Ask HN: Why is Bitcoin suddenly so popular?

[forkLding]

Taking a look below at price, you can see that 1 bitcoin is worth around $4400 US dollars.

https://www.coindesk.com/price/

I remember a time when they were giving out free bitcoin at hackathons and conferences etc.

For a casual outsider and a passive market speculator, whats going on with bitcoin and maybe the rest of cryptocurrencies, what are they seeing that we can't?

And any clues as to whats with the recent surge in East Asian interest of bitcoin?

https://www.coindesk.com/annyeong-bitcoin-south-korea-canada-changing-crypto-market/

Note that I've tried googling but a lot of the urls are before May 2017 and are trying to explain about Bitcoin's peak at ~$2000 which is not helpful much.

[garethsprice]

It's a classic speculative bubble. People are making bets to position themselves for a situation where Bitcoin will be worth a lot in the future, but the valuation is untethered from any intrinsic value.

The surge becomes self-sustaining, in that as news stories of easy wealth spread and more speculators bundle into the market, it fuels more demand from new participants looking to get rich quick. This is not sustainable in the long run, and as soon as the crowd gets spooked all the dumb money will bail out very quickly, leading to a very fast crash.

The Gladwell book "The Tipping Point" is a good read about how ideas and fads take hold in societies. It's more a function of the way information spreads than about any secret knowledge about Bitcoin. Nobody can predict the future, but Bitcoin speculation is an attempt to gamble on it.

There's an investment adage that's something like "When your barista's telling you to invest in something, it's time to get out". Have had a number of non-tech/non-finance friends ask about how to invest money into Bitcoin lately, which is a signal to me that Bitcoin is becoming dangerously overheated.

Take a look at http://static4.businessinsider.com/image/515b40886bb3f7bd490... from the South China Seas bubble in the 18th Century. The first half of that curve look familiar? Guessing we will see a lot of Newtons in the not so distant future...

(Still, I have some crypto as part of my investment portfolio, about 2% of my net worth... you never know...)

[literallycancer]

If you are reasonably sure that it's a bubble, you should be shorting, right?

[gt_]

Define 'intrinsic value' though.

I don't think shininess counts.

[danielharrison]

I'm not sure if a South China Sea bubble in the 18th century can really be used as a valid comparison here.

We're talking about the rise of a self-contained, decentralised currency and transactional system, all rolled into one. It literally has blatant potential to be a game changer, 100%.

In saying that, I wouldn't be surprised if it all falls apart in the short term.

[vanderZwan]

Is anyone else having this feeling (and I'll immediately add the disclaimer that I mean "irrational gut feeling with no factual back-up") that the current cryptocurrency hype is going to end similar to the information superhighway hype of the nineties, with a lot of disappointments, a few big new players, and then a kind of "revival" a decade later where we get it right?

Again, I have no evidence to back this up, I just have a feeling that spectacular mistakes will be made, things will crash and burn when idealism can no longer paper over the parts where naive hopes cannot be reconciled with harsher realities, learn from that, and then get it right the second time around.

EDIT: Note that this is basically a criticism of human nature, not of cryptocurrencies

[soneca]

That bitcoin survived MtGoX espectacular crash and kept growing in value after that shows some resilience. I'm not sure other pure financial bubbles survived middle-of-the-way crashes before the final definitive crash.

That said, I believe there will be a lot of disappointments regarding expectations of bitcoin sparking a revolution. My belief is that it will be "only" one more tool among the several financial tools that exist in the world.

[Rmilb]

There is no doubt the pets.com equivalent of ICO startups that won't deliver anything of value. On the other hand, the googles, and Amazons of the crypto world are being built today and if they provide enough value they will survive when the liquidity tide washes away.

[Andrenid]

I have been thinking the exact same thing, but once again based on nothing other than a hunch and following lots of altcoin stuff from the sidelines.

Doesn't mean I don't regret throwing some BTC away when they were worth cents!

[davidgerard]

Plain bubble. https://en.wikipedia.org/wiki/Economic_bubble Non-speculative use is all but nonexistent. ICOs are a bad excuse whitepaper attached to a tradeable ERC-20 token. There is no actual economic productivity there, just money going into a whirlwind.

I'm getting emails from friends whose retired parents are being targeted by crypto hucksters. My brother sent me an email this morning which was a glaringly obvious scam a friend of his had fallen for and was trying to get him in on.

I thought the bubble was bad a few months ago, right now it's clearly in batshit insane territory. What they're "mining" is the money from normal people who shouldn't be going within a mile of cryptos, and it'll be a bloodbath. The 2017 bubble is so much bigger than the 2013 bubble.

[quickthrower2]

Are you saying dotn hodl?

[xiaoma]

Japan is a huge part of this. Since the government approved btc as a currency, Peach Airlines has started taking bitcoin, huge chains of convenience stores like FamilyMart have been accepting payments in bitcoin, etc.

It's still a tiny portion of total commerce but an absolutely massive jump from previous bitcoin usage.

[davidgerard]

> Since the government approved btc as a currency,

i.e., regulated it in any way at all; specifically, they said exchanges could trade BTC and ETH.

> Peach Airlines has started taking bitcoin,

no, they ran press releases saying they may well by the end of this year probably.

> huge chains of convenience stores like FamilyMart have been accepting payments in bitcoin, etc.

no, one of their payment processors added a bitcoin option; there's so far no evidence of non-negligible usage.

You're inadvertently parroting speculative bitcoin hype here. The general rule with all bitcoin (and blockchain) media coverage is that there's always much less to it than there appears.

[glandium]

Also, bitflyer, a bitcoin exchange, is running TV commercials in Japan (Source: I live in Japan, I've seen it first hand)

[chrisco255]

I think Bitcoin has been growing in popularity since it began, but we first saw mainstream interest in 2013...then interest waned in the wake of the Mt. Gox disaster. Since then, I think the platform and tooling has matured. You've got exchanges like Coinbase that have developed methods of securely storing Bitcoin and have at the same time made it easy for the average person to link to their bank accounts.

I think Ethereum has come up with a novel use case for Blockchain as a distributed computer (as opposed to merely a distributed ledger). And all the alternative cryptos are trying to show that there are use cases for other protocols, too.

So the competition, the tooling, the ecosystem, all of these are exploding right now. There's a lot of money pouring in, developers are getting excited about it...It feels like a new paradigm, distributed apps have some exciting implications. No one knows what this will look like, but it feels a bit like the early dot com era right now.

[forkLding]

Thats actually the part I don't understand, one could argue that VR is in a similar or even more advanced stage than Bitcoin/Blockchain in terms of tooling and platforms simply because of the exposure on a day-to-day basis but we've recently seeing VR die down, VR equipment price cuts to encourage sales and HTC looking for a buyer for its Vive.

In fact one bitcoin is worth almost 6 HTC Vives. I'd argue that there was even bigger interest in VR than Bitcoin specifically and yet Bitcoin has emerged the winner recently.

[nikolay]

It's, in fact, getting less popular outside of speculation - it's only practical use. Most articles and news are about blockchain technology gaining adoption, not Bitcoin per se, which is obsolete already. What's getting popular is Ethereum, and Ripple which is a far more superior platform with real potential but not as lucrative for speculation.

[davidgerard]

The "Blockchain" hype is totally being carried by the hype in cryptos, though. And it is hype - there's endless hypothetical proposals, and endless bare excuses for an ICO, and endless pilot programmes that IBM's managed to sell someone on, but there's about 0 being put into production use.

[exolymph]

Hey now. It's also useful for buying drugs.

[doomjunky]

Crtl + f "bubble" => 17 matches

Since no one mentioned it yet - deflation.

The total amount of bitcoins is limited. Although the last bitcoin has not yet been mined, the available amount of bitcoin has stabilized, because the bitcoin-mining-process has slowed down and is in parity with the bitcoin-got-lost-process.

[vram22]

Coincidentally, there is a recent post on AVC.com (the VC Fred Wilson's blog) about Bitcoin:

http://avc.com/2017/08/store-of-value-vs-payment-system

Note: I don't have a position or view on this topic either way, just posting it here to see if there are any interesting comments here on it, from which I or others might learn something.

[wnmurphy]

What would happen to the long-term legitimacy of the bitcoin market if corrupt state actors started investing heavily in order to hide money laundering?

[fwdslash]

It's the network affect. More people using it, the price rises, more people buy, the price rises more, and on and on.

[nylonstrung]

That doesn't really explain it. BTC's popularity skyrocketed in the last 4 months at an extremely rapid rate that doesn't correspond to any long term trend line.

The price was actually comparatively low as of Q1 2017

[forkLding]

It could be but whats the network effect about? Like I can see a network effect coming out of Facebook for connecting friends, what would bitcoin do thats so powerful, that more people use that the price would rise? Transfer money internationally in a fast and cheap manner?

[nikolay]

More people using it? Any proof of that?

[literallycancer]

The correct word here is "effect".

[wizeman]

I especially like the way the following video explains the long-term vision of why Bitcoin is valuable. Once you understand the long-term vision, and how Bitcoin's fate is still very much up-in-the-air in some respects and still subject to a lot of speculation and possible government interference, it's not hard to understand that such large short-term upsides and downsides are to be expected. The speaker is Andreas Antonopoulos, a particularly eloquent speaker (IMHO) about all things bitcoin: https://youtu.be/ONvg9SbauMg

[freech]

Every day Bitcoin survives proofs that it works.

[2_listerine_pls]

Suddenly?

[forkLding]

It jumped ~2000 dollars USD in less than 2 months

https://www.coindesk.com/price/

[natch]

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