Just bought 12 ethereum.
Crypto currency is checking the patience of value investors… It will keep on rising till most of the value investors break down.
lite coin has doubled in few days…Community members say , its just the beginning… Lite coin will go tot he roof in some time…
Can someone explain, what is the value created by these new crypto currencies? Why one should buy ethereum and not bitcoin? What are the qualitative parameters to differentiate? We know what happens to IPO proceeds, do we know what happens to ICO proceeds? If ICO proceeds are used to generate new coins or to maintain existing coins, then isn’t it a Ponzi scheme?
Excerpts: At least a half dozen Indian startups are skipping venture capital dollars to raise funds through ICOs despite the regulatory ambiguity, as investors take longer to scrutinise balance sheets and conduct due diligence before parting with their money.
I do not know whether this is a bubble or not. One funny thing I noticed is majority of people do not understand how to value these cryptos , that’s why they say such thing. Even if this is a bubble , it will take long to explode as this is a world wide phenomenon and the traction has just started. Common people are yet to get into the cryptos. However , I am sure some kind of regulation will come in , that could be a dampener in terms of sentiments , but certainly its not an end game for them.
So mining bitcoin takes energy and it was cheap to mine coins in the past when solving the equations were cheap, for the earliest coins. Now as we approach the finite number of coins that can be mined, it is energy intensive and consequently, the value of the coins in circulation goes up. I get it.
What I don’t get is equating this to Gold. If Bitcoin is one element that can be compared with gold, then what about Etherium and Litecoin? We can’t call them Silver or Platinum or whatever, because anyone can setup a Bitcoin clone and start mining and it will go through its own cycle of value discovery and acceptance. In essence, though there are finite number of each, there can be infinite number of these finite currencies and so comparing market cap of Gold with market cap of Bitcoin itself I think is very flawed because in the future, more of these cryptocurrencies are going up pop up and they are going to be very useful for transactions but not as a carrier of value.
I think current run-up in cryptos is a big bubble. Time will tell.
Statement on Cryptocurrencies and Initial Coin Offerings by US SEC Chairman Jay Clayton
Every tradable security has some underlying asset that has some intrinsic value. Stocks derive this from the underlying company. Commodities derive their value from their use. Currencies derive this from the fiscal and monetary policies of the issuing country. Even gold has industrial and ornamental use. Whenever there is a significant gap between the market price and intrinsic value, it may be assumed that a bubble is formed. In case of Bitcoin, there is no bubble as there is no intrinsic value to tether. It is just an example of mass hysteria and buyer’s belief of Greater Fool Theory.
Right now an insane amount of computing power and electricity is utilized to mine a Bitcoin which is of zero intrinsic value. So in that sense, every Bitcoin produced now has negative value because it utilizes a lot of resources to produce and gives nothing in return.
In one year, a Bitcoin may be priced at $1 or $1 million, no one knows, both prices are possible. But when it ends, a few (like Nvidia, for example) will make tons of money and most of the investors would be cursing the market.
If Bitcoin is one element that can be compared with gold, then what about Etherium and Litecoin?
Bitcoin is the only truly de-centralized cryptocurrency (Monero being an honorable mention) and is capped at 21 million. Ethereum and Litecoin are not. Ethereum is centralized via the Ethereum Foundation and Litecoin has a mentor in Charlee Lee (ex-Coinbase engineer).
Gold is de-centralized (i.e. there is no issuing body)
Gold is hard to mine.
Gold is scarce and fungible.
Gold has network effects (people agree to its value).
Gold correlates negatively with stocks and serves as an economic hedge.
Bitcoin has all these properties, except the last one - which is yet to be proven. It is very hard for new cryptocurrencies to match these qualities of Bitcoin. Bitcoin has existed for 9 years now and its network effects and de-centralization are proven.
9 years is nothing when you consider long-term implications. If cryptocurrencies are here to stay for the foreseeable future, does this initial 9 year head-start that Bitcoin has mean anything? There are new ones popping up every single-day, each one touting itself to be better than the last and with bigger software and hardware players getting into the fray, there is bound to be a lot of flux in this space going forward. I personally don’t buy the argument of them being carriers of value at all (and hence think there is a big bubble in the space) but I am pretty excited about a future with them for transactions.
BTC intrinsic value - once it got off the blocks - is its usable property as a currency that is fairly anonymous and de-centralized. Yes, that has to count as some form of unconventional intrinisc value, especially for some people.
It’s got a headstart and so other cryptocurrencies will have a harder time catching up.
You now have bitcoin futures too and even common retailers are buying, so its going more mainstream.
Bitcoin is computational gold and one of the first ingredients in what I call a computationally driven economy.
I mine bitcoins instead of holding bitcoins. I successfully mine BTC on Genesis Mining and Hash Nest (by Bitmain). All new bitcoin generated from mining goes back into mining (I have successfully paid off my initial mining purchase by converting bitcoin into fiat and I used only 3% of my capital to buy bitcoin mining contracts).
It barely costs anything to print a INR 2,000 note and 1 BTC at today’s paremeters costs only USD 200 so as long as prices stay above USD 200/BTC it is profitable to mine bitcoin. Mining equipment has successfully lasted 3 years (from original production) at least from my observation.
Bitcoin’s major benefit is that it is the first cryptocurrency to have infrastructure being built around it for the ordinary man to use.
BitMain is no longer shipping AntMiners (or anything else) to India due to Customs issues. Do you know any Indian source @SteveBayerIN
@vij, I don’t buy the miners. I buy re-sold hashing power from Bit Main through their Hash Nest website.
Please don’t get me wrong but cryptos are not fully decentralized. The backbone of all cryptocurrencies are miners. If there are no miners, there cannot be any transactions done.
I mentioned earlier that when 70 million worth of Ethereum was stolen last year, the ethereum community wanted to fix the bug and also reverse the transaction. In order to do that ethereum had to move to a new blockchain. The decision to move to a new blockchain was made by the miners and the votes that had the most weight were companies that had the best mining capacity. A few minority voters rightfully argued that if the transaction is reversed, then it removes the decentralized element of the platform. This can happen with bitcoin also.
Another big issue with bitcoin, is that the incentive for mining is going to keep reducing. Each time the mining reward is split the difficulty increases and miners get less bitcoin for the amount of power they use. Miners are also rewarded with transaction fees paid by the person who sends bitcoin. Now if all bitcoins get mined the only way miners are going to get rewarded is with the transaction fees. When that happens, I can see the transaction fees going up and up. If people don’t want to pay the transaction fees then there are going to be less miners which will make the transaction speed very slow.
Ethereum is trying to tackle the above issue by something called a proof-of-stake.
If it works out then Ethereum has a better chance of surviving in the long term.
Stallion Asset has explained the bitcoin bubble well:
I-T department conducts surveys at Bitcoin exchanges country-wide
They said various teams of the sleuths of the department, under the command of the Bengaluru investigation wing, today visited the premises of nine such exchanges in the country including in Delhi, Bengaluru, Hyderabad, Kochi and Gurugram, since early morning.