cards. But my tiny little position turned out to be rather interesting.

[Amishman]

74. BTC is traceable but many other crypto currencies are not

More are adopting encryption or complex mathematics (zero knowledge proofs) to make transactions anonymous.

[dembotoz]

18. the thrill is gone

[JCMach1]

19. Cue the DU BTC hate committee...

Same old drone from people who don't understand crypto...

[mathematic]

21. I understand crypto and it's a garbage libertarian fantasy

Surely you realize that when people call it "censorship resistant" you understand they're talking about tax evasion, money laundering, and in general avoiding all the regulations that democrats generally support?

If you understand crypto and support it, man that's fucked up.

[JCMach1]

35. And you just showed me exactly how little you know

All transactions are recorded in block chain. That's exactly the opposite of anarchical libertarianism .

As others have mentioned BTC price has fluctuated like any other commodity.

[MisterProton]

22. Bitcoin has "died" over 300 times before

There was historically a lot of the premature calls of it's death - https://99bitcoins.com/bitcoinobituaries/

However, it's literally saving lives in places like Venezuela. The poor are using it to protect themselves.

https://www.caseyresearch.com/how-bitcoin-is-saving-lives-in-venezuela/

Just because it may not have as big of a use case in places like the US, don't assume it's use isn't gaining steam in other countries around the world.

Transactions per day

[erronis]

29. Link to Casey Research? I thought they were a RW research firm - why in bitcoins?

[Major Nikon]

52. Not really a "firm", just a far right wing nutbag selling paranoia to other RW nutbags

[ProudLib72]

34. That's why I find this news sad

In poor countries where crypto currencies are the most "stable" form of currency, it is a must. Sure, in this country it's perceived as a silly concept because it's in direct competition with the dollar. That doesn't mean that crypto currencies are useless everywhere around the world!

[Major Nikon]

56. They aren't the most stable form of currency

The most stable form of currency is currency from stable governments which are very commonly used in the 3rd world.

[Major Nikon]

53. Your first link is from a web site that markets bitcoin for profit

Your second link is from a far right wing nutbag whose argument for bitcoin is silly. People in areas with a highly volatile local currency also turn to stable foreign currencies with the difference being they aren't paying twice it's current value while receiving half that value on the back end. It's closer to reality to say bitcoin is killing people in the 3rd world who are buying into the pyramid scheme and losing big time.

[uponit7771]

59. +1

[MisterProton]

61. Who cares?

The site is showing linked news articles to where prior predictions of crypto doom were made... YEARS ago. How does the fact they choose to sell anything magically make all those articles anything but what they are? Failed predictions - Hundreds of them... The same one you seem to be making.

As for the other link, it was just one of many I tripped over. The Venezuelians can also invest in crypto "stable coins" which don't fluctuate, but at this time Bitcoin trading there is hitting highs.

[Major Nikon]

62. Those who value unbiased sources I reckon

The OP explains why things are different now and how bitcoin mining has reached the point of diminishing returns and why this dooms the currency which was never anything more than a pyramid scheme to begin with.

[LanternWaste]

64. Your previous S-Curve theory in regards to Bitcoin is getting spanked.

(advertisements for a widget work better if you provide a soundtrack and a puppy...)

[Anon-C]

26. Loll!

[zipplewrath]

27. Probably not

It has a use, question will always be, how much is it worth.

[Ohiogal]

28. And in Ohio

our state treasurer is a special kind of idiot

https://www.computerworld.com/article/3322851/blockchain/ohio-becomes-the-first-state-to-accept-bitcoin-for-tax-payments.html

[Goodheart]

30. I don't see how it could ever become worthless

Maybe it's overpriced at the moment... who knows... but I think there's always going to be a use for decentralized cryptocurrencies.

[pnwmom]

54. A use? Sure, for tax avoidance and money laundering. n/t

[JCMach1]

57. since the blockchain records everything, it's a pretty poor mechanism for those things

that's the reality vs. the bankside propaganda...

As it is now an asset, there is also plenty of pump and dump activity... hence price volatility

[LuckyCharms]

32. This makes me glad I'm too stupid to figure out how it works. n/t

[quaker bill]

33. Like all currencies of any sort

it is worth what people believe it is worth. If people lose trust in it, it will go to +/- zero.

[pnwmom]

55. Not quite. Gold and silver actually have uses. Bitcoin has no intrinsic value. n/t

[JCMach1]

58. Actually it does have intrinsic value, it's in the chain

... verifiable transactions

[quaker bill]

70. not to be too picky

but you are talking commodities not currency when you speak of "uses". It is true that the metals have uses, but their "value' fluctuates based on what we believe the currency used to purchase the metals is worth. This is why the same ounce of gold that cost $3800 four of five years back, now can be sold for a little over $1200.

As far as gold and silver that has been coin pressed into a form of currency, in most cases the currency denomination considerably exceeds the value of the metal content that was coined when melted. Collector coinage has been made and sold by brokers for years, for a profit.

[csziggy]

36. That makes it even funnier that the scammers want to be paid in bitcoin!

I've been getting emails claiming that they have hacked my accounts and giving me a chance to pay them off in bitcoin or they will scramble everything on my computer. It's total BS especially the bit about monitoring the camera on my computer while I am surfing porn websites. I built this computer from scratch and there has never been a webcam close to it much less attached to it, so I knew straight off it was a scam.

It'd be funny to pay them off in worthless currency, if it could be done totally anonymously!

[localroger]

39. The scammers, like the e-merchants who take it, aren't holding it

They are using it as a transfer medium and almost certainly converting it back to harder cash by selling it to investors within hours, if not sooner. The merchants have services which standardize all this and let them effectively do all their books in $USD.

[csziggy]

40. OK, that makes sense

I know next to nothing about bitcoins and intend to keep it that way.

[Polybius]

46. I got that same email

They did say they had my password though, and it was one I have used somewhere.

[csziggy]

49. I checked with my webhosting company

Since the email that was used was one that comes through my domain. The tech I spoke said these scammers are using the fact that many emails and passwords were exposed during some hacking of various large companies over the last several years - but that they cannot actually get into my email account or my domain. The emails and passwords were ones for online vendors such as Amazon.

He did recommend changing passwords on all my account and being cautious but was reassuring about the danger of the information on my computer being accessible to these scammers.

[Blue_true]

41. Tulips. The next big thing. Back again too. nt

[qazplm135]

43. so if it goes to zero

I can buy an infinite amount for nothing, and then when it goes to one dollar...I am infinitely rich!!

[Celerity]

47. The author is a RW Cato Libertarian type who signed onto their letter attacking Obama

in 2009 over the stimulus package (He and his co-signers wanted tax cuts, small government and austerity).

https://rightwingchicky.wordpress.com/2009/02/10/i-know-it-passed-but/

“There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy.”
— PRESIDENT-ELECT BARACK OBAMA, JANUARY 9 , 2009

With all due respect Mr. President, that is not true.
Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of government, we do not believe that more government spending is a way to improve economic performance. More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan’s “lost decade” in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today. To improve the economy, policy makers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.



snip


supply-side slash Austrian claptrap


Sarin also, just a year ago, was actually saying how bitcoin and crypto currencies could be a part of your investment portfolio.


Opinion: Here’s how bitcoin can fit with your stocks and bonds
Published: Nov 20, 2017 10:28 p.m. ET
Cryptocurrency, like gold and other alternative assets, has a place in an investment portfolio

By
ATULYA
SARIN

https://www.marketwatch.com/story/heres-how-bitcoin-can-fit-with-your-stocks-and-bonds-2017-11-20


He also (amongst other articles) in 1998 published a disastrously wrong paper with the thesis that options trading (equity derivatives, currency swaps, etc.) needed to be freed up more as they (his conclusion) improved the stability and health of the markets. This was done in the horrific Commodity Futures Modernization Act of 2000, which combined with the 1999 repeal of Glass-Steagall eventually led to the 2007-9 financial meltdown that wiped out over 30 plus trillion USD across the globe.

https://econpapers.repec.org/article/blajfinan/v_3a53_3ay_3a1998_3ai_3a2_3ap_3a717-732.htm



The OP article uses strawman arguments (for example the million dollar per bitcoin valuation target was never held as a realistic pricing point in anything remotely resembling a short term event horizon by anyone other than scammers and loons). It exhibits a very poor (or purposely disingenuous) understanding of block-chain technology vis-a-vis the ledger as well when he speaks about mining being the only thing that keeps it being maintained. He also echos a tired talking point by referring (actually inferring) that gold is a historic store of value due to some undefined accident, and thus even that is not legit. 7000 plus years of continuous value prove otherwise.

I don't have a dog in the Bitcoin fight, but I can suss out dodgy financial writing when I see it. You want another bad investment, try the US dollar, which has lost around 99% of its value since 1913, the year the Federal Reserve was brought into life.

[TexasBushwhacker]

48. I wonder how much Bitcoin the Winklevoss twins continue to hold

They sunk about $11 Million of their Facebook settlement into Bitcoin when it was $120 each, so at one point they were Bitcoin billionaires.

[tandem5]

63. I don't think sunk is the right word...

if they invested 11 million @ $120 per, their investment is now worth 360 million. I would be okay with that return.

[TexasBushwhacker]

65. As would I

I just wondered if they sold any of their holdings when it started to take a dive this year.

[tandem5]

67. They've probably had to resist selling off significantly for profit

to keep up the appearance of confidence as they continue to push for a bitcoin ETF.

[whistler162]

60. I invested in Tulips instead.

[RichardRay]

69. Who flees to BTC?

Anyone? Ever? When market events (any market) motivate a ‘flight to quality’ investors are driven from risk to safety. AFAIK, BTC has never been favored in those events.

I’ll believe in it when flight from USD’s causes increases in the demand for BTC’s.

(N.B. - ‘contemporary with’ is not the same as ‘caused by’.)

[Azathoth]

71. Bitcoin serves a purpose. But idiots with too much money and too little knowledge

always follow the Booyah! Train that drives these kinds of bubbles.

[Cosmocat]

73. Cypto is an emerging market

Pretty much every major "traditional" finance market/institution is positioning in the market.

They don't waste their time and money unless they know something is there.

It is going to evolve is where things are right now.

How so is the question.

Yes, there is a LOT of garbage and scams, and getting things weeded out is going to take time.

But, there is also some good tech in it, and it is going to find a place as a secondary market.

Valuations of company's in the traditional markets are for the most part wildly over valued, people just have normalized it.

Bitcoin itself is still "king" and will be for the foreesable future.

It is very volitile, and you should not put any money into it that you are not willing to completely write off going into it.

But, there is great upside, too.

Equal risk/reward potential.