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Everytime I see news like this I imagine a lot of economists laughing.
From an economist perspective, price fluctuations on money is not a feature it is a very serious bug. There is a whole lot of economic theory worried on preventing it. "Good" money should avoid being the target of speculation, it should be stable, boring, predictable. Money that changes their prices is like an unit of measure (meters, quilos) that stretches and shrinks unexpectedly.
There was a long time ago when I could use bitcoins to buy web templates. Today almost no one accepts it as payment. Exactly because it is unstable.
I think it’s misleading to view a currency’s price “stability” as some intrinsic quality that determines whether or not it is suitable for broad adoption. Wild price fluctuations are a consequence of incomplete adoption, relative to the quote currency. Higher adoption leads to less fluctuation as the demand is more constant from day to day.
If we judged the stability of a currency by its supply stability, then Bitcoin would be the most stable currency ever to exist. But for now, it must compete with sovereign fiat currencies and everything is priced in those currencies, so it will appear extremely unstable and perhaps unusable for most transactions.
>Today almost no one accepts it as payment. Exactly because it is unstable.
Or because transactions became too expensive.
It’s like using a wire transfer (~$30 fee) for every transaction. Most people use credit cards or other “delayed settlement” payment methods even with existing fiat currency, so it’s not really fair to compare Bitcoin blockchains transactions to this. Sidechains and other enhancements can easily make low-risk Bitcoin transactions as fast as existing fiat payments.
I used to be very bearish on crypto because all I saw was scam after scam and an unstable "currency" (Bitcoin) that no one used.
But as I've been getting more and more into crypto, especially DeFi, it's clear to me that we are on the cusp of something incredibly revolutionary. Right now, DeFi is to finance what the world wide web was to communication and content in 1993
The internet managed to break every established industry that relied on network effects and scale - media, commerce, communication. But it didn't do much for finance. The world's biggest banks are still the same as they used to be 30 years ago (whereas internet based companies have taken over media and commerce).
DeFi is going to change that. If you rummage through the scams (and there are a LOT of them), there are some truly exciting ideas being explored in this space. It legitimately feels like the internet in 1994. Heck, even the web design is wild and adventurous as it used to be instead of the boring, tame "professional startup" crap we see everywhere now.
I am still skeptical about crypto, at least in its current form: What problem does it solve?
It has failed as a payment system, as a currency, as a reserve currency, a remittance channel, a timestamping service, a settlement layer, a bank for the "unbanked", a cypherpunk liberator, a money laundering tool, a drugs-by-mail tool, a unit of accounting, a store of value, and as a "disruptive" fintech technology.
When I think of crypto/Bitcoin, I am reminded of Warren Buffett's view on gold:
> Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.
> Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?
[…]
> A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.
* https://www.berkshirehathaway.com/letters/2011ltr.pdf
Perhaps it's just the current implementations of 'crypto' that are lacking, and a Crypto 4.0 will get the details right at some point in the future so that it because useful.
You have to start by decoupling crypto and bitcoin. I don't know what use Bitcoin is anymore except as a reserve of value. Some of the more interesting crypto projects are even using BTC as a "peg" currency.
The most interesting use case of crypto to me is synthetic assets. That's where the majority of money in the trading world is stored and made.
Think of margin trading, and buying insurance on being margin called, and trading those insurance tokens - all of these are not "real" assets. They're synthetic; they've used a real asset (say, a stock), multiplied that manifold and enabled trade on it, unlocking exponentially higher value to be created.
Trouble is that this entire world is completely closed to you and I. Goldman Sachs can trade it, but you can't. You can't drop into a bank and ask to underwrite the insurance on my trading account being liquidated - only the bank can.
DeFi changes that. Any asset on-chain can be theoretically combined and made tradable. You can get a loan on DeFi platforms like AAVE. Another platform can offer insurance on those loans. And another platform can offer people the chance to bet on the insurance being called. Since everything is on-chain, a single asset can create exponential value. And since it's all decentralized, anyone can participate, not just banks.
DeFi is honestly in its infancy. The biggest platforms are barely a few years old. The idea of synthetic assets has just taken root. New platforms are just starting to explore opportunities for synthetic assets. There are some very interesting new ideas about stable currencies (look at Ampleforth, Basis Cash, Dynamic Set Dollar). There are new insurance platforms coming up where you can add money into an insurance pool and take a cut out of insurance payments.
If it works - and I truly hope it does - I can't imagine anything more exciting. The internet hasn't managed to break down the walls of traditional finance, let alone investment banks and insurance companies. DeFi is the chance to do that.
Explore this space. I used to dismiss it as just memes and scams. But the more I've dug in, the more I've realized how important it is to make money - and the opportunities to make money - free from banks.
Tell me more about some used of DeFi. So far I have only seen DeFi being talked about in the context of yield farming which isn't an economically productive activity.
See this comment:
On the other hand, precious metal prices fluctuate quite a bit and it’s a normal part of assessing and valuing them as stores of value.
maybe it's not "good" money. Bitcoin is a store of value and it's volatile, much like e.g. the stock of tesla. Conventional money is protected from speculation and swings by guns. Bitcoin is not going to have such protection, but it doesn't seem people who invest in it mind very much. Maybe the concept of what is "good money" has shifted.
Tesla is a company which produces goods and services in return for money. When you own stock in Tesla you own part of the company so it's not something that would be classified as a store of value since it's economically productive.
Maybe. But the alternative hypothesis we have to evaluate against is that people don't expect Bitcoin to be good money in the first place, and their investments are driven by a desire to be part of the movement or a hope that they'll be able to get rich off of it. A sudden spike and then fall in Dogecoin, which was never intended to be taken seriously, is a pretty strong pointer in that direction.
Agreed. Store of value with as much "intrinsic" value (i.e., no one knows and determined by supply / demand) as any other asset.
Well, real money really trades. 5 billion is nothing for the scale of US population or GDP.
I like seeing DOGE doing well. It has never been advertised as anything other than a meme so it's pretty funny watching it get memed into a huge pump. Compared to 99% of other crypto projects it makes no daft claims and doesn't advertise a new "partnership" every week.
It actually seems curious seeing some sort of link between meme power and money. Reminds me of whuffie.
Still not sure who is spending money on the joke, but think it’s cool to see internet world/real world crossovers.
I don't like seeing a fun joke turned into a scam to rip people off.
How is it a scam?
It depends on your interpretation, since there isn't a single actor involved. If you think everyone who buys into it knows what's going on (that it's a pump, and that the last people in are going to be the bagholders), then I'd argue it's not really a scam because there isn't deception going on (IANAL, THIS ISN'T LEGAL ADVICE). On the other hand, the posts I've seen definitely are not mentioning the risk aspect, and are advertising it as a get-rich-quick scheme. In that sense it's a scam.
Just checked, it's down nearly 40% today. It's a meme pump and dump.
Yeah it’s not like GME where a short squeeze (and gamma squeeze) can keep the party going. Nobody is short Dogecoin, and you can’t buy options on it.
But, but...the trading volume!!
Honest question from a nocoiner: are there communities, however small, that use meme coins as non ironic currencies? Like, can I rent a VPS for a month for 1000 doges or whatever from someone without any cross-currency conversion in between?
I know that if I seriously propose that offer someone will take it, but you know, I'm talking about something perennial
There are companies that accept Dog but I believe due to the volatility of all crypto, the rate is derived from it's fiat value.
Such as
Edit* Sorry, on my phone and my eyes are not that great, I miss read communities and vps.
You can watch premium content on pornhub with dogecoin. An example.
That's fair! Thanks
1 BTC is about the same price as 1 Tesla car. I'm not sure how I should feel about that.
I don't know how I should feel, but I definitely know how I do feel about having owned 12 BTC that I bought for $300 about 10 years ago and then just traded until I lost it all, instead of just putting it on a usb key and forgetting about it for a while like I should have. Sigh. I did learn a thing or two about trading, so there is that. I learned enough to stop. (Along with the slightly tarnished feeling of having lost about half of it to the mtgox scandal.. also a good lesson, I guess.)
You really can’t let it eat you. It’s psychologically and economically almost impossible to have bought it that low and sold it high, as the short list of blocks of early coins sold years later demonstrates. There aren’t many Bitcoin millionaires through speculation or early mining alone.
Same goes for buying significant Apple or Amazon stock in the late 90s and holding until now.
> You really can’t let it eat you.
Nah, it doesn't eat at me, only when a story like the one in this thread comes up. :/
The reality is that I was 25 at the time and knew absolutely nothing about the financial industry. I still know next to absolutely nothing, but I was serious about being happy to have learned some things due to playing with BTC. I consider it a fairly inexpensive lesson in how it all works... I'm no good at trading, but to this day I can follow stories about the markets a little better than I would have otherwise. I also learned that trading was fun! It almost gave me an appetite to get more into it, but I realized that at the end of the day I prefer spending my time making functional things than pushing money around.
The other thing that got me to stop was after trying to get into algorithmic trading, which I just couldn't get to work for me, I finally did a basic correlation analysis on prices and realized there is far more noise than signal into those indicators. Obviously there are ways to predict and profit, but I realized it was far too subtle an art for me, and I moved on to other interests.
If it makes you feel any better, I'm in the same boat. I think I made about $100 profit from the 8 or so bitcoin I owned a decade ago.
But I also know that even if I'd made double that, I'd never have had the nerve to hold for a decade. The only way I would have made any serious money would be by forgetting about them.
One the one hand, anyone who ever spent BTC or sold it to someone else appears to have made a bad financial decision.
On the other hand, if everybody had held from the beginning, would this have happened?
If it makes you feel any better I lost about the same amount of bitcoin at about the same time frame playing blackjack in an online casino. I learned the lesson, I never gambled in a casino again. One of those expensive life lessons.
I rented a miner contract off ebay for 50 dollars back then, I recall that I linked it to a mining pool and it earned around 40 dollars worth of BTC. I would like to say I lost it due to the 3rd party wallet company going bankrupt, but if I'm being honest I'm pretty sure I gambled away 90% of it in a BTC dice scheme.
:(
I remember considering to buy into BTC about $100 worth when it was trading at $2.70. My password management then was nowhere near as robust as it is now and I have little doubt that I would not have been able to recover the password for a wallet even if I had made the decision.
+1 on the lessons learned, now I just need to loosen up and accept a tad more risk in my life.
I had a bunch of BTC back in 2010 or so. I always used it, my rationale being "I want a future in which we use cryptocurrency, and using it is the way to help bring that future about".
Unfortunately, that wasn't enough, and in retrospect I should have bought $100 of it to hold, but I don't regret not just HODLing back then. The times were different.
Oh man... this hit close to home.
at one point, i had ~30BTC. i literally spent them buying random shit, like steam games.
oh well, at least those steam games were played.
I think a lot of people feel that way.
Years ago I paid 22,000 Italian Lire for a cheap meal. This is the same thing with the numbers the other way up.
More broadly, this is now a world in which everyone is short sanity and long craziness, until the "correction" arrives. Meanwhile I need to figure out how to cash out the "litecoin" I was given for free by Keybase.io .. what's the reliable exchange for this?
Its times like these I regret losing my doge coin wallet. I got in early on to learn about mining and what crypto was and in the process I think I mined somewhere in the area of 14000 coins. Its a shame I can only ride that $1 moon rocket in spirit with my lost wallet.
The community of genrosity and general kindspiritedness that formed around the silly currency really is a highlight of the time I've spent bouncing around internet communities. Its only fitting it pop up now I think.
"Dogecoin (DOGE) briefly surpassed Bitcoin (BTC) in daily volume on Binance at over $5 billion on Jan. 29.
This is a first for Dogecoin, and it happened as the price of DOGE surged around eightfold overnight from $0.012 to over $0.08."
Pfff should I buy Dogecoin before they’re $50k?
Much wow
Very blockchain
Good boi
I’m not a mathematician, but that looks more like sevenfold than eightfold to me...
I already lost $70 on it.
Curse you Elon!! :D