[jasonwen]

I discussed the things that happened specifically on November 14th in my Quora answer: https://www.quora.com/Why-did-the-price-of-Bitcoin-plummet-d...

It's very very likely because of the Bitcoin Cash fork. It has become a pissing contest between Roger Ver (Bitcoin ABC) and Craig Wright (Bitcoin SV). While Craig trolls and threatens the Bitcoin ABC side by "bleeding them dry" in a hash war.

Jihan Wu, founder of Bitmain quoted: “I have no intention to start a hash war with Craig, because if I do, by relocating hash power from BTC mining to BCH mining - BTC price will dump below yearly support; it may even breach $5,000. But since Craig is relentless, I am all in to fight till death!

The war is related to Bitcoin as the price of Bitcoin tanks because in a hashing war, both sides are likely to rent hash from the Bitcoin mining pool. This is being settled in Bitcoin, sold on the market to cover electricity, and thus suppressing the price of Bitcoin.

Since Craig is trolling around, threatening a price of $1,000 per Bitcoin in a full out hash war, people are selling before it gets even more ugly.

Another downside which reinforces the price suppression is for Proof-of-Work systems (where miners are rewarded based on their computing power), there's an unfortunate feedback loop in price drops. As said by Colin, founder of Nano currency, Low price -> low mining rewards -> turn off some miners to lower cost -> lower hash rate -> longer transaction confirmation -> lower price.

More details can be found in my Quora answer about this.

[wpietri]

I think it's fascinating that this is 100% different than what Bitcoin was sold as.

The theory of Bitcoin was basically "money without people". You wouldn't have to worry about governments and politics; value would be sent and stored in pure pieces of math. Mere governments couldn't possibly do as well as the glorious algorithms wisely fixed in advance by, etc, etc.

But if you're right, Bitcoin has way more politics than a third-world kleptocracy. And it clearly lacks the institutions and formal procedures used to shape those kinds of political currents into useful effects on the currency and the economy.

[petre]

There's no money without people. Money needs people's confidence to work as an exchange vehicle or value store. Jasonwen's theory seems correct if the facts are looked at as a collapse in confidence. If this is true, we shpuld also see capital flight to other cryptocurrencies.

[natmaka]

The problem here is not Bitcoin per se, it is the current state of the real world, where anyone can "buy" and "sell" Bitcoin for legal tender.

Bitcoin, in a world where it is the sole currency, has the benefits you quoted.

[dragonwriter]

> The problem here is not Bitcoin per se, it is the current state of the real world

If Bitcoin doesn't work in the real world, that's a problem of Bitcoin.

> Bitcoin, in a world where it is the sole currency, has the benefits you quoted.

If Bitcoin doesn't offer sufficient benefits in the real world as it is without being the sole currency in the world, there's no plausible route to it becoming the sole currency.

“My clever idea is great if everyone wakes up one day and abandons all other alternatives for it, but not otherwise” is a long winded way of saying “my idea sucks”.

[natmaka]

It may be a process rather than an abrupt change, just like most evolution.

Adoption/revolution.

[sbierwagen]

If the design of bitcoin requires it to be the only currency in the world, then it will never function correctly.

[projektfu]

No true Bitcoin has this problem, of course.

[foepys]

No. There are currently two super powerful individuals fighting and are allegedly dragging down every thing on the market just because they don't like each other. What makes you think that this would be a good state of affairs for a world currency?

[deevolution]

>There are currently two super powerful individuals fighting and are allegedly dragging down every thing on the market just because they don't like each other.

Kind of like how nations compete and in the process to drag everyone else down: Like US and China trade war.

[natmaka]

According to this explanation those super powerful individuals "sell" Bitcoins for fiat in order to pay the energy (electricity) they use in order to mine another currency. It is only possible because Bitcoin is not the sole currency.

The current financial system faces such battle-ordeals and isn't immune, remember the Black Wednesday.

[dragonwriter]

> According to this explanation those super powerful individuals "sell" Bitcoins for fiat in order to pay the energy (electricity) they use in order to mine another currency. It is only possible because Bitcoin is not the sole currency.

Doesn't it? What changes if you take out the fiat intermediary and buy energy (a fungible, near-universal production input and end-consumer product in one) directly and the competition is about a commodity that is not a currency?

[natmaka]

The Bitcoin "value" (the buying power it confers) will be mainly determined by bulk transactions and by factors of high-inertia (changing them radically and fast is impossible), not by investors. One of such last factors is the cost of energy production and storage, another is the efficiency of mining equipment and the associated willing to amortize it. Therefore it will be much more stable, and it seems to be the main problem at hand.

[wpietri]

Ah, of course. Bitcoin can never fail, it can only be failed.

[latchkey]

There is differences between the white paper and the implementation. There is also another elephant in the room... whales who have enough money (thanks to crypto currencies) to influence things.

[nnain]

It seems to me that the price is dropping due to large players selling off their coins, not because of some hash-war. AFAIK, mining Bitcoins is barely profitable anymore and wouldn't cause such wild jumps (even if this is true).