It can all go to zero
feld.com
feld.com
There are individuals in this thread claiming "there will always be buyers" and that the probability of Bitcoin becoming worthless is zero.
The point of the article isn't that Bitcoin is doomed. It's that there is a substantial non-zero probability it ends up worthless. That such an elementary claim about a volatile asset is controversial almost says more than the article.
The classic one. Nobody wants to pay more than a token amount for Bitcoin. Maybe central banks jacked up rates or we went into a recession or something newer and shinier came about.
Value crashes, miners find it more valuable to sell their equipment than keep mining or confirming transactions, the entire ecosystem compresses to where it was when it was more about tinkering. Maybe it remains somewhat relevant, as a curiosity. Our generation's Esperanto.
It takes no more imagination to imagine $0.0000000001 than it does to imagine $50,000.
Either. Spinning up a cryptocurrency may become as mundane as creating up a database, as silly (or illegal) as trying to market a Ponzi-based hedge fund, or simply a pedagogical tool for CS students.
There is nothing inherent to crypto that says it must hold value. Markets are moody.
Yet you will find claims, on this thread, that Bitcoin becoming worthless is not possible.
A company’s stock (or bond) is a right to get some compensation in case of dissolution, bankruptcy, or liquidation sale. A precious metal like gold still has a backstop value - it can be sold to electronics manufacturers to make those beautiful gold-plated audio cables. Diamonds have a backstop value of being used in boring and drilling. Vacated real estate can be converted to other uses.
All of those assets (when owned outright and not pledged) are unlikely to go to $0.
I'm not sure what difference this makes.
As you can see here, Google has billions of assets, of which $19.7 billion are buildings.
Edit: I thought I posted a link to Google's balance sheet in my parent comment, but apparently I left it out: https://www.marketwatch.com/investing/stock/goog/financials/...
That or governments outlaw it entirely.
Consider, what happens if the Internet dies? Well you could run a private coin on an old laptop, but that's not really meaningful.
By analogy: two decades ago, US consumers were buying almost a billion dollars' worth of photographic film a year [1]. Photography hasn't gone anywhere -- people are taking orders of magnitude more photos than they used to -- but if you had invested your entire net worth into Kodak in 2000, you'd be penniless now.
Is this a serious argument?
Also, the concept of "numbers yet to be found" is philosophically questionable.
I'm not sure I'd bet on them having a quicker response than an open-source project with millions of interested parties.
Additionally, anything sent over the Internet via ANY of the standardized public key encryption algorithms can be skimmed and stored right now and decrypted once quantum computers are available. Social security numbers, bank account numbers, credit card numbers, security question answers, tax returns, trade secrets, personal details, Signal messages between elected officials and/or dissidents, informants, etc... All in clear text to anyone with forethought to start storing it right now.
Changing to a quantum resistant algorithm doesn't change the past; it doesn't change data that has already been archived.
That's why Quantum Jubilee is going to be such a big deal. Not only do you have the usual slowness in deploying new encryption standards (thus likely exposing industrial equipment, etc), but everything being sent right now is already at risk.
And we don't know when it'll happen. Could be 5 years from now, could be 15. Could have already happened in secret (unlikely, but still possible).
However, if you wanted to break the hashed private key, you don't need to solve 256 bits. Grover's algorithm is a search, thus difficulty scales with the final hash key length, not the intermediate hashes. Still, it's only a quadratic speed-up and 160 bits is still pretty tough. But that's fine, as you can still intercept the public keys before they're hashed on the blockchain.
My parents, before I was born, worked as teachers in Africa. They were sent via an agreement of our (communist) state with the Belgian government and were paid "expat" money. Only problem is, they knew that when they came back the government would take all their money (coerce them to exchange it at shit exchange rate, for a currency that was basically worthless). So they invested - they bought stuff. What did they buy? Well, they figured that ivory can only increase in value. So they bought ivory carvings - african art. We're sitting on a bunch of it - except for the artistic/decorative value... the monetary value is zero. Nobody touches ivory. Unless I'm willing to deal with some very shady persons and risk jailtime - I can't turn it to cash.
You think it's unlikely that governments worldwide would ban any given crypto - including BTC? Just watch what happened recently in a few countries....
Bitcoin is unlike your situation as with ivory you have to have physical contact with the shady person. With BTC you don't. People online don't care as much about dealing with shady people. It's also kinda hard to tell who's a shady person online.
An argument that you then concede, saying that it doesn't matter whether BTC is legal or not because you can always sell it online.
If it's illegal, doesn't it's value go way down? If you literally risk jailtime to sell it (or more accurate, to convert it to fiat eventually)
Not really, I dislike the fact that he volunteers this information. Replace ivory with child pornography (ethically they aren't that different). Would you still defend op's parents? Also note, it was a side note, I didn't say it to win an argument.
> If it's illegal, doesn't it's value go way down? If you literally risk jailtime to sell it (or more accurate, to convert it to fiat eventually)
So like all governments at once will outlaw doing anything with crypto? Like not regulate it, even if heavily, they'll just basically make owning crypto as illegal as owning idk, child porn (pardon for the repeat analogy). Like you aren't realizing the impossibility of making something like crypto illegal.
> Not really, I dislike the fact that he volunteers this information. Replace ivory with child pornography (ethically they aren't that different).
Well, they're quite different. Morally, legally, whatever, the society at large assigns larger value to a human than to an animal - any animal. Plus, they didn't do anything illegally - at the time they bought it, it was legal to buy it and sell it anywhere in the world.
You're now eating meat. It's quite conceivable that there might be a future where eating meat obtained through killing animals is considered as barbaric as you are now considering ivory trade. Different time, different people.
I only told you about ivory because it was __relevant__. It's a thing you can relate to - that people did in the past, without giving it much thought. Ponzi schemes are outlawed and considered imoral - do you consider _impossible_ a future where a marketing campaign convinces people that crypto is just a form of ponzi scheme, and participating in one is not just stupid and illegal, but also imoral?
Not the best things to compare. Builtin and culturally acquired anthropocentrism shall not be denied:
"And God said, Let us make man in our image, after our likeness: and let them have dominion over the fish of the sea, and over the fowl of the air, and over the cattle, and over all the earth, and over every creeping thing that creepeth upon the earth."
https://news.ycombinator.com/newsguidelines.html
These cryptocurrency threads are reliably causing people to lose both their manners and their minds, and we're going to start moderating them down for a while until this madness blows over.
So going to zero in that particular way would presume that there's a vulnerability in the protocol that makes it possible to manufacture effectively unlimited bitcoin outside the normal channels, and that nobody is able to figure out a way to defend against it.
2) Bitcoin's blockchain grows to petabytes or exabytes in size thus becoming horrendously slow to both replicate or even host
3) Bitcoin is surpassed by a better technology, such as Cardano or IOTA. This won't kill it but it will stunt/cap its growth indefinitely.
4) Bitcoin fails to integrate into the legacy world fully by remaining pseudonymous, reluctant or refusing to comply with AML/KYC regulations everywhere in the world, developed or not. It then maxes out in growth. Again, not a failure case, as whatever value was there will probably still remain, but it will be dwindled down significantly.
I'm sure there's more but I can't think of all of them...
And it boggles my mind that their only conception of failure is some kind of catastrophe or monumental event, like nuclear war, or quantum computing breaking cryptography. LITERALLY ALL THAT NEEDS TO HAPPEN IS THAT PEOPLE SUDDENLY WANT IT LESS. Excuse my caps.
If people doubt the future of crypto, then the price goes down. If the price goes down, crypto looks less attractive, so the price goes down more. This can spiral arbitrarily close to zero. No nuclear war or quantum computers needed.
What is being traded is like MMORPG game money or game items. They're only valuable as long as people want them. Crypto makes them unfakeable, but that doesn't mean people will want them.
My jaw is on the floor that this is beyond so many peoples' imagination.
I'm guessing there's at least someone that'd pay a few million for all of Bitcoin, so maybe a $0.10-1.0 floor, easily? Would be illiquid and hard for small holders to sell though.
Also, quantum computers do not break Bitcoin entirely as in previously unused addresses are safe. You'd need a way to quickly generate keys matching a certain hash. Otherwise you need a ton of hashing power, too, to rewrite the part of the chain created in the time a spend-of-interest was created and you generated matching keys with your attacking machine. Seems like something that can be upgraded assuming a QC-resistant crypto scheme exists.
It's funny, in this thread you dont really see much crypto optimism despite this meme being around for some time now.
> What is being traded is like MMORPG game money or game items.
There's definitely that aspect to crypto but its naive to think it's a dominant one. It might be like 10% maybe even less.
No offense, but I think this proves my point about commenters not having any clue what a run is or how markets work.
Explain to me what you think causes a run?
Is it really that unbelievable that bitcoin breaks certain economic rules and that some economic theory might have to be rethought? Is that what you are implying? That economics is like "science"?
Yes. Particularly when the basis of this rethinking is “there are so many people involved, how could it possibly crash.”
Yes, yes it is. It's incredibly remarkable that bitcoin could rewrite our economic theories so completely. It offers nothing novel in any way economically.
> It offers nothing novel in any way economically.
Ok, can you explain bitcoin in economic terms?
Its current status is essentially a speculative commodity. But in that regard it has no utility. Most commodities are, well, something tangible or valued based on something else in the world. Bitcoin as a commodity has nothing backing it up other than its distributed ledger and the massive amount of computational power behind that. But the distributed ledger will see a drop in miners as the value of BTC drops, or an increase in fees to make it even less tenable as a currency than it already is. If BTC were a useful currency, then BTC the commodity would at least have that as a backing. In theory the commodity price and currency price would move towards each other (with one leading or lagging behind the other). But BTC the commodity has made BTC the currency essentially impossible to use due to the present overvaluation.
Regarding deflation and its inability to survive more than one or two generations, assuming some stability, if it maintains a modest 2% deflation rate the real value of a nominal amount of BTC would double every 32 years. So someone receiving 1 BTC as salary today would receive 0.5 BTC for the same work in approximately 32 years. Halved again 32 years later, the 3rd or 4th generation would receive 1/4 the salary of the first generation (in nominal terms) and have a fraction of the buying power.
I suppose a novel aspect of this is that it virtually eliminates the need for pensions as the mere presence of money in your wallet means you'll have more buying power in the future than now. Unfortunately this only makes financial inequality even worse than the situation we have today. Lending would be eliminated, or the terms would be so dreadful only the most desperate would seek it. Savings would go up, but in the "under the mattress" sense rather than the "in the bank" sense, where the money can at least continue to have some utility by being lended out to others by the bank. A massive economic drag.
None of this is novel stuff, from an economics standpoint.
> As a currency, assuming that its value stabilized
by pointing out that without a central bank, a stable value is literally impossible, because its price becomes entirely demand-driven.
That alone is enough to bring its hope of being a meaningful currency in stable society to zilch.
Correct, but you somehow missed how demand for bitcoin was actually created - it is somewhat untraceable currency therefore used in "black market" transactions.
As those markets develop they will demand such currency in one way or another and that's novelty from an economics standpoint.
But that was also something that held back bitcoins valuation. In 2011/2012 anyone who heard of it either understood its technical features, or thought it was "that thing for buying drugs online". Once it stopped being the latter (at least in common perception) the speculation really began in earnest as the exchanges were able to gain access to banks and other financial institutions.
A blackmarket crypto that retains that reputation, whether used for legitimate business or not, will likely find its global valuation impaired by that reputation like bitcoin and it will be difficult for average folks with no interest in the blackmarket economy from "investing" in it.
It certainly will be interesting.
> Sure. It's an overvalued, speculative commodity in a bubble.
Overvalued compared with what? Speculative is an opinion.
> Ostensibly a currency, but without any of the useful features of a currency
With a fundamentally different set of features. Like being able to exchange with literally anyone in the world is unprecedented. Again, Bitcoin has opened many new markets, e.g. I can trade with North Korea with it. It also lets the underbanked people fight back against their government. E.g. I can pay a worker in Zimbabwe much easier than before. This could drive up the adoption rate to unprecedented levels.
> Most commodities are, well, something tangible or valued based on something else in the world. Bitcoin as a commodity has nothing backing it up other than its distributed ledger and the massive amount of computational power behind that.
The backing part of commodities is greatly exaggerated. Who cares? Is that why you are using dollars? It's a protocol that lets me plugin to the world economy. That's unprecedented.
You talk about BTC but like BTC is not the end all. There's like 7000 crypto, some of which are shit but some have like ...serious research behind them.
As a trading instrument it's so much better than stock. With stock you have to wait three days. I guess the closest is Forex but forex is just so boring.
You asked me to explain bitcoin, I did.
> Overvalued compared with what? Speculative is an opinion.
Overvalued compared to its utility as a currency, which is what it ostensibly is. As a currency it presently has no value because the overall BTC valuation is so high and so unstable, paired with the transaction fees and delays.
Speculation is not an opinion here. Look at how many people are "investing" in it with no comprehension of what it is and what it does.
> Like being able to exchange with literally anyone in the world is unprecedented.
For all practical purposes I can exchange Euros and US dollars with anyone in the world, modulo a few countries that have stricter and enforced policies. I was in Uruguay last July and was able to use USD at shops because the other option was credit card (exchange rate set at the end of the day) or ARS (cash on hand) and the exchange rate was better with the posted USD->UYU was better than either of those (as long as I used at least a $20 bill). No questions asked, they just took it and I got the goods I wanted.
> I can trade with North Korea with it.
I will agree that it does eliminate or reduce the effectiveness of economic sanctions in some situations, like this one. However, if you're a US citizen conducting business with NK is still illegal or tightly controlled, and bitcoin is only pseudonymous. And with regard to opening up financial interactions with people across borders, that is a potentially very useful thing. But at the moment it is not a feasible thing with bitcoin.
> The backing part of commodities is greatly exaggerated. Who cares?
The people seeking profit off of them. If a commodity doesn't have something behind it, its value will fall. When it will fall can be a while in the future depending on the general hype and/or confidence. Bitcoin is all hope, no real confidence, and no real utility (at present).
> You talk about BTC but like BTC is not the end all.
You asked about bitcoin, I answered about bitcoin.
> As a trading instrument it's so much better than stock. With stock you have to wait three days. I guess the closest is Forex but forex is just so boring.
Three days? Three days for what? And better in what way? In the "I enjoy rollercoasters" sense? Then sure, it's better that way. At least with stocks (or the ones I invest in) I can examine the fundamentals of a company, the global and national economies they play in, and have some idea of whether they're overvalued or undervalued at any given time with ease. Most Forex is the same.
Bitcoin, the thing you asked about, is not useful as a currency. So it's only useful, right now, as a commodity and in trading on various exchanges as a commodity. It is pure speculation until the value on those exchanges and the value of things I can purchase with are closer together than they are today.
It's not just a currency. It's part stock, part currency, part forex, part world of warcraft money, part political movement, part programming platform, part distributed database etc etc. Like the number of categories it fits into is a lot.
Ok talk about ethereum. Does ethereum have intrinsic value?
> Look at how many people are "investing" in it with no comprehension of what it is and what it does.
Is everyone investing into bitcoin speculating? Is possible that some people know what it is and still want to invest?
> But at the moment it is not a feasible thing with bitcoin.
That was an extreme example.
> Bitcoin is all hope, no real confidence, and no real utility (at present).
Ok, lets talk about other crypto.
> You asked about bitcoin, I answered about bitcoin.
OK can you answer the same questions for other cryptos not just Bitcoin?
Nah. You'll just be dissatisfied and ask me to answer other questions.
"I don't understand what a run is, but somehow I'm pretty sure it's bullshit. I don't understand how economics works, but I'm pretty sure all the rules have been rewritten in some unspecified way that makes bitcoin invulnerable, and I'm in a better position to know this than people who actually have the understanding that I'm rejecting. My ignorance, which I have no burden to dispel, is better than your knowledge."
If that's not your viewpoint, then I'd love to hear what exactly you were getting at.
Also what exactly do you think is the required knowledge for this? Just economics? If so, you are off.
Yeah, we could start there. So what's a run and what causes it? Still waiting.
Things like that don't just suddenly happen for no reason.
That it's such an elementary claim is the reason for the pushback. What's the point in saying something obvious?
Saying something obvious (e.g. circles are round) isn't the same as refuting something obvious (e.g. circles are squares).
But I don't know. If you play with the zoom levels on price tracking sites, the $20k peak onward has been a pretty steady downward trend. BTC is down 20% over three days, down nearly 23% over a week. Is that par even for Bitcoin flash-crashes lately? Zoom out further to a month and the price is now down almost 40% at the time of this post.
We zoom out to six months, or a year, or two years, and we see astounding gains then – we are all aware of the blistering rise in price over 2017. But once it dipped after 20k, there were a lot of people who swore it would climb back. And then it dipped further, and further, and the collective memory of Bitcoin's humble recent history was lost in the cacophony of media blitzes and new customers entering the market.
I think the underlying worry for most people isn't the fact that the price goes up and down a lot... I think the worry really is that when growth stops will people still be interested? Can Bitcoin last forever if the price is e.g. <$5000/BTC?
Exactly! This is why casinos never make money.
This is what any market would look like without being rigged by governments and government backed institutions.
Bitcoin may be the best proof yet of how deeply flawed the libertarian free market ideology really is.
The price of gold isn't stable because the visible hand of the govt has stabilized it, or if there is any law which protects it.
If you have convinced yourself that this is the reason why it is stable, then you're drinking your own kool aide.
The price of gold, or any currency is stable because its market has been discovered, and huge financial assets have been created which allow people to profit off it's price movements, which results in price stability.
Even with that, Gold market can move up and down quite drastically, for instance when in 2009 and 2010 by 25% and 30% respectively, then dropped by 27% in 2013.
The reason why price of Bitcoin moves so much up and down because it's true market hasn't realized yet, once it does, it's price will stabilize too. No govt can make it happen.
If someone ever manages to mine asteroids for gold or we discover a previously unknown reserve we'll see more price shocks.
I don't know where you got the idea that the supply of gold was stable; it is merely inflexible because it depends on physically digging it out of the dirt.
Protections in the form of contract law, fair and impartial judiciary, notions of property (ownership)...
We can't just blanket say that any government interaction with a market is negative. Sure many aspects are. But there are positives as well.
If you look at the housing crisis that occurred that was because the market was becoming unregulated over time and because fraud was allowed to flourish. That was then coupled with human greed and it wasn't entirely the government or the banks faults either, because if regular people weren't going out to buy houses to make money doing nothing, then there wouldn't be such a huge collapse.
At the end of the day it's all the same. People want to get rich doing nothing and any opportunity to do so brings out the greed in individuals. If there weren't some winners in this equation, especially winners that you can relate to, then people wouldn't join in. But when an everyday person makes money this way then everyone starts thinking, well that person isn't special, why can't I do the same?
More often than not the early investors are the ones that reap the profits and hope to exit on time, while those entering the game late are the ones most likely to incur losses.
Look at the fundamentals. What we have here is a bad currency (volatile and deflationary) whose utility is diminishing as its price increases.
There aren't a lot of value investors in cryptocurrency at this point. The vast majority of the people who hold it are holding it on the theory that it will continue to appreciate, but it can only do that if more money comes in. If these "HODL"ers start to believe that no more money will come in they will sell to lock in their gains. Once it starts this will easily become a self-reinforcing panic sell-off a.k.a. a bank run.
Let's say it goes higher. Let's say it goes up another 1000%. That doesn't change these fundamentals. If anything it makes the situation even more volatile. Most people look at price charts in linear not logarithmic mode, making moves look larger at higher prices. This makes panic selling more likely.
I agree that bitcoin et al are escrows vs currencies.
That their current valuation is a combination of money laundering and typical bubble hype (FOMO, castles in the sky, gambling).
Do you have any tools you recommend that make it easy to see these logarithmic charts?
The transaction fees on the network are incentives for miners to pass transactions in addition to block rewards.
But you can gain some idea of probability that something is correct or incorrect. For example, if 99 of 100 doctors agree that vaccines do not cause autism, that does not necessarily mean that vaccines do not cause autism. But chances are really good that the 99% of doctors are correct.
Nice job giving the formal name of a logical fallacy, though. Adds a lot of credibility to your argument!
The whitepaper is short and very approachable ;)
For reference a lot of times you currently have to pay a fee of >$10 to get your transaction recorded in the blockchain, and estimates of around $10 million a day in transaction fees go to miners.
Of course its questionable whether fees can actually support the ecosystem, but it is designed into the system.
The endgame seems completely untenable. No one is going to pay a huge amount per BTC transfer. So what do you think will happen to all those miners, with all their mining equipment?
We currently have a monstrous block reward every 10 minutes, and yet tx fees are already $10 to $20. Imagine how much the fees will be when there's no reward.
Which of course means the next difficulty adjustment would take far longer than two weeks to trigger.
right now every block pays 12.5 coins, which even with current low prices is around $145K.
The average transactions per block looks like around 1,800 (https://blockchain.info/charts/n-transactions-per-block) which puts mining revenue per transaction at around $80, on top of which miners also get the transaction fee.
With no more mining where is the other $80 going to come from?
More to the point, who in their right mind would ever use a transaction processing system that charges $80+ per transaction?
What happens when you have a fixed currency stock and every transaction requires paying some of it to the transaction processors? Seems pretty unsustainable to me.
Are you asking where transaction fees come from?
Well, if PayPal earns $3 when I use it to send you $100, where did that $3 come from? The truth is that I sent PayPal $103, PayPal kept $3, and you got $100. (These numbers are probably not exactly correct; I don't know what PayPal's actual fees are off the top of my head.)
So the transaction fee comes from the person that made the payment.
If what you're saying is that this means that miners will be able to accumulate all the BTC… well, yes, but that's what happens now. When you buy BTC, you are buying something that, at one point or other, was initially owned by a miner. So yes, miners could bring the whole system down if they just accumulate all the BTC for themselves, but they could already do that now, and they don't - instead they trade that BTC for fiat or (nowadays, perhaps) other cryptocurrencies, so it begins to circulate to others.
What will happen is that animal spirits will change, and liquidity will slowly recede. At some point many market players will say, "Yes crypto has value, but I prefer to hold more dollars for the time being."
Price levels drop and volatility increases, and the feeling compounds. More people prefer to hold more of their wealth in dollars.
Those who have bought with leverage are force to sell, driving the price further down.
At that point there is a full on panic and crypto exchanges which are unregulated at best and sketchy at worst, and under no legal obligation to clear trades, will first front run their customers and then fail.
Stocks and bonds at this point would hit a floor at the value of the liquidation dividend, often, but not always, zero for the stock, slightly higher for bonds.
Currencies have no floor, but typically have capital restrictions (you can't get out) or a central bank with reserves and an interest rate mechanism The central bank would buy with reserves or raise interest rates to support it.
Cryptos have no central bank and no capital restrictions.
The reality is that the nanosecond the zeitgeist changes and people start believing that there is going to be an extended period of decreased value in cryptocurrencies then there will be a massive selloff which will just cascade. This is how markets work, this is how speculative bubbles work. Bitcoin especially has almost no value other than speculative investment, it's just a matter of time until the bubble pops.
The market as a whole won't tank completely unless its revealed that blockchain or DAG tech can't ever scale and decentralized tech is just too slow and inconvenient to use for everyday purposes.
At some point during said panic sale-off people will think, hey have the fundamentals changed or is this just a panic sell-off? Then they won't sell or will sell with the intent of buying in lower.
Curious, none of the things you mention indicate how this speculative bubble is any different from houses, stocks, or tulips.
People were investing in houses, stocks and tulips to make money. Many people invest in Bitcoin for religious reasons.
Could you please explain what “overvalued” even means in this context, and how one might go about determining fair value for cryptocurrency? I’ve yet to receive a straight answer on this.
So now we have bascially infinite bitcoins so the value of them is zero, because why would I buy one, when I can just make one at any time.
The opposite of this is where Bitcoin derived it's value. First there is a fixed number of Bitcoin, so you can't simply make more past a point. Secondly, the effort required to mine Bitcoin increases over time.
This effort requires real world currency exchange. I need to buy a powerful computer and then pay a lot of electricity, cooling, space.
So effectively my mining operation costs $x. Now as time goes on to get the same number of Bitcoins I need to increase my spend because the computational needs increase as well.
Effectively, I'm exchanging my USD to equipment and energy, which are giving me Bitcoins.
A reasonable value for Bitcoin would be to calculate the total amount of hardware and energy invested in mining and there you have a decent floor value. You can then extrapolate this for the future, since the total amount of Bitcoin to be created is known, you could say that multiplying that out you get a total amount of value.
To say that they are overvalued would mean that the total current dollars invested in mining bitcoin is far less than the current total market cap of said coins. If you look at the price of Bitcoin 2014 to the start of 2017, you see a gradual increase in price, which would be explained by the amount of money going into mining and with some markup.
In 2017 you see a 20x increase, but that isn't matched with a 20x increase in spend for minting Bitcoins, so the increase is irrational.
If I spend 1000 hours making a really bad doesn't, it'll have a value of zero, even though it's unique and a lot of work was put into it.
I haven't created value, I've destroyed it, I.e. All that time and nothing to show for it.
So not everything that is limited is valuable, however everything that is valuable is limited.
Just imagine if someone figured out how to engineer gold out of thin air, the value of gold would drop instantly.
That's literally exactly what you asserted:
> The opposite of this is where Bitcoin derived it's value. First there is a fixed number of Bitcoin, so you can't simply make more past a point. Secondly, the effort required to mine Bitcoin increases over time.
Not necessarily. The effort required is based on trying to create blocks every 10 minutes. If the price increases, mining becomes more profitable, thus more effort will be put into mining, which means the blocks will start to be created quicker, leading to an increase in difficulty. The reverse is also true: if blocks take too long, the difficulty decreases.
If you take a look at a difficulty graph [0] you can see that it decreases at times. Compare with a price graph [1]. You can see that significant price decreases also cause minor difficulty decreases, but it's not a 1:1 correlation due to mining efficiency improvements.
[0] https://bitinfocharts.com/comparison/bitcoin-difficulty.html... [1] https://bitinfocharts.com/comparison/bitcoin-price.html#log
The fair value for cryptocurrency, just as with everything else, is determined by the market(s) (at least, when it is unadulterated by government obstruction and price-fixing and such). So to determine the fair value of a bitcoin, go to the exchange of your choice and look at the price. If you don't like that price, try a different exchange. You might not want to pay that price right now, and that's okay, but that's what the fair value is right now.
To quote Warren Buffett, “price is what you pay, value is what you get.”
I "overpay" for Apple laptops because I know I'll be able to quickly make my money back by doing productive things with them.
Maybe 0 isn't right for bitcoin but it is possible for it to go incredibly low and there are altcoins for which there isn't even any historical interest....
That is a crazy claim.
People still occasionally perform music from 2000 odd years ago, which I would consider to belong to a different civilization to our own.
Gold has jewelry and industrial uses, but bitcoins are cypherpunk collectibles.
A 5%/day sustained drop is enough to halt transaction processing entirely.
Often what happens after a massive price drop is people stop trading instead of a larger nominal price drop. AKA, you still get some high value beanie baby transactions, but the market is not large enough to really liquidate a collection at even close to the nominal clearing price.
It seems like the harder problem is convincing anyone else to pickup mining again on the other side of your "I own all the coin" transaction block.
So, unless you start over there will be transactions to addresses and you need to be able to correctly sign a transaction to your own address.
PS: Think of it this way, someone mining just one block can't make an arbitrary transaction from any address to any address.
Markets crash discontinuously. It was trading at one hundred, it was trading at one hundred, it was trading at 99, it was trading at 2. Go on GDAX and look at the order book. Lots of demand priced close together at the top of the book. As you go down, the bids are further apart.
As a first-order approximation, that's a decent view into what would happen if a massive bought of selling hit the exchange.
Some people would probably argue it's no longer "Bitcoin" at that point, but at least you'd still hold coins that have some value.
That is just an observation about human nature. I have no idea what will happen with the price of anything.
Too many players, too much ease of access, too much of the potential has been demonstrated at this point. Could it go down 50% or more still? Yeah possibly. I sat through 2013-2015 when Bitcoin had fallen from $1200 and got stuck in the $180-$300 range for two straight years.
I don't think that's going to happen again, not least of which because there will be people like me that would be happy to buy and hold until whenever it goes back up again at that price, but sure, it's possible.
But zero, or close to zero? No. Even this guy's example of his company was only one company, not the entire stock market.
There's not an equivalent to mutuals in the cryptoverse yet, but there will be.
I've made quite a few small bets on various alts. I'm taking the black swan approach to them. Quite a few could drop to zero in a couple years but I'm betting at least one of them will make enough of a profit to eclipse my losses in the others. If one of them had been Raiblocks, that already would have been the case ($0.10 cents to $34 in 3 months...crazy). It missed my radar because the aggregate site I check didn't include it.
Working equivalents already exist.
Something that you want me to use to buy things with should not be so volatile that it goes from pizza to luxury home in less than ten years years. If I had some bitcoin "lost in the cushions of my couch"from that era I would be a rich man today.
Crypto currency has become a massive misnomer. To that end I'm not sure WHAT it is any more because if it isn't stable as a currency and it doesn't have intrinsic value then what good is it?
And assets are worth whatever other people are willing to pay for it. My friend sold a digital-only World of Warcraft character to someone for over $2000 once, and for the longest time there was a sub-industry based around buildings of employees playing the game to get and sell World of Warcraft gold, so much so that it got its own term of 'goldfarming'.
Crypto has value because other people are willing to pay the asking price for it. If that ever becomes not the case, then it's no longer an asset. Could that ever happen? Possibly, and I'd say definitely for certain coins. But now that this idea exists in the world of programmable tokens that can be exchanged quickly and cheaply and decentralized public ledgers, I don't think it's ever going away, not totally.
Cisco went from ~$550 billion to ~$50 billion.
That was a real business with billions in profit. That single drop is nearly greater than the value loss in all the junk dotcom stocks combined. There were dozens of real businesses that were massively over-inflated, from Intel to Microsoft.
Oracle went from ~$200 billion to ~$35 billion. Again, another very serious business with substantial profits.
So how about Bitcoin goes to $3,000 to $6,000 and stays there for ten years? Impossible! everyone will cry.
$25K is not zero, but it would be hard to distinguish the effective difference if you're leveraged $250K.
So, as with any investment, if you're spending monopoly money on cryptocurrencies, scoff away. But if your retirement depends on it...
Las Vegas saw some similar action. It suffered the worst overall top to bottom crash of any major city in the US.
I don't have monopoly money in crypto, in fact I just cashed enough out to put a downpayment on a house just yesterday (fortuitous timing), but I understand how volatile the market is and I only invest what I can afford to lose.
Honestly if crypto did lose 95% of it's value overnight, I'd still keep on buying, and just wait until the market recovered. I don't want that to happen, I'd love for it to go up forever without ever dropping, but I understand that's not a reasonable idea, especially after sitting through the last two major Bitcoin crashes.
Maybe. If you actually own the house, sure. But many people had a mortgage, lost their jobs, and they couldn't afford the mortgage any longer. Additionally you can borrow against the value of your house. But since that house was practically worthless, they couldn't borrow to get through the job loss.
What assets does a cryptocurrency have? What value is actually there?
You can't really do this with bitcoin. It's never going to "shut down".
Waste of energy, however, is harder to argue with. Hence PoS etc.
What industry is that? Don't confuse a handful of exchanges, speculators, con-men and marks with an 'industry'.
Will the history show the future again?
There was a lot of economic movement while the entire economy moved over to the internet. Those who didn't adapt failed. Those who tried models which didn't translate also failed. Lots of experimentation, and lots of reinventing things from scratch. So lots of failure and lots of speculation-- but ultimately around a real sea change.
I don't see how blockchain tech could have a technological / cultural impact on that scale. It has some value, and it will find its place in mainstream society, but I don't see how/why the market needs to test everything against it to reinvent itself as was done when the internet came to the fore. I could see that for sure with AI, but blockchain? Seems pretty specific and limited.
Much more hype and much less substance than the .com revolution, IMO.
Before the internet, I would wake up in the morning and have to go to a store and buy clothes, then the travel agent to book flights, then Blockbuster to get a movie to watch. After the internet I could wake up in the morning and do all that myself. That was valuable.
Before smartphones I would wake up in the morning and print out my airline tickets, then call a taxi service and have to explain to them where I was, and I couldn't tell where the driver was if I didn't see him.
OK, got all that?
Now, with cryptocurrency I will wake up in the morning and do what? I could send money to buy drugs, that's a pretty killer use case. There are some things like transferring money out of a war torn country that maybe it would help that have some value, but I'm not in a war torn country. So... where's my killer use case?
It's important to note that all the internet/smartphone examples above are INCREDIBLE use cases, and that's just scratching the surface. Booking travel used to SUCK now it's better. I can get books instantly. I can collaborate on music or video production across the country. And so on, these are big deal things. There are TONS of examples. The business opportunities here were utterly massive. Nearly everything people and businesses did on a daily basis changed in consequential ways due to the internet in ways that opened up opportunity for profit.
And even with that said most of the people who saw the promise of the internet in 1997-2000 and put money into passive investments got creamed.
Now, in all seriousness, what's my morning going to be like with crypto as a mature technology, how will it be different and better and why will I care? When will this happen, why hasn't it already happened, and how are all these people going to profit from the change?
The fact that your imagination can't come up with killer use cases does not mean that those use cases don't exist. It means you haven't exercised your imagination very hard.
Further, if I think I know what crypto's killer use cases will be, also think that I can prove concept as to those use cases within 1-2 years, and I have enough money to fund that process, why would I explain those cases to you?
If you're constantly waiting for concepts to be proven, you'll always feel behind the curve and wondering why others have way more money than you, even though you're way smarter than they are. Imagination, vision, and the willingness to push beyond initial analysis are probably worth 20-40 IQ points in terms of lifetime earning potential.
In fact, I read a book written in back in 1914, about the history of aviation up to that point, that was talking about planes being used in WWI, and a sentence struck out at me that said something like "It's not determined yet what, or if, there is any commercial use to planes as of yet, but their use in warfare is clear."
Obviously in hindsight it's clear that there are tons of commercial uses for airplanes, but back then it wasn't proven yet, and the writer apparently didn't have the imagination to even make a prediction on it.
The benefits of manned flight to the military, and having a spotter above the battlefield, let alone flying weapons, were massive and immediately apparent to a child.
Maybe some writer was trying and failing to make some kind of point. I don't know the guy.
None of this really changes the point that ten years into cryptocurrency the only genuine killer use cases are contraband and speculation.
"In 1917, at the time of writing this book, there are probably thirty distinct types of airplanes being manufactured for commercial and military use, and not less than fifty thousand are being used daily over the battlefields of Europe. No invention save possibly the telephone and the automobile ever attained so prodigious a development in so brief a time. Wise observers hold that the demand for these machines is yet in its infancy, and that when the end of the war shall lead manufacturers and designers to turn their attention to the commercial value of the airplane the flying craft will be as common in the air as the automobiles at least on our country roads."
I think what happened is that I was marveling that I was reading a book where it was talking about the history of aviation before there were actual airports and consumer uses for planes, and I was essentially tying that in with 'commercial' in my memory of the passage. Up until this point in the book he hadn't mentioned any real commercial uses, but further investigation revealed that there were actual commercial flights as early as 1914, so I was wrong about that as well.
Nevertheless, most people back in 1917 would not even begin to imagine where commercial flight would lead us to one hundred years later, especially with space flight, jumbo jets, super sonic jets, drones, etc. Give crypto one hundred years and I don't think anyone will still be saying "cryptocurrency is only good for contraband and speculation". Give people the chance to build the infrastructure around it.
Especially when people have invested a couple billion dollars in the tool.
I actually asked this question of Joseph Lubin, a founder of Ethereum, when I interviewed him for a podcast. Unlike you he did actually have some answers for it, he mentioned peer to peer insurance markets, crowdfunding, seamless payments to content creators.
He fits your description and was happy to explain. It was an interesting discussion. I remain unconvinced, in the sense that I think the hype is out of control and 99.99% of the initiatives in this sector are essentially scams, but clearly there are some smart people working on it. Who knows.
As an investment I still think it's a dumpster fire, and my question is still an excellent one in my opinion.
I know that's not what crypto currency currently is, but that's what I personally want it to be. I could care less about its' fluctuation in respect to fiat.
For me I look at crypto the same way. Crypto's value is going to fluctuate over time, but I think that over the long term (5-10 years) it will become more stable and more valuable. A huge dip is a great time to buy.
It also helps to only buy crypto for fun and consider it akin to gambling :)
Once you can buy $10 of goods, consistently, for 0.0001 BTC (or whatever) then the price will be stable and the currency can establish itself.
The same is true for the other cryptocurrencies. Being unpegged from any other currency or any goods, and nearly useless for conducting business transactions means the value will remain wildly unstable with a significant non-zero risk of failure or effective failure (going to $0 or something not much above that with little interest in conducting business using the currency).
And that stability is literally impossible without a central bank.
http://www.bzarg.com/p/what-bitcoin-shows-us-about-how-money...
There are plenty of bubbles that never really recovered (ex. the Japanese stock market crash of 1989), and technologies that petered out (ex. tablets).
Pattern matching to the first chart that comes to mind isn't a great way to predict the future. Instead, look for arguments why something will or will not be useful, since that's what actually will determine the eventual success or failure.
Total amount of US currency in circulation = 1.2 T https://www.newyorkfed.org/aboutthefed/fedpoint/fed01.html
Any way you want to figure it, the amount of wealth that exists does not correspond to the amount of currency in circulation. Both can go up and down independently of each other.
Is that true? Source please
It also depends on what you mean by "controlled by". Large amounts of Bitcoin have been deposited in exchanges where the coin "owners" have no control over the coins. For example Bitfinex stores about 1% of Bitcoins in a single wallet [2]
[1] https://www.zerohedge.com/news/2017-09-19/cryptocurrency-con...
[2] https://bitinfocharts.com/bitcoin/address/3D2oetdNuZUqQHPJmc...
No 94% is not owned by 4% of people. The cold wallets behind major exchanges completely skew those number
And no, 30% of coins are not “lost”. Realistically it’s closer to 5%
As long as folks believe there's a get rich quick possibility (or believe in the viability of crypto assets, or whatever), things will keep on as they've kept on.
HOWEVER: What that line of thinking misses is the possibility of new, external, market-shocking information. I don't know what that is or could be (the ol 'we don't know what we don't know'). Maybe someone discovers a massive and fundamental bug that renders them useless. Maybe quantum computing advances faster than we think and factoring large numbers becomes trivial. Maybe ______, maybe _______, maybe maybe maybe.
THAT is what could bring it all to $0. That's what you should be worried about. That's why this isn't a sure thing for ever and ever.
The latter could indeed crash without impacting the former. Advances in the former that solve cryptocurrency scaling problems could even cause the latter to crash by reducing artificial scarcity. Unlike gold there is no real objective scarcity here. It's just software.
"Bitcoin is a major innovation" and "Bitcoin is a bubble" can both be true.
BTW...
I'm waiting for someone to explain to me why this kind of appreciation in value is actually a desirable thing in a currency. It makes Bitcoin less useful.
It's similar to housing. How is housing being more expensive a good thing?
Humans are skittish, irrational creatures, especially in large groups. If you operate on the 'rational market' hypothesis, you're wrong. Plain and simple, just wrong. That's not how it works, or how it has ever worked. Panics happen. People hurt themselves in order to limit their exposure to even manageable risk.
But, their main insight stands, really. If you can hold long enough, things converge. It's the 'hold long enough' bit that can sometimes require a wait that costs more money than there is in the world.
So who's to say a parody coin isn't worth that much? It certainly caught everyone's attention.
But yeah, it is questionable, and a serious indicator there is a lot of "me too" money in the cryptocurrency space.
To motivate this, there are many reasons for gold to have become the physical currency of choice, outlined here: http://www.bbc.com/news/magazine-25255957
I would imagine that the long-term cryptocurrency will have comparable benefits (whatever those benefits are for cryptocurrencies).
https://twitter.com/cryptozerp/status/953324474077769728
Good time to go shopping!
But there is more room to go up than to go down :)
http://archive.is/2018.01.16-165846/https://twitter.com/AntP...
Just looking at r/Poloniex it doesn't seem like quick customer turnaround is a thing.
Bitcoin is all about money trying to get out of China. There is a bit of people in countries with trashy currencies trying to save, some illegal commerce and some greater fool speculation on top of that, but that's not a lot of money comparitively. As China squeezes the vice, it's going to slowly suck most of the air out of the market.
There are a lot of kinds of risks you can buy that exhibit "picking up dimes in front of a steamroller" risk, and are priced fairly. That is, 99% of the time you get a free dime...
Honestly, the history and trends are there, its just a thing that happens every year, I dunno man
Indeed, if this had been an equity, it would have been illegal for him to trade the equity without disclosing the insider information prior to the trade.
I don’t want to make money on short-term financial trades, but rather by helping create new things over the long-term.
Anyone else have comments on this? I’ve been thinking this lately as well
Bitcoin has none of these properties ,which makes me call it a fiat currency (like the U.S. dollar). The only difference is that the U.S. dollar does have transactional value (and limited storage value).
All that can change, but only if the price drops back down to its 2016 to early 2017 values, and there are too many people invested at this price to let Bitcoin survive as an actual currency if that happens.
We crossed the event horizon a couple months ago.
Could one have a cryptocurrency which is always subdividable? Are there any which already have this feature?
Are you sure it's not a flaw in pricing/incentive? If people are using a cryptocurrency "in a real sense" then the public blockchain ledger of a properly maintained cryptocurrency could be maintained by parties who are motivated to get their transaction done. This is not a natural flaw in the general mining concept. This is a flaw in Bitcoin's implementation of mining, due to the circumstance that most miners of Bitcoin are motivated by speculation in Bitcoin.
One in particular has 128bits of divisibility (3.4e+38 raw units)
(Disclaimer: I'm invested in it and don't want to shill)
the value is that you can have anyone in the world murdered without it ever conceivably getting back to you.[1]
(that value is obviously negative.)
Therefore the appropriate value of bitcoin is $0 because literally all of society is set up for the exact and sole purpose of ensuring that the availability of bitcoin is $0.
This is literally the only purpose for which the past 100,000 years of society have been set up.
That's it. 1) technology. 2) rule of law.
briefly 1 has surpassed 2 but not for long. social progress is worth way more than technological progress.
My price target for bitcoin is $0. That said, an appropriate target is trillions in market cap and it is likely to get to that price.
----
[1] While producing greenhouse gasses robbing our children and their children of the sole habitable habitat in the universe - but that is not enough to make it illegal.
There are lots of governments and people that attempted to censor perfectly moral and reasonable transactions.
Just because it is "the law" doesn't make it right.
Do you also dislike Tor because it allows political dissenters to hide from the government?
Which is exactly why tools for fighting censorship are important.
To fight the bad governments.
"just make the government better" isn't a solution. People have been trying to make terrible, abusive governments better for thousands of years.
But until the problem of bad governments is solved, tools to fight those governments are important.
Just like tools that allow people to engage in anonymous and protected speech and political disagreement are important.
And right now there are a lot of really freaking terrible governments.
I'd argue that around ~20 percent of people in the world right now live under a government that I'd describe as "Nazi level bad". (ex, much of the middle east has laws that literally give the death penalty for being gay. That's Nazi level bad... ).
When you have this many people living under terrible governments, tools for these people are extremely important.
What other ways do people have of sending censorship resistant transactions?
It seems there are only two types of sentiment in the cryptocurrency market: extreme hype, where you start seeing mainstream media articles about "getting rich with cryptocurrencies," and extreme FUD, where everyone that has never trusted cryptocurrencies starts piling on for weeks about the tulip mania (we've never heard that one before) and how it will all go to zero this time.
But it never does. Almost every year, cryptocurrencies become bigger, on average. Small corrections, major corrections/bear markets, and even super-corrections (2-3 year long bear markets) are all in cryptocurrencies' future. But cryptocurrencies are here to stay. They won't ever crash to zero.
The market is huge at this point. Like NASDAQ is like 7T IIRC. Crypto is today ~550B. It was like ~750B not too long ago.
Note how there's no glue joining the idea of the company and crypto. It could go down but it could also go really up even higher.
It's funny how the one thing that North Korea agrees with the West on is how dope Bitcoin is. Like in some sense NK, is very vested in this going well.
And re: zero. No, it will never be a literal zero. No buying or purchasing happens when things are priced at zero.
EDIT: HN seems to be really anti-crypto. I setup a slack channel right now, if anyone is interested in having a discussion about crypto beyond "what if it goes to zero".
This has no relation to whether something goes to zero (or practically zero). Political influence? Sure. But I don't think anyone expects D.C. to bail out Bitcoin.
> A company has a "single point of failure"
Companies trade after bankruptcy. There are stubs, practical and theoretical, for companies improperly wound up going back decades.
Even if a state says "XYZ failed to pay franchise taxes and is now inactive," a shareholder can sue the former directors, holders of proceeds from the company, et cetera. (Company "ownership" is de-centralised and ambiguous, a fact that becomes uncomfortably clear post mortem.)
Colloquially, we call "practically worthless," i.e. where the cost of valuing something is likely more than it's worth, zero.
The combined worth of all the crypto-currencies put together is a drop in the global-financial bucket. The only people who would be hurt by a collapse to zero are those trying to artificially pump the price to cash out rich.
I used to be anti-FUD, but whatever the term for the opposite is - it's way more infuriating.
What does it mean for Bitcoin to be bailed out? How can Bitcoin "fail"?
> But a penny price is as good as zero.
Why would it go to zero?
Crisis of faith. There's nothing else behind it.
The point is, there will always be buyers.
Someone could have said the same for the Dutch East India Trading Company. "What, will the colonies sink into the ocean?"
Note: I'm not saying it will become worthless. But you're grossly underestimating this risk.
Say Bitcoin crashes down to $1 tomorrow, such that it's no longer profitable to mine. A bunch of miners go dark. What happens to the block time?
Now remember that difficulty readjusts every 2016 blocks. If there are now 1% as many miners, that means a 1000-minute blocktime and potentially up to 1400 days per adjustment period (average of 700).
In this situation, the only option would be a hardfork to bootstrap the network back to a live state, either by directly adjusting the difficulty or by readjusting more frequently and more aggressively.
And I feel like people for example aren't talking about the fact that technology doesn't really go away. Like any technology we've ever invented is still used somewhere. This will very much be like bitcoin.
Let's say the most recent difficulty adjustment has just passed, and the total network hash power suddenly drops by a factor of two. That means each block takes twice as long to find, so now you have to wait four weeks for it to correct itself. And during those four weeks, if the hash rate continues to drop, the adjustment gets further and further away.
Basically, if hash power drops by 5% per day for a sustained period, the network can't recover fast enough.
Around when Bitcoin was trading at $19,000, my Uber driver told me about the second line he'd taken on his home to buy some. That's not a systemic problem in America. But it might be in some other countries, e.g. South Korea.
Suppose Bitcoin crashed 90% and stayed down for a few months. It is conceivable that Seoul might pay out, to avoid social tension. Directly, e.g. you get a jeon for every won you lost, or indirectly, e.g. temporarily increasing welfare benefits [1].
Note that I said "conceivable." It is unlikely, hence why I think arguing that because lots of people are involved it cannot become worthless is silly.
> Why would it go to zero?
Why would it go to $50,000? Because people decide it's worthless (or worth more).
[1] https://www.theguardian.com/business/2014/sep/03/long-term-u...
You are comparing the market cap of cryptocurrencies to NASDAQ, a portfolio of the highest profit driving, real asset laden companies on earth. How is this even remotely realistic?
Bitcoin will enable many more exchanges that weren't possible before.
Investing has nothing to do with faith, that’s called speculation. Investment is based on sound financial principals of expected future return based on debts and cash flow, where actual value is being created and added to the economy. This is mania.
Something based on faith can drop all the way to zero and stay there because e.g. everyone bailed to something else and there was no reason to come back.
"If everyone stopped using google tomorrow, their stock would go to zero. Investing in google is based entirely on faith."
Do you agree with this statement?
Yes, there's some faith involved in assuming that the advertising market won't change overnight or that Google won't suddenly stop being able to compete effectively but that's orders of magnitude less than the level of faith needed to justify the current valuations, especially when the argument is not just that despite being unproven cryptocurrencies are certain to become mainstream but going further to say that a specific unproven implementation is going to win.
That's kind of my point, really. If crypto goes low enough, especially if the price is down for no good reason (i.e. it's based on a single country in the entire world cracking down on it, not because the tech stopped being useful or interesting), there will be investors who will think it's underpriced and will jump back in, which will bump the price and draw more people back in, etc etc etc. Bitcoin went through exactly this in 2013-2015. It kept dropping and dropping and dropping, all the news was terrible for it, but it never dropped to zero because there was enough people who thought it was underpriced and bought and held, waiting to see if it would go back up. And boy, if they held through last year, those people won big time.
Can I interest you in a Venezuelan bolivar fuerte. There are 30,000,000+ people vested in it. There are billions of USD worth of them out in the world. What could possibly go wrong?
(In fairness, there's a lot of faith involved in your broker doing the trade in BP, the ADRs if applicable, the DTCC holding your actual shares, etc., but not a lot of faith required to believe that thousands of people are actually drilling useful shit out of the Earth for BP's owners.)
The point api is making is that they were sure they were right.
This is where Credit Default Swaps came in. What is the cryptocurrency equivalent of a Credit Default Swap?
And, you probably wouldn't use a swap for hedging bitcoin currency exchange risk, unless you were doing an actual useful transaction where the sources and uses were in different currencies. People with bitcoins are either speculating or taking duration risk approximately equal to the delivery delay of a Priority Mail envelope full of heroin, as I understand it.
Crypto is nowhere near that, for one, very little of crypto's value comes from loaned money.
At any rate, the value of cryptocurrency market isn't a reflection of the amount of money that has been poured into it. The market cap is a product of the last price paid on any given exchange times the circulating supply of currency. So a $500B market cap might be the result of less than $50B worth of cash infusion, so long as the last person who bought in paid $13K for a Bitcoin.
One could make a good argument that the air is worth zero.
Yet one would be wrong: http://www.telegraph.co.uk/news/worldnews/asia/china/1205135...