Quote from: superlative on December 08, 2017, 05:13:12 PM

Today I want to talk about tulips and the dot com bust. A lot of "smart" economists have been claiming that they are the same bubble as bitcoin. I'll tell you why it's not the same.

In order to understand effects, you need to look at root causes. What is the root cause of the dot com rising, and what is the root cause of the dot com bubble bursting? The root cause of the dot com boom is euphoria over the implications of internet businesses. It reached the mania stage where everybody wanted to get in on the action. The root cause of the dot com bust are Venture Capitalists who ran out of funding money and went to the dot coms and demanded results. Most of the dot coms could not produce results or profits and so went bust, pretty much all at the same time because it was the same group of VCs that were coming to claim debts. The root cause of the boom and the root cause of the bust are not related at all.

Regarding cryptocurrencies, the root cause of the meteoric rise of bitcoin is that it everybody wants it. But there is a distinction here. There are the faithful, who believe in the dream of a decentralized world free from the control of evil central banks. This is the majority of bitcoin owners: at least 80%. Then there are the "tourists" still stuck in the centralized banking world, who are in the "mania" stage - they want in on the action; they only care about bitcoin because it gets them more US$. That's why when you see corrections, you see wild price swings but there is a hard wall - because the 80% faithful NEVER WANT TO EVER SELL BITCOIN for US$. The 80% have learned their lesson - never sell out of bitcoin (for US$) because you will regret it. Selling an appreciating asset for a depreciating asset (US$) is the worst decision EVERY SINGLE PERSON IN THIS 80% HAS MADE - I'm in these forums, and that's what they believe.

To understand the 80%, you have to understand this: there are over 1000 different cryptos, but people don't buy those cryptos because they like them more than bitcoin - they buy them because they think it can rise faster than the price of bitcoin SO THEY CAN BUY MORE BITCOIN. In the stock market, nobody sells stocks so they can get more of "the one stock". No - people buy and sell stocks to get more US$ - because the US$ is the reserve currency of the centralized world. In the decentralized world, people buy and sell all those various cryptos to get more bitcoin - the 80% are NOT interested in getting more US$ - we all want bitcoin.

Now let's talk about the 20% - the tourists from the centralized world. The smart-ass investors who think they understand bitcoin because they think it's a "company" or a "commodity". They don't understand that bitcoin is neither of those - it is a paradigm shift - it is an ideal - freedom for the plebs from the evils of central banking. Bitcoin was born out of the horrors of the Great Recession brought on by evil banks who bankrupted the middle class and got bailouts from the government. All thanks to the f'n US$ that is completely out of our control. The middle class was manipulated PERIOD. If you're in the middle class and you're shouting from the roof tops that bitcoin will crash because you believe the old bankers who say this - shame on you. Bitcoin was made for us - the middle class - to free ourselves from central banks, if you side with the central bankers instead of us plebs - shame on you, because they stole your money and recognize the threat of bitcoin to their control, and you agree with them. These tourists will now be entering the market on Dec 10th, Dec 18th and more of them next year as NASDAQ just approved futures too next year. They will come in and try to manipulate the 20% of bitcoin that isn't held by the believers.

The root cause of a collapse of bitcoin are these 20% of tourists getting spooked and exiting all at once. Now does this sound like the dot com bust? No - completely different root causes. Bitcoin would be caused by all the tourists getting spooked all at the same time, dot-com was caused by dot-coms not being able to produce profits for VCs. Totally different. The only similarity is that both had parabolic valuation growth - but correlations are not the same as causations. As for 20% getting spooked - you tell me whether you think that will crash the bitcoin price to zero. The 80% of people that hold bitcoin are rich middle class believers - you think we're not waiting to buy more when the price drops? You think we haven't been round the block before and seen these wild swings? The centralized world isn't used to seeing massive drops of 20% - the decentralized world is used to seeing it, so we're not spooked because bitcoin just recovers again after a few days.

Now, let's talk about tulips. First, the comparison is stupid. Tulips die and can be produced to infinity - just like the US$. Bitcoin can only EVER go to 21M, and in fact people predict that about 4M bitcoin have been lost forever because people lost their private keys and wallets when bitcoin was only worth a few cents and dollars. Currently there are 16.6M in circulation and we will only reach 21M in the year 2140, and if we factor in the 4M coins that have been lost and the 1M held by Satoshi Nakamoto who doesn't plan to ever release them, then the real circulating supply is 11.6M. That's a far cry from the US$ and tulips which have an infinite supply. Price is dictated by the simple economics of supply and demand. If you have more supply than demand - the price goes down. There are 36M millionaires in the world and only 11.6M bitcoin available today. There isn't enough bitcoin to go around - that's why bitcoin WILL go to $1M valuation and beyond. You can't argue against math.

Bitcoin was made for you. Celebrate it and buy it.

Although I agree with most of what you wrote, I have to disagree with you on a specific point.
You don't know that Nakamoto is holding 1m coins.