Bitcoin’s sinking

Bitcoin continues to fall, now below $7,000. Some say that the cost of mining provides a floor for Bitcoin, but that is wrong. If Bitcoin becomes unprofitable to mine, which it presently is, mining activity will decline. This will cause mining difficulty to fall in order to keep the hash rate at its programmed level, until some sort of equilibrium is reached. Then the process repeats of falling prices and lower difficulty.

Others say they want to buy the dip, as if they have an unlimited amount of money. If one has unlimited capital, then there is no need to buy Bitcoin, because you already have enough money. Buying Bitcoin becomes redundant and an unnecessary risk.

Others argue that the supply is capped at 21 million, and while that is technically true, the open source protocol encourages copying, so although are a fixed number of Bitcoin, there are a potentially unlimited number of currencies all build on platforms identical to or similar to Bitcoin. I read a post months ago that Ethereum in 2018 should be bigger than Bitcoin because of how much Ethereum is used for generating ICO tokens. Another made a comparison between Ethereum and Microsoft, because they are both ‘platforms’. But neither person understands that Ethereum holders do not in anyway profit from the use of Euthereum’s technology. There are no royalties and patents, unlike Microsoft. It’s like saying that Tim Berners Lee should be the richest person alive because all websites are built on HTML technology.

The absence of intellectual property guarantees the dilution of value of equity among existing holders, which has already happened. Instead of x dollars chasing y currencies, it’s x dollars chasing 2 (times) y currencies, so that means existing owners of gets half of what they would have gotten had there been fewer currencies. This was not a problem until mid-2017, when Bitcoin’s marketshare rapidly fell from 85% to 40% due to the proliferation of altcoins, where it has remained. This means in spite of the huge rally in 2017, Bitcoin holders were effectively robbed of the capital that would have otherwise gone into Bitcoin but instead went into an altcoin, so rather than Bitcoin being at $7,000, it would be at $14,000 without the altcoins.

[but one could argue that capital that went into altcoins would have never gone into Bitcoin had the altcoins not existed, but this is impossible to know]

If you were pumping Bitcoin and other currencies in mid to late 2017 and early 2018 on Twitter and elsewhere and think that just because you’ve stopped talking about Bitcoin, we have have forgotten, you are mistaken. We have not forgotten. Bitcoin pumpers who go ‘AWOL’ will be named and shamed (or at least reminded). There’s nothing wrong with pumping Bitcoin if you are keeping people updated during the declines, but memory-holing Bitcoin and hoping no one notices is not acceptable. I was telling people to buy in the low $100′s in 2013, all the way until around $10,000 or so. Then in early 2018 after the price peaked I told people to sell multiple times, and I still stand by that.

At least we won’t have to see this guy’s face anymore: