RT @nathanielpopper: There are some very conflicting messages on where Bitcoin and cryptocurrencies are headed after the bust of last year. I tried to dig beneath the gyrating price to look at how people are actually using the technology today. (a thread of context) https://t.co/Diu5qDkCxT
There are some very conflicting messages on where Bitcoin and cryptocurrencies are headed after the bust of last year. I tried to dig beneath the gyrating price to look at how people are actually using the technology today. (a thread of context) https://t.co/Diu5qDkCxT
I knew about Bitcoin quite early and always believed (absurdly incorrect with 20/20 hindsight) that the price ought to correlate to the "actual" utility of bitcoins, i.e how many transactions were performed to purchase goods and services. I imagined a future where bitcoins would be used for micro transactions online, illegal purchases (drugs/≈Wikileaks/banned stuff in dictatorships) and by people in hyper inflationary economies. I speculated that if the price would reach multiple thousands of USD per BTC, we would have seen massive adoption for even mainstream uses.
It's so strange, because I love the ideology behind it and the decentralised technology, and by many measurements bitcoin and other crypto initiatives would be considered a somewhat success if we didn't have the price to look at. That I can pseudo anonymously (or completely anonymous with stuff like zCash/Monero) transfer a token of wealth over the internet without a central party is so cool.
But I'm afraid that almost all of the price increase is simply a hype/speculation/hold-cycle that inevitable never will survive.
I was in YC during the same time as Coinbase (where I now work), and personally, I think cryptocurrencies are transformational. Having grown up during the Internet era and hearing from my parents about the Mainframe -> PC era, use cases and viable businesses take time. Even founders in early, disruptive spaces have a hard time figuring out the use cases.
Here's my own thoughts on why rational people — and media — get disruptive markets (like crypto) wrong:
> As someone who had worked in banking and and microfinance, I got excited about the idea of credible digital scarcity, programmable money, and open financial systems. I didn’t quite know the use cases that would follow, but it was clear to me that the world would never be the same.
> Mostly though, everyone I respected thought cryptocurrencies were stupid. One MBA classmate haughtily wrote off cryptocurrencies as only useful for drugs and pornography. My old management consulting friends—all from elite American universities—pooh poohed Bitcoin and other open cryptocurrencies as they fixated on the needs of their lucrative banking clients. The vast majority of successful, rational people disdained everything about cryptocurrency.
If you are a software entrepreneur, raising money by selling digital assets (“tokens”) is a legitimate option that flips VC on its head with instant liquidity and value based on the success of the network.
Ethereum raised $15 million to fund their network, which now has a market cap around $18 billion.
Cosmos launched their mainnet yesterday, and now has a market cap over $1 billion. All of the employees can exit if they choose, who were given tokens rather than illiquid stock.
To be perfectly honest, this is a much fairer system for the average employee at a startup than our current ISO situation, where employees are diluted, forced to pay ridiculous AMT taxes on exercise, and basically screwed by the founders.
> Bitcoin’s critics say the digital tokens are like the tulip bulbs of 17th-century Holland. They generated a wild, speculative rush that quickly disappeared, leaving behind nothing but pretty flowers and wrecked bank accounts
Which Tulip bubble? The small one that actually happened and was largely a small group of wealthy people trying to outdo each other, or Mackay’s wildly exaggerated account that has seeped into popular legend?
Badly mis-characterizes "the Internet", annoyingly common mistake that to me says I should ignore any further speculation because if you don't understand the present you've a worse than pure luck chance to correctly predict the future.
The Internet is the completion of (the latest and vitally important phase of) the Network. The Network is like the Word, that's how big a deal it is.
Brief pause for definitions: The Word is the idea that makes language possible. Units of meaning that can be transmitted by one person and then received by other people, a revolutionary idea that by definition is prehistoric (history itself is an Application of the Word). The Network is a way for people to send and receive information over a distance, it works very well with the Word, and it's hard to imagine the Network without the Word, but it would actually stand on its own: sharing video of a cat studiously choosing a very expensive fragile object to knock off a narrow shelf works fine without the Word if you want a very concrete example from your modern experience. In our world that video would have a title, and thus need the Word, but truth be told the video stands on its own if you haven't invented the Word.
Note that the Word is not just the written word, writing is a (big) incremental improvement in the Word idea, but speech was already a big deal. Likewise the Network is not just the Internet, the Internet is a (big) incremental improvement in the Network idea, but telephony, newspapers and even travelling minstrels are already a big deal.
Anyway, scarcely anything is going to be as big a deal as even these incremental improvements to fundamentals like the Word or Network. You might think Money is a big idea, but that's _peanuts_ to the Word or the Network. If Bitcoin completely revolutionised Money (as if) that still wouldn't be anywhere near the difference the Internet makes.
So, Bitcoins are more like tulip mania because almost _everything_ is more like tulip mania. YA Fantasy novels, slogan T-shirts, pizza, marriage, any of these things is more like tulip mania than like the Internet.