After waiting almost 3 months for my money (3 separate transfers), I asked them to revert the transfer and they quickly re-credited my account.
Their support will answer, except that they won't tell you how long it will take to get your money or how far you are in the queue.
Since then I've found a local exchange (anx.hk) in Hong Kong that is Government registered and actually pays out quickly (got my money in 3 days after testing a sale of a btc). They accept International accounts in USD as well apparently.
If I were you, I'd just try it: ask MtGox to revert your waiting transfers, buy some btc, transfer them to the new exchange and try to cash out.
(PS: Not affiliated in any way to them, just a user).
Why did you sell on MtGox? If you'd done any research, you would have easily found that they have been having huge problems with cashouts for a long time now.
That's why MtGox price is inflated, high price != the best place to sell.
If you can find a place to buy a macbook directly with bitcoins, you'll be OK. Selling BTC for dollars is whats tricky, as it requires money to pass through Gox's bank account. The banks don't really like BTC that much, so it's a pain. I've bought things directly with BTC before and it's an easy process.
If you want to cash out to USD or Euros I run a service http://bitcoinsaresexy.com - you can cash out to amazon gift cards or even paypal money and then buy whatever you like ;)
No need to cash out, you can buy from anywhere using all4btc.com. If you'd rather order it yourself than have someone else buy then try an Amazon gift card from gyft.com instead.
heh this is funny to me (though i'm sorry for you, i don't mean to rub it in) only because when i suggested dollar-backed or gold-backed bitcoin a lot of people made fun of me saying "oh it's been done & it was corrupted" "mannnnn" "original sin" "blahhhhhh"
but.... whos to say the Bitcoin exchanges are better at banking than traditional banking industries? I understand they represent individual points of failure in the ecosystem, but soooooooo many users have gotten screwed by them thus far.
I don't trust Mt. Gox's prices for this very reason.
Coinbase seems a lot more trustworthy in this department, but I don't fully understand how their exchange works. BTC-e seems to hit a relatively decent middle-ground.
Hopefully someone can clear this up for me: With the price rising so quickly what incentive is there to actually use BTC as intended, as a currency?
Because the maximum number of coins is fixed it's pretty easy to project where the valuation is headed, and so anyone in their right mind should just hoard their BTC instead of spending it, which in turn should drive the price down, no?
Bitcoin worshippers will tell you, "no it does not matter, why would you not spend bitcoins, it's better than fiat", blah blah blah...
Yet if you look at /r/BitCoin, there are dozens of "OMG!! I spent all my bitcoins on Pizza instead of holding on to them, look at this gif of me being sad"
So to answer your question, it's just insanity.
I miss the days before this month when BitCoin prices were stable for a couple of months. Spending it was actually pretty cool.
I spent bitcoins on many things and intend to do so in the future. The thing is, if you need something, you'll buy it, either with USD or Bitcoin. If you buy it with USD, then that is the amount of Bitcoins you haven't bought instead. So it doesn't matter. Bitcoin in no way stops you from spending it when you really want.
This is true, but the definition of "really want" changes if everything you can buy is subject to deflation in your currency of choice. If you believe Bitcoin will keep rising you will defer every expense until the last possible second and many transactions you will defer and later find that you do not need to engage in them, thus there is less commerce ongoing.
How does a rational consumer justify going out for dinner on Friday if on Sunday they expect the date to be 15% cheaper, and Tuesday to be 20% cheaper, and so on? It is like the pain of finally biting the bullet and buying a new computer in the 90's knowing it will be cheaper in 3 weeks, but on every transaction you make.
No, it explains succinctly why almost anything that does not offer the amazing value proposition of a 1990's computer (in the 1990's) would see its sales volumes plummet. That threshold is not met by the vast majority of durable goods. This is why it is a problem.
Yet people still bought computers knowing full well they are going to be cheaper in a couple of months. Why? Because they needed them. Same thing with Bitcoin. Of course, you won't be buying stupid stuff you really don't need. And you know what, that's a very good thing for the economy, because it will make people very responsible when it comes to buying things and investing their money. Bitcoin is an ultimate cure for consumerism and excessive spending. Economy as a whole and people in it don't really profit from investing into useless hole digging, even though it may look good on the paper.
I do not necessarily accept the premise that consumerism is necessarily good or bad but I do not find the argument that a currency that discourages economic interaction is a good thing very compelling. I do not think that having someone else prepare a meal for you in the evening, lets say, once a week is "useless hole digging" but and honest exchange of services for money. Drastically changing the dynamic of such interactions seems like a pretty wild economic experiment, not one to be taken lightly.
When spending within the economy is restricted in this way by market forces value will concentrate very highly in essential goods and infrastructure and attracting rent-seekers to those areas of investment. The net result, it seems to me, is casting off the tyranny of fiat currency for a new kind of tyranny. The same kind that lead to the trust-busting era in US politics.
Honest question, what do people "need" Bitcoin for that cash or other payment systems can't do? The only unique advantages I see are those that are illegal in many jurisdictions and those that are related to speculation. The number of people who need currency for illegal activities plus those who speculate in currencies is finite and not a significant portion of the population, so I'm just not seeing how regular people are going to derive any use from Bitcoin that couldn't be achieved by other means.
That is actually /not/ very good for the economy at all. If you abruptly reduce spending to the absolute minimum, sure it sounds very idealistic, but you're grinding most economic activity to a halt, causing hundreds of millions of layoffs, and minimizing the job market.
I estimate that we'd have about 60-70% unemployment, and no jobs for those people to go to because, well, other people just aren't spending any money.
But even electronics do not change value on a daily/weekly basis. And when it does, like pending the release of a new iphone, people do stop buying them.
It does matter. If you have already decided on the purchase (so you're ignoring the opportunity costs of investing in BTC) then spending USD will not affect your position in BTC and thus you'll be better off spending USD if you believe t1 value of BTC is higher and t1 value of USD is lower.
Yep, there are two fundamental and incompatible forces behind Bitcoin. First is the currency group. Second is the speculator group. The more success the second has, the more problems the first has.
This is a valid question. One that I think about often.
It's not easy to predict the valuation. For that, we would need to know how much business is done in bitcoin in the future. That's anyone's guess. Will it do $1 trillion or will it do more ?
The price isn't always going to rise at this rate. That's for certain. However, yes, there will probably be a long term rise until bitcoin finds it true usage, market cap, and as a result of this, it's value with steady deflation going forward.
While, I'm not sure what an economist's opinion on this is, the fact that you are encouraged to spend money because it's worth less in the future (inflationary fiat money) leaves a really bad taste in my mouth. Consumerism is a horrible disease and our planet is suffering from it every. single. day.
That brings me to bitcoin and it's deflationary nature. Well, you're still going to buy the stuff you want to buy. Then, you'll save more because you know it'll be worth more later. Why wouldn't you buy the things you always need ? (food, shelter, a few gadgets, etc.) Should I spend on a new iPad when I might be able to buy 6 months worth of food with that money a year or two later ?
You'll save as much as you can. You'll consume less junk. Isn't that a good thing ? Shouldn't we ask ourselves if we really need all the crap we keep buying ?
These are interesting questions that challenge the entire nature of mindless consumerism that most of us indulge in these days.
Also, if the only reason you spend your money is because it's going to be worth less tomorrow then you have bigger problems than bitcoin ;)
PS - I don't mean you personally, just stating some thoughts.
You aren't intended to hold dollars themselves as a very-long-term store of value. But most people don't do that anyway. They put them in (for small values) a bank or (for larger values) investments where the capital is used to create more wealth.
If I had 1/1000th of the country's wealth in dollars under my mattress or gold buried in my yard or bitcoins in the cloud, and then go into suspended animation for 50 years, there is no reason I should still expect to have 1/1000th of the country's then-increased wealth. My capital wasn't doing anything to grow the economy.
You can argue "but wouldn't it be great if you could take that 50-year nap and have more money?" Yes, it would. You have also described an excellent reason for someone to start a pyramid scheme, but not for everyone else to want to get in on it.
The problem with your premise is that you are taking up bitcoin and trying to fit it into today's world view where banks lend out YOUR money for relatively high interest and give you some interest if you're lucky. Now, you have to keep your money in a bank because it appears to be safe, etc. and of course all your arguments about creating liquidity in the economy are correct.
However, there is a lack of choice in this scenario. Due to the way the economy functions, I do have to put my money into a bank, I do have to look into investments because otherwise my hard earned money is worth less in the future. Let's leave the discussion about that being fair or unfair, etc. because this is a subject where people tend to have strong opinions.
Right, so coming to bitcoin. Why can't there be an entity that allows you to lend your bitcoin as a loan and you get a higher return (higher % interest than regular deflation) because you lent your money out (i.e. took some risk) ? Say deflation is 5% per year and you can give out a loan through some entity and get 10% returns ?
Isn't this what the bank does right now for you ? But do you have much of a choice in the current scenario ? Right now, you take on the risk of a bank without having a say in it. It's either that, or have your purchasing power slowly eroded over time.
I personally don't like arguing about inflation vs. deflation because I am not an economist but I can on my own think of trivial solutions that turn the problem around. Maybe these solutions are ultra complex to implement in practice, but so are the economy, currency markets, stock markets, etc.
Can I argue that it would be great if I worked hard to earn money and save it, and have it at the very least, retain it's value and purchasing power in the future? Why should the capital that I have worked hard to earn lose it's value because it somehow doesn't help the economy ? Helping the economy comes with it's own risks. Why do I not have a say in whether I have that choice or not ? What happens if my bank goes bankrupt ?
The fact it would be great (if you could preserve 1/1000th of a country's wealth this way) is precisely one of the reasons why Bitcoin succeeds.
You may argue "it should not be this way" but people are tired of losing 20%+ (in some countries, 3-4% in the US) of their wealth yearly due to inflation.
Bitcoin elegantly fixes a very real problem of inflation. You cannot wave your hands telling people "this is the way things should be, deal with it".
> "That brings me to bitcoin and it's deflationary nature. Well, you're still going to buy the stuff you want to buy. Then, you'll save more because you know it'll be worth more later. Why wouldn't you buy the things you always need ? (food, shelter, a few gadgets, etc.) Should I spend on a new iPad when I might be able to buy 6 months worth of food with that money a year or two later ?
You'll save as much as you can. You'll consume less junk. Isn't that a good thing ? Shouldn't we ask ourselves if we really need all the crap we keep buying ?"
Presently, you can't really buy things you "need" with Bitcoin. Ask a landlord if you can pay your rent in BTC or a bank if you can pay your mortgage with it. Take your Bitcoin wallet to the grocery store and try to check out with it. You'll get blank stares at best.
On the other hand, you can buy things like iPads with BTC. The Bitcoin economy is not an economy of essential items right now, and this is largely because even if it were possible to pay for essential items in BTC it would still be just as easy if not easier to do so using some sort of fiat money.
The whole philosophical justification for Bitcoin is fine, and I am on board with that. But the present price dynamics of Bitcoin are directly undermining its viability as a currency and the philosophical motivations that support it. Satoshi was frustrated with the destabilizing monetary policy of the Fed, but having rampant price speculation due to an inherently depreciating currency isn't any better.
There are very few direct ways in which you can currently use bitcoin, I completely agree with that. People are using indirect ways now though, for example, a lot of people are using target gift cards bought off gyft to make their grocery purchases. Of course, this is a highly impractical solution but there will be middlemen helping out until actual retailers start accepting bitcoins. Now you can buy a subway sandwich, soon newegg will start accepting bitcoins (yes, not everyday purchases but a big retailer endorsement is still a big win!). When something happens in a fragmented way around the world it gets harder to gauge it's momentum. Say 10,000 retailers in SF started accepting bitcoin, it'd be huge news vs 10,000 retailers all over the world - no one would notice.
The rampant volatility of bitcoin is bad for business but it's analogous to several people jumping onto a boat and rocking it a lot. Eventually we get a bigger more stable boat that isn't so easy to rock any more. (a $1.2MM sell off a year ago would have tanked BTC value, now it doesn't even dent it.., this happened yesterday while I was watching the bitstamp order book)
As the market cap of bitcoin increases it will get harder and harder to cause huge swings in it's value (sort of like the 51% attack is now impossible.. or adding a server farm to take over the bitcoin network).
But to get there it will have to go through this process.
Using BTC as money is an independent decision from holding BTC as an "investment."
If you have 0.02 BTC (~$20), you can spend $20 on a pizza, keeping your 0.02 BTC. Or you can spend 0.02 BTC on the pizza, and have $20 more USD to buy BTC with.
This of course assumes you can easily transact with BTC, and convert USD <-> BTC, which seems to be anything but a sure thing.
If you think that your 0.02 BTC could get you two pizzas tomorrow, you can still buy the pizza today with BTC, and then use the $20 you saved to buy more BTC.
My point is that the decision to transact using BTC is independent from the the decision to accumulate BTC. If you want to hoard BTC because you think it will keep going up in value, then convert all your USD to BTC right now. And then if you want to buy a pizza so you don't starve to death, buy it using any currency you like, while continuing to invest all your disposable (ie non-pizza) currency into BTC.
Can you make it til tomorrow? Are those 0.02BTC all you have?
If you're sure you're going to buy a pizza with BTC tomorrow, why not buy the BTC today, or five days ago? The prices have been pretty consistently going up. Yeah, there's a chance that pizza will have been 5% cheaper if you bought the coin to pay for it yesterday, or if you wait til tomorrow.
So, why wouldn't you just take all of your USD savings and convert them to BTC? Wait, you mean to tell me you _only have_ that 0.02BTC? (Wait, you mean to tell me you only have that $20 in the bank?)
I have way more USD value of BTC than I ever planned on having. It started as $50 and when that performed well, I put some more in, and bought some mining equipment, and put some more in, and now it has significantly more than eclipsed my USD cash savings at this point. It is for this reason that I would love to spend BTC, in fact it's a karmic imperative for me to try to spend BTC, since I've done so well with it so far.
I can always replace it at the market rate at Coinbase. If you're spending the bitcoins and you're valuing them lower than it costs you to replace them, you're getting screwed. If things keep moving the way they are moving, you're going to have a talk with your vendor that accepts bitcoins. (It's always fun to get to ask, "Tell me why am I paying you extra?")
I make more hoarding a few meager bitcoins in the midst of this bubble than riding a desk at my dayjob. So you can see why I am in your corner.
Still, I don't think there has been a bad day to buy BTC in the last (how long has bitcoin existed so far?). I recognize that I would be a fool to keep less actual fungible cash than I need for groceries, rent, etc, and when I can use a Bitcoin in an actual transaction with a person (rather than trading it for cash at an exchange), I feel that it's probably a good idea to use some of that cash I saved to offset the impact to my BTC portfolio.
All that being said, when I watched the price take a minor tumble the other day, from 850 to 785, I got nervous and went to SatoshiDice to recoup my perceived losses in an even riskier way.
Nobody will take my bitcoins in exchange for anything I need (I can't spend them on rent, I can't pay taxes with them, I can't leave them at the grocery store or at the restaurant or the bar), apart from the exchange site (which will give me cash, that I do need)... but I have all of the cash I need for the moment and it doesn't do any fun tricks like these BTC.
So why am I buying pizza again?
I don't know if all that's a sign of a healthy market, but I don't think so. Still, you weigh the facts, you pick your horses and you take your chances.
They're deeply dependent on each other. Both kinds of user are strongly influenced by BTC exchange rates, and BTC has the same exchange rate regardless of how you intend to use it.
I encourage you to read up on the recent history of Iceland's currency.
If the price keeps rising, you are right a smaller percentage of all bitcoins will be in active circulation, because people want to save their coins instead of spending them. However, SOME coins will always be spent (people gotta eat.)
Here's the counterintuitive part: The currency "notices" the low rate of spending and will increase its own value to make sure the amount being circulated, though lower in face value, remains constant in its real value.
In short: Hoarding is fine, because the un-hoarded coins increase in value to compensate. As economists say, this is not a "zero sum game", we can have high spending AND high hoarding without difficulty, if the currency has a large enough market cap.
Exactly wrong: People who have earned money ARE the productive economy.
The current system puts money in the hands of those who run the printing presses. (and as I explained, the fact that coins are being "sit on" is irrelevant)
>> Exactly wrong: People who have earned money ARE the productive economy.
Not when they're getting richer just by sitting on cash they are not. That's not producing anything, any/all productive work they did was in the past.
>> The current system puts money in the hands of those who run the printing presses.
We're not talking about the current system, we're talking about Bitcoin.
>> (and as I explained, the fact that coins are being "sit on" is irrelevant)
Except it's not irrelevant, for the reason I've just mentioned. You can dismiss or ignore it all you like but simply saying "You're wrong" doesn't cut it.
If the amount of currency in circulation goes down because people sit on it, then yes the rest may well increase in value to cover the activity in the economy, but the hoarder gains economic power on the backs of everyone else's work.
>> >> Exactly wrong: People who have earned money ARE the productive economy.
>> Not when they're getting richer just by sitting on cash they are not. That's not producing anything, any/all productive work they did was in the past.
If they are getting richer just by sitting on cash, it means - by definition - that the economy is increasing in size. If it ever comes to a point where too many people just sit on their savings, then the economy will retract, and all these people will start to lose wealth.
There's a balance in the system: when the economy increases too quickly, it will incentivize people to stop producing (because they can live off their savings), and when the economy starts contracting, it incentivizes people to start producing (because their savings are getting worth less).
Nursie, you are to be commended for understanding my argument, it gets tiring arguing against people who don't understand.
OK, now SOMEBODY has to have economic power- So it can't be people who have earned money (as it is with bitcoin) and it can't be the owners of the printing presses (apparently I'm not allowed to say that)...
...so who's left? Should we create a currency that immediately bursts in flames unless it is provably handed to another person within 24 hours? Wouldn't that still be deflationary without printing presses?
EDIT: Maybe you want all the economic power to be with cryptocurrency miners, via an inflating cryptocurrency? So now we're back to giving the power to those who own the presses (the miners, in this case)
People who have earned money are perfectly entitled to have their earned economic power, they just aren't entitled to keep getting more powerful off everyone else's back simply by sitting on cash. Sitting on cash is not an economically useful activity, it's a null operation, and setting a system up to reward it is foolish.
At the moment at least if you want to use money to make money you invest it, and by doing so you enable further economic activity.
Ideally a currency would expand at a rough pace with the economy it serves, making it a reasonable store of value but a better fit for its primary function - a medium of exchange. The two purposes (fixed supply asset, medium of exchange) are not really compatible AFAICT.
But then I'm not horrified by the idea* of central government controlling currency anyway, in theory it allows them a mechanism to smooth out some of the lumps and bumps in the economy. And while currency inflation above and beyond economic growth does effectively constitute a tax, I have no issue with reasonable* taxes.
So in summary - I think BTC would be worse choice than what we have now, but neither is perfect.
(*I said the idea, and I said reasonable, I know there's a hell of a lot wrong with how various governments handle their currency and the amount of wasted taxes)
> People who have earned money are perfectly entitled to have their earned economic power, they just aren't entitled to keep getting more powerful off everyone else's back simply by sitting on cash. Sitting on cash is not an economically useful activity, it's a null operation, and setting a system up to reward it is foolish.
So tell me. If I work for a year and save up $10,000, and when 10 years have passed a car can be made using only 50% of the labor that was required 10 years ago - and, consequently, the car is cheaper than it was 10 years ago - who is more entitled to this increased in wealth than me?
The increased productivity has to benefit someone. I don't think money producers deserve the benefit more than the saver.
No, it's not. Not all goods become cheaper over time, productivity gains do not magically make everything cheaper, only some items. Economic growth is not purely based on making stuff cheaper or more efficiently, it is also based on increased economic activity. With a fixed supply currency a hoarder gets richer in the absolute, not just where efficiency gains are made on particular products, they become richer directly because other people are working harder. This is not the case in the situation you seek to describe.
Right. There are plenty of situations where a saver becomes richer, one of them is if an employer can make his employees work the same for less.
But you still haven't answered my question: why is the money producer - who makes sure we have inflation - a more deserving recipient of the increase in wealth from increased productivity than the money saver?
>> Right. There are plenty of situations where a saver becomes richer, one of them is if an employer can make his employees work the same for less.
That's certain goods getting cheaper, not an appreciating hold over the economy in general that a deflating currency represents.
>> But you still haven't answered my question: why is the money producer - who makes sure we have inflation - a more deserving recipient of the increase in wealth from increased productivity than the money saver?
Deserve? That sounds awfully like a moral judgement...
But I don't think you'll find I said that either one deserves it. I said that I'm not going to, by choice, buy into an economy where my effort enriches currency-squatters. That's not my idea of fun. A currency that inflates roughly in line with economic expansion is more pragmatic.
And frankly, if it goes to the money-printers, well that's the government and in theory they get to use it to build useful stuff we all use. I have no issue with reasonable taxes.
Except the default transaction fee of 0.0001 BTC is exponentially getting larger and larger.
The higher the price of BTC, the more expensive it is. The average transaction fees for BTCs have reached around $0.10 now, and will only rise as the BTC exchanges go up.
Regardless of how you cut it, this rampant speculation on BTC is hurting the BTC enthusiast (who wants to spend BTC), and instead favors the BTC speculator (who simply wants to cash out before BTC crashes)
Yes and no: The high transaction fee is just a side effect of the fact that bitcoin is so popular now that this high fee is needed to keep the size of the blockchain manageable.
Pretend that $1 million / day (in BTC) flows through the BTC network. I'm making this number up, but you can see that this number would be roughly consistent.
This represents the number of people using Silk Road (well... used to anyway), maybe purchasing domain names through Namecheap, and so forth. People out there are trying to use BTC as a currency, so they will be spending BTCs in exchange for services.
Now, if the amount of BTC starts to shrink, then the "value" of BTC needs to grow to compensate. At this point, governments would typically print money, so that the price of a currency wouldn't deflate significantly. But since BTCs don't have a means of "printing money" to meet demand... we are seeing the massive deflation in the currency right now.
Massive deflation discourages spending, and encourages more speculation. As more people speculate on the currency, the price goes higher and higher, driving more deflation. So the currency is in a deflationary death-loop right now.
People will only use BTC if it stabilizes to a price. But as it stands, its simply better to speculate (which means there is no "value" in using BTCs right now).
> Massive deflation discourages spending, and encourages more speculation
It encourages a lower PERCENTAGE of spending, but has no impact on real value of the bitcoins being spent (i.e. how many eggs/houses/etc the coins in circulation could buy)
well; for me its fun. before bitcoin went through the roof i would invest in bitcoin and periodically buy stuff that i could only buy with bitcoin; or replace my bitcoin as i spent it (using coinbase).
now for me, as well as probably others.. i got so much upside on my bitcoin i don't mind spending a bit here and there. i still hold it mainly as speculation because i deeply believe in its long term value--but i bought a plane ticket at like $860/btc .. no regrets whatsoever. i got to buy a frickin plane ticket with frickin bitcoin.. that might seem like 'oh yeah whatever' to most people, but if you have been watching bitcoin for years, as I have.. as many people with decent stashes have, that is one of the main things people came back to again and again to say "it will be a real currency when".
i am waaaay over vested in bitcoin so i can't justify 'replacing' my bitcoin anymore; when i am so exposed to the exchange rate; but 'spending it' is like cashing it out
Its vital to understand that even if bitcoin is never used for any commercial transaction, application , services or goods, it can be very valuable just as a fiat to transfer dollars/yuan/currency from one place to another. This is a very international, expensive problem. I wouldnt be surprised to see that china is leading BTC trading because of chinese people sending money to their homeland, this time, with a much smaller fee than Wester Union or wire transfers. For giving money to someone else, its better than banks (which you might not have an account to, or the wires are expensive), WU (very high fees), mailing money (gets stolen).
I share a negative feeling when i think that someone with 10k U$S in BTC last year is now a multi-millionaire, i find it hard to believe that much value was created.
My surprise is that those insta-millionaire's arent cashing out. Or if they are, the demmand is so big its still working out.
Bitcoin will have an S curve of growth. Spending once you're at the flat top of the S curve is a different proposition than doing so while you're on the vertical. Store of value stage must come first before the currency stage.
Anyone going on about "intrinsic value" is missing the "intrinsic value" of the protocol.
I agree mtgox prices are borked, but historically mtgox prices were used as the "official" price, and I think this is going to continue well into the future. Since these price milestones are arbitrary anyway, does it really matter?
I think bitcoin is extremely interesting, but price reports like this are not intellectually stimulating. 1,000 is an arbitrary number. Let's talk about bitcoin, but for a volatile currency, let's not fire off news articles every time it crossed another arbitrary threshold?
I don't think it's fair to say that it's entirely arbitrary. The 1000$ mark holds significant psychological impact. When the price rises, it's going to be reported on, and it makes sense for it to be reported on when it hits a psychologically important value like 1000$ rather than 947.13$
I don't understand this. "1" BTC is an arbitrary amount as well. Perhaps in the long run, mBTC or uBTC will be the perspective we hold of Bitcoin. From some of what I've read, that was sort of the point of the high divisibility.
Exactly. If the goal of bitcoin is to be a great buy/sell commodity, then it's definitely looking like a fun rollercoaster ride!
However if it truly wants to be considered a currency, the developments it needs are more ATMs (like the one Vancouver), more merchants accepting bitcoin, and more adoption in terms of velocity.
Primary value of Bitcoin is being money. To be good money it must be widely valuable, there must be as many hands willing to hold it, as possible. Since the supply is fixed, price must grow. So price acts as an indicator of liquidity. Other functions based on blockchain (contracts, timestamping, escrows etc.) are only valuable if Bitcoin has enormous hashrate and is trusted by everyone as money. Hashrate is supported by high demand for generated bitcoins and desire to make transactions (reflected in voluntary fees).
What you say is interesting—so interesting in fact that I submitted your write up just now ( https://news.ycombinator.com/item?id=6808420 ). I would much rather read that than see a post about the current exchange rate of Bitcoin.
I waffle on this point. Obviously with limited adoption in terms of actual exchange of goods, $1,000 is an arbitrary threshold. That said, with limite adopton in terms of actual exchange of goods I can't really judge how much bitcoin is worth. I have a good understand of what $1 is work (1/2 of a carton milk, a candy bar, and so on) but really no concept of what a bitcoin buys me. So it makes perfect sense for me to relate its value to something I already understand the value of.
1 BTC is worth 1/20000000 th of the entire BTC economy. The current push in price comes mostly from an uptake in China.
Now that's 1 bn people there, so if it finds broader adoption in the country we could see further price increases (if we divide all Bitcoins that will ever exist by the population of China, everyone there will get 0.02 BTC). So if the current trend holds true and the adoption takes on there.. Now let's say India, Africa or most of south america get wind of it.. Africa in particular has difficulty with local currencies and a relatively good mobile network, so it is well possible and the other countries certainly don't want to be left out either. And then there is Europe and the rest of Asia..
So let's say 5 bn people want some part of it (just to buy 1/2 carton of milk), we are at 0.004 BTC. But then, some are greedy and want more than average, so.. you might get the idea.
Edit: thinking about it, at current price ca. 0.001 BTC / 1/2 carton of milk, you could actually buy all those people one serving (excluding shipping). Now if people want to buy cars or houses or ponies, we have to split that a bit further.
That still brings me back to "I know what a dollar is worth." The wealth will obviously not be evenly spread so figuring out how much each person might have doesn't really help us much, especially not until all bitcoins are mined. What I (and everyone who wants some part of it) want to know is "What does a bitcoin buy me" and right now literally the only benchmark of that for me is the currency which I currently buy things in.
But it's warped because I can't buy things in bitcoin. Not much, anyway. So I don't know what to think about $1,000 = 1 BTC.
For a currency who's primary promise was eliminating the middle man (payment processors, global exchange rates and so on), I find it ironic that it relies heavily on middlemen for adoption.
Not sure which makes me more sick to my stomach..... having not jumped on BitCoin when it first started and was around a single dollar, or the fact that putting hundreds (or thousands, by the time you read this) of dollars of my hard earned money into a non-existent, unsecured, irrational "currency" of bits that inherently are biased towards inflationary pressures due to its fixed nature.
This is a bubble, clear as day! Some are not going to have a good time at some point, whenever that point comes.
There is seriously something wrong with an economy when millionaires are made for nothing but being first.
>There is seriously something wrong with an economy when millionaires are made for nothing but being first.
Tell that to every land speculator or homesteader who struck gold, oil or fertile land (but ignore the natives, they only complicate this). Being first is a huge part of any economy. They took the risk with their cpu cycles, electricity or money, if it's successful, they will get the payout.
Risk does not equal value. I can play russian roulette for an ultimate bet and win 5$ if i dont die.
It is still daunting for me, that i have bought bitcoin and made a few bucks on it, that someone that bought 10k bitcoins last year is now a multi-millionaire.
I have thought the same thing. However, after a little thought I realized I would have sold as soon as their price got multiplied by 10x. I don't have the nerve to keep them from 1$ to 1000$. In no possible universe I am rich.
Being first is actually kinda important. Obviously (as others have noted) first to mine Gold / find oil at a spot, first to find diamonds somewhere, but more importantly:
First to invent something (Automobile, Computer, Smartphone, postit, ...). In line with Henry Ford being first means doing something or inventing something, i.e. believing in something even though most others thought it was a futile or stupid attempt. When cars were invented, most people thought they were stupid and useless. Carl Benz and Henry Ford believed in cars, nevertheless.
They were so smart to be among the first to believe in an idea. Same goes for the early bitcoin miners. Now you may say that the car needed to be invented, but even in early mining days, the algorithms had to be ported to the GPU, and then people build huge rigs and spend all their time coding and building the mining system even though bitcoin was still worthless. Of course, some people just installed the client and generated a couple hundred of coins, but even these, they were early believers, much like an early employee at a startup, who is willing to work for sub-par payment because the likes the idea.
Thing is, the fact that this is still newsworthy in the tiny HN community means that it's on the bleeding edge for people in the real world. I was talking about bitcoin to my workmates the other day and none of them had even heard of it (I've been following it since the Wired article in 2011).
While it's clearly too late to be first, second isn't a bad place either. Just that the arbitrary line is the sand is higher. You can still ride the wave created by the early adopters (who took on the initial risk and validated the entire ecosystem).
As an aside - it would be interesting to see the adoption curve for BTC as compared to Paypal (probably the last disruptive financial platform) and whatever else preceded that (Western union, gold, seashells?).
Nonetheless, I share your pain of not having invested more at the beginning, but that's just the nature of any speculative investment / bet.
Bitcoin is a bet that it becomes world money. If it's not broken and trust is not shaken, its target price is somewhere from 1 to 50 millions of today's dollars.
When it's suddenly broken, well, people will sell off and lead the value to zero.
I bet it will replace currencies, gold and silver.
Do you mean "currencies: gold and silver" or "currencies, gold, and silver"? Do you really believe it will replace traditional currencies? Do gold and silver have any real value (as in I can exchange them for good somewhere)?
I wonder because I've noticed that generally people who bet on bitcoin as "world money" seem to forget a few things: 1. the information infrastructure necessary for bitcoin is not universal and requires constant upkeep (thus a stable political and economic climate) and 2. there are currently many currencies and the world seems to get by with them. Is there reason to believe that bitcoin's adoption will be fostered by the necessary stable political climate and if it's enough of an improvement over paper monies to replace them entirely?
EDIT: I guess to summarize what now seems to be a confusing point: my dollar still work fine. What does bitcoin have that will motivate me to replace my dollars?
NOTE: I hold bitcoins and will continue to hold them. I buy webhosting and a few other things with them on a fairly regular basis.
National currencies, gold, silver and other commodities used to hedge against USD, EUR, banks etc.
Our whole global economy and lifestyle enjoyed by billions of people needs computers and electricity, otherwise we go back to middle ages.
People want one money - most liquid, most used one. Gold does not fly, USD is politically controlled and restricted. Bitcoin weights zero and unrestricted by design.
>Our whole global economy and lifestyle enjoyed by billions of people needs computers and electricity, otherwise we go back to middle ages.
Well, "whole" is a strong word here. I would try using bitcoin in Cuba. Or Russia. Or some parts of Montana. Good luck getting a wireless signal.
>People want one money
I'll need a citation for this. I think instability in the Eurozone has more or less turned this idea on its head. If people wanted one money, we would have one money. The fact that major economic players either never joined the Euro or now want out indicates to me that "one money" is not a universal desire.
I'm from Russia. There's internet even where the toilets are from 15 century full of shit. Half of Africa pays with mobile phones and lives in dirt.
It's logically easy to prove. Which money would you choose to store permanently? Bitcoin if it's accepted everywhere in the world, or EUR if it's only accepted in 20 countries? Who knows where you'll be next year, so it's better to store money in a more liquid currency. Bitcoin can be it because there are no fees or capital controls like in EUR or USD.
In Russia, in 1990s people were using dollars no problem. Until government went in with laws forcing people to put prices in roubles and other controls on flow of capital and cash.
You still need to be able to convert your BTC to a legal tender currency to pay wages, debts, and taxes. As long as that requirement exists, BTC will always be a secondary currency at best (and I'm not convinced it will ever be a currency in any meaningful way).
Wow -- $1030 per BTC as I write this. This is happening way faster than anyone ever expected.[1]
All else being equal, the more people who decide to use or hold Bitcoin, the higher its price will be, because the maximum number of bitcoins that can ever exist is permanently fixed. It's a scarce commodity by design.
If BTC did become a de facto currency, what's to stop a government printing "I promise to pay the bearer 10BTC" notes, and just carry on "printing money" (I know it's not literally done these days but it's the effect) as they always have done?
The gold standard was broken, can they not have a "bitcoin standard" and then break that in the same way?
Nothing could keep them from doing that, except the unwillingness of users to use the government paper money instead of the real thing.
Gold has to be "converted" to paper to be practical. Bitcoin is already a whole lot more practical than almost any aspect of the modern money infrastructure, so there's no "killer app" for Bitcoin-backed currency.
Banks extend credit money which is backed by reserve currencies. Money may start out as value-based (gold, bitcoins) but eventually a whole credit based economy springs up around it, and we're just where we started.
The "killer app" isn't being able to pay someone quicker. It's going to be the ability to borrow money!
(Although paying someone quicker is already the main reason two people use blockchain.info or something similar to transfer money instantly instead of waiting for a few confirmations. In small amounts you'll see "banking" like this, and then those banks will start lending money on the reserves they have.)
In other words, the same cycle always happens:
1) A value (scarcity) based currency is widely acepted
2) People store it when they aren't using it. They want to earn returns on it.
3) It is lent out by the "banks" to others, keeping a fraction on reserve
4) Governments regulate these reserve requirements and set up central banks which pay interest on the reserves
Now with Bitcoin right now the biggest thing stopping it from being used as a currency and 1-4 to happen is th massive price inflation. Who wants to spend a bitcoin when they can hoard it? Lots of people but apparently more people want to hoard it. Which is understandable because metcalfe's law is going to make ALMOST ALL the cryptocurrencies grow in value.
The good news is that this will make even more merchants accept bitcoin and once its price settles down (it might reach a saturation point only when many many merchants accept it, would be at least $100k a coin by then) then it can be used as a real currency that people really spend.
Bitcoin cannot be fractionally loaned out - if a bank has BTC in reserve and loans it, the transaction goes through and the bank has that much less in reserve. Say they have 100BTC in reserve, and I want a 10BTC loan: they can't just issue a piece of paper saying "here's 10BTC" and only reserve 1BTC (10%) to cover it, they have to transfer the actual amount. So, they can't loan out 10x what they have and profit from the multiplier when collecting interest. They can't pyramid-scheme their way into a major financial bubble. I love this aspect of bitcoin, it neuters the parasites.
> So, they can't loan out 10x what they have and profit from the multiplier when collecting interest.
Sorry, you don't know how a bank works. The bank will borrow from someone else - depositors, other banks. The reserve requirements is how much of their own money they need to have to cover loans, and is a protection against risks, it does not imply that the rest of the money they hand out have been created out of the blue.
Yes, they will collect based on leveraging their capital, borrowing money at lower interest, and profiting from the multiplier.
But as to your scenario where the bank just hands out papers saying "here's 10BTC": In fact, you can already speculate on margin, on Bitcoin by buying Bitcoin CFD's (Contracts for Difference). CFD's means you're never actually owning the underlying security at all (and in fact there's no technical reason why the company you enter a contract with needs to ever own any at all either; whether there are legal reasons may depend on jurisdiction) - you're just, as it says, entering into a contract where you're putting up some cash now to be paid the difference in value over a time period.
I have an account with a company that would me buy Bitcoin CFD's with a 15% margin if I'd like. Meaning for $15, I "get" $100 worth of "here's some bitcoin" "paper" - if those $100 worth of BTC increase to $110, I can sell and get $25 back. Conversely, if they drop to $50, I'd get a nasty margin call to pay the $35 difference.
Gold has survived for thousands of years as a store of wealth. It has intrinsic properties, it is one of nature's unique elements. It cannot be synthetically created.
Bitcoin's scarcity is based on a completely fictional and arbitrary hard limit of 21 million which can be changed in a trivial fork such as Litecoin.
Furthermore, given that there is no intrinsic physical difference between a Litecoin, Freicoin, Bitcoin etc. there is an argument that a P2P currency is the ultimate fiat. The printing presses have just been handed to the public rather than being held by a select few.
Bitcoin is a great electronic currency, and a real challenge to money transmitters like Western Union, but it is not a store of wealth (in my opinion).
Saying that bitcoin isn't scarce because someone could fork the blockchain is like saying that gold isn't scarce because everyone in the world could suddenly agree to start using silver instead.
Limited resource physical commodities vs. a few bytes on your filesystem? This is a ridiculous comparison.
But what people mean when they say you could fork libcoin or something like that is not that Bitcoin isn't scarce. It's more along the lines of "We are in no way beholden to this psychotic black market pyramid scheme currency. We can just start anew with a better dispersement/capping scheme."
> Bitcoin is a great electronic currency, and a real challenge to money transmitters like Western Union, but it is not a store of wealth (in my opinion).
You can store your wealth in any commodity. I can store my value in stocks, gold or BitCoin to hedge against inflation. Just because something doesn't have physical intrinsic properties does not mean it somehow stops being a store of value.
Anything that someone wants to buy and someone wants to sell, that can be stored and transferred, can be a store of value.
>Bitcoin's scarcity is based on a completely fictional and arbitrary hard limit of 21 million which can be changed in a trivial fork such as Litecoin.
Changed in a fork? Yes. Trivial? Not even close. Remember, you have to convince a lot of people to go along with your fork, due to the network effects required to get a new currency off the ground.
The triviality is not bound to the network of people - the valuation is. And yes, the change is also trivial - and that means that once people realize that valuation is just about being first, then by starting another scheme the valuations of all the other will dilute.
Governments money is 'backed up' by the need to pay taxes in it which in the US is a multi trillion a year demand and creates a lot of stability. aka Get paid in bitcoins? The IRS does not care you need to pay taxes in USD which means you need to sell bitcoins and buy USD.
As to being a fixed currency there would be a lot more bitcoins in circulation than actually exist as soon as banks started lending money and no you don't want to try and keep 100+k USD worth of bitcoins secure by your self it's just a fucking bad idea. Which means banks which means loans which inflates the currency. Of course because governments can't print money to bail out banks when they fail you just lose your money anyway and they will fail.
PS: Non private wallet = bank. The reason we don't see loans is because people don't want to borrow money in bitcoins.
Banks lend money they don't have, they cannot do that with Bitcoin because math. Usually their reserves cover a fraction of the loans they give, and they get a massive multiplier benefit. Fortunately, the blockchain won't accept pieces of paper with IOU written on them.
Money in a 3rd party wallet is an IOU as far as the block chain is concerned. Here is how it works you deposit some bitcoins to Bit Bank and the block chain is updated so they now own the and can lend gem out the same day. The borrower would then be able to deposit his coins into Bit Bank II which could then lend them out. Net result is effectively bitcoins from thin air even though there not part of the block chain people act as though they exist which impacts the supply / demand curve.
The bank would have a database somewhere saying "We owe btbuildem 10 BTC". When you make a withdrawal they would take some out of their massive stock and hand them to you. So long as they have enough to cover withdrawals at any given moment they don't need enough to cover if everyone made a withdrawal at once, any more than they do with dollars/pounds/etc.
There is nothing stopping a government from doing that. Anyone with the choice to receive 10 BTC or a 10 BTC fractional reserve-backed note may, however, have a strong preference for the 10 BTC due to a lack of trust of the reserve institution.
Within regulation, you can refuse goods and services to anyone. However, as far as I know, if someone owes you money they can always pay you in an equivalent amount of [local currency]. Isn't that the whole point of a legal tender?
If I lend someone 1 BTC, can I force the borrower to repay me in BTC? How would that even work if the borrower has already spent the BTC?
If you give the borrower a loan priced in BTC, you can attempt to compel them to repay the loan in a BTC-equivalent amount of their local currency. "Legal for all debts, public and private", and all that.
If BTC is to become a reserve currency then it seems to me it would replace/compliment SDR's and precious metals as an international reserve currency and not a national one. In that hypothetical situation BTC solves the Triffin Dilemma for all those who use the USD as a foriegn reserve but the USD would likely still be used in American territory and still backed by confidence (in its ability to be productive and thus pay its debts).
Don't think of it as dollars, think of it as gold (especially when gold was broken down in smaller bits and traded in streets or held in the form of gold bars).
The government will never stop printing money, nor would you want that. Bitcoin's are great for online use, but are traceable (more so than current money). Hence, the government does not mind us using them.
Bitcoin's being used in stores is a complete possibility, but dollars will always be accepted (at least for the next several decades or longer). The current economic system is only sustainable will a currency the government can control. Although I dislike the idea that the government can "print money" unless the economy takes a pretty large pivot (which will take decades) at a gradual rate there will be major issues. If the change into cryptocurrencies is to fast we will see a MAJOR depression.
I would also speculate that the government will come out with it's own form of cryptocurrancy soon enough.
You must be referring to fractional reserve banking and M1 or M2 supply of a currency. There will still be a need for real M0 supply of Bitcoin. There is currently about $3 trillion worth of M0 supply worldwide (any country). That's simply how much is necessary to run the global economy. BTC is of course much more efficient, but we'd still need quite a bit to run any major economic activity.
If at some point chain reaction is triggered (people are not afraid it's another bubble and jump in non-stop until everyone has some coins), then the growth must be not exponential, but even faster.
that's the nature of any pyramid scheme -- the potential cashout of any individual is higher when more money is put into the system without being removed. The funny thing about the Bitcoin scheme is that everyone has the ability for the cashout, it's simply a really complex Game Theory scenario (lol, simply complex).
Still though, the early adopters have a much greater shot at grabbin all the marbles, just people suspect they won't because it's been a while and they still haven't. So either they're
A) Absurdly greedy.
B) Asleep at the wheel.
C) True believers in the idea & want to see it succeed.
D) Cashing out coins periodically enough to give them a decent lifestyle without disrupting the ecosystem.
Here's a thing: in both cases, when Bitcoin is a fraud and joke, and when Bitcoin is a future world-changing technology, price must grow up like crazy. So the price alone does not give us any clue about the nature of Bitcoin. Only analysis of fundamentals and analysis of the econo-political environment we are in can tell us something about value of Bitcoin.
well the thing is.... all economic analyses seem to conclude that it is ridiculous.
The only thing keeping it alive is that people are still willing to buy/trade it. As long as that is the case, it will exist. But I don't agree with this idea that it could be rapidly increasing in price because its "a future world-changing technology". This argument has never made sense to me because it's simply 1 implementation of cryptocurrency and has not even performed its function as such. I'm sure there are better possible versions. In fact, I highly suspect that a better alternative has ALREADY BEEN IMPLEMENTED!
The only reason Bitcoin is the giant that can't be defeated is because of the lure as an investment, and this is all a sham. Early adopters probably are doing "option D" and even though it's somewhat unnoticeable to consumers it is likely sowing the seeds of destruction for the environment. Perhaps because they're abusing users trust by selling for high prices that are bound to crash. I'm not sure... but the point is, eventually people will stop buying when they realize they're paying $1000 for a coin and they don't even know wtf it is.
As you said, only analysis of the fundamentals achieves anything. And these analyses have been done. And can be seen in the market. It's obvious at this point -- Bitcoin is worth what people believe it's worth. Fundamentally, it's nothing. They are sold for cash & then that cash is gone. Spent. The currency doesn't retain anything on it's own. The burden of maintaining the ecosystem stability is passed on to those who now have the money.
Similarly to the way in MLM a salesman's sub-tree is responsible for making the product move, unless they can find another to pass the product along to.
Most of modern economics are bullshit promoting government meddling with money supply. No wonder "economic analysis" says Bitcoin is ridiculous.
When you dismiss Bitcoin by saying it's only there while "people are still willing to buy/trade" you are missing important point. Ask yourself: why people are willing to hold it. Why people are willing to have any money at all: USD, gold, seashells. Are they stupid? Or money gives some utility to them?
The "bullshit" and "government meddling" you decry has almost completely eliminated long-lasting panics and depressions in the industrialized world. Even the most cursory examination of pre- and post-Great Depression economic trends in the West shows that recessions became shallower and less common once governments adopted countercyclical policies.
The aircraft carrier builder could probably give a concrete explanation for why the long boat builder's understanding of buoyancy is flawed, and also demonstrate why his model works better for both his boat and the long boat builder's boat.
Similarly, if you're going to assert that current economic theories don't apply to BTC because it's special, then you better be prepared to follow that up with an enumeration of what those special characteristics are and why they matter. And then you better be prepared to follow that up with a new theory of economics that does a better job of explaining the behavior of both BTC and other currencies as well.
Otherwise it's impossible for others to distinguish a credible objection from wishful thinking. Which is a kind of critical distinction to make, because history tells us that whenever the price of something starts going up rapidly and people start talking about how the economic orthodoxy doesn't apply anymore because this time it's different, nearly 100% of the time what happens next is a tragedy.
> This argument has never made sense to me because it's simply 1 implementation of cryptocurrency and has not even performed its function as such. I'm sure there are better possible versions. In fact, I highly suspect that a better alternative has ALREADY BEEN IMPLEMENTED!
Quality of an implementation doesn't imply success. Success also depends on other factors.
History is full of examples (e.g. Betamax).
Plus, it's very naive to assume that a Bitcoin is nothing because the only things that gives it value is the belief of people. Belief of people has value.
Plus, it's not clear how long the prices will rise, and if something's going to happen in the meanwhile (e.g. more shops accepting it).
If it's a bubble, it can't be said with certainty until the bubble bursted.
> Fundamentally, it's nothing. They are sold for cash & then that cash is gone. Spent. The currency doesn't retain anything on it's own. The burden of maintaining the ecosystem stability is passed on to those who now have the money.
This is why the real world currencies which arent "backed by anything" still make people wake up at 6 every morning, drag around for 9-10 hours of the day and then spend those on food and cover. The us/eur currencies have the value of the social contracts that are based and exchanged due to these currencies. The value comes from making people do things for it, and cash seems to be doing that quite well even if it isnt backed by anything.
What Im trying to get at, its the social contracts that exist in the millions - employer employee government - that make up and back up the value of any currency.
For BTC to succeed as a currency, people need to exchange their goods and services for it, especially their time, their work. It isnt enough to buy or sell ready-made goods, its the producers that need to be payed in bitcoin, only then a real revolution can happen.
Frankly, I have a hard time seeing how such a transformation could or would happen - for people to start getting payed in BTC. A company cant just do that, they have taxes and laws to follow.
yep agreed here. a lot of the responses i've been getting are intelligence-insulting "that's how all money works" "economics is flawed blah blah" but i think the fact is -- these things are taken into account.
Currency can exist purely through the means of social contract, I'm in total agreement with that. But Bitcoin's volatility is not exactly "good PR" unless people are actually delusional enough to believe that the value is massively increasing because it's "clever and people are beginning to understand it". It's soaring because it's clever and people don't get it at all.
Given all of the shady baggage and investment scheming associated with the ecosystem I don't think it will ever reach the level of widespread social contract.
it's not that I love the dollar or anything it's just that the dollar is an agreed upon currency and Bitcoin is still just a trading market. Since it's yet to be proven that it's performing its stated purpose (transactional currency), there's no reason why the market for it won't just disappear one day with a crash so bad that selling at a loss isn't even possible -- the faith is just gone.
Thinking more about this, I find a good measure of a success of a currency is to just look at how much of your monthly transactions are conducted with said currency.
Now I believe a persons wage is the biggest monthly transaction they perform - work and monthly wage pays out, in what currency?
When bitcoin reaches that point, if ever, where employers pay their employees and taxes in BTC. Then its a currency. Now its a speculative bubble - for which it may still be a good idea to get behind and compete with all the other gamblers.
you may be able to make some money it's true but I think if you believe it to be a ponzi scheme it is immoral to get involved. that's my basic stance. I can live life just fine without it
You should take into account that if things go as usual, there will probably be a crash in the next few days, leaving the price around $500 for a while.
Never, never pay attention to what the market is doing. … Stay away from the crowd. “A good time to start in [the investing] business is when markets are terrible…." A classic value investor looks at a price drop of a stock
they like as a chance to buy more, whereas the ordinary investor may panic and sell.
Wow! I remember PG's wrote in one of his essays "What hackers are using today will be used by regular people in 10 or so years." Though BTC is statistically yet to claim the status of being used by "regular" people, it has certainly passed the early adopter status it seems.
Or they immediately bough more bitcoin to replace the bitcoins they used. Or they had so many bitcoins that they're happy with the price rise and the purchases were insignificant.
Unless all of your wealth is already in Bitcoin then buying something with bitcoin isn't really any different than not buy butcoins with your other currency.
Really not sure why I can't reply to dragontamer, but yes, the 10000 BTC was worth it. It's one of the reasons why one BTC is worth $1000 today. Without this transaction we probably wouldn't be talking about it.
FYI: Click on "link" and it is always possible to reply to someone. Usually, you are locked out of responding directly to someone for a few minutes. (The Hacker News way of talking is... bothersome. It is very difficult to hold quality conversations here).
So clearly, YOU value the fact that someone paid BTC for pizza two years ago. And you continue to value the fact that people are spending BTCs as a currency.
But can you not see that this dramatic rise in prices discourages future spending? Will you buy a pizza today for 1 BTC? For 0.01 BTCs? Or are you going to continue to hoard BTCs and hope the bubble goes even higher?
People spending BTCs is the true value of Bitcoin, and the promise of the future. I'm worried what will happen when people stop spending BTCs because they've all turned into speculators.
Yes, I find it fascinating that a large number of people appear to want to live in a deflationary world when all instances of such that I am aware of have been economic basket-cases.
As soon as BTC crashes, they'll all be gone. But the BTC Enthusiasts will carry forward, and hopefully learn that encouraging this kind of speculation is harmful to the "currency" that they wish to create.
I do think cryptocurrency has a future. However, the current price bubble is a _failure_ of BTC, not a success story. The only ones happy are speculators.
I think the apparent alternative cryptocurrency is one that does NOT have a fixed supply and thus has stable inflation built into it, the puzzle of course is solving the problem of creating the math that can act in that way that can not be disrupted by an unexpected advance in computing power.
Or you know, when people simply recognize that BTC miners are the "governing body" of BTC rules and regulations, and realize that to solve this issue is as simple as changing the rules of BTC so that the rate of inflation is more sane.
But as long as BTCs are touted as a anarcho-capalistic wet-dream, no one will wish to see the truth. BTC Miners are the government. They can change the "law of BTC" extremely easily.
Can they? (This is an actual technical question...)
I was under the impression that they couldn't. But yeah, it's shocking that people idolize the core devs even though they set up a failing system. My best idea I think was to set up a cryptocurrency that is 1:1 with the dollar, therefore if you need to print more you do it by well... putting some $$ in the vault and dumping the equivalent amount of units into the ecosystem.
Bitcoiners seem to hate the idea of using the dollar for stabilization though. It's an affront to the power of imagination and the aforementioned "anarcho-capalistic wet-dream".
Incidentally, Ripple seems to be an implementation of what I'm interested in. Yet for SOME GODDAM REASON I DO NOT UNDERSTAND, their internal cryptocurrency (XRP) has some dumbass dispersement scheme too.
It's not exactly easy for miners to change the rules of Bitcoin because those rules are also verified by non-miners. The software would have to be updated.
Nobody has figured out a decentralized way to peg a cryptocurrency against some external price. You can't really measure the price that other people are paying in trades; you basically have to take their word for it, which means they would lie if it was in their interest.
Non-miners follow one rule and one rule only: Follow the longest blockchain.
That is it. Miners build the block chain. The most powerful computers working together build longer-blockchains (on the average). If a blockchain fork were to happen (again, like back in March: http://bitcoin.org/en/alert/2013-03-11-chain-fork), the miners can simply "vote" on which blockchain they want to keep.
Non-miners have no say in the matter. The BTC protocol says to trust the longest blockchain, and that is going to stay for the rest of BTC.
Thats why I consider the miners to be the governing body of BTC. If Miners wish to build blacklists and stop stolen BTC from going through the network, they can do so. If Miners wish to change the rules of BTC, they can do so (once more than 50% of miners agree... their blockchain will ultimately grow faster than the rest of the miners, which forces the network to conform to their rules).
I think non-miners also verify things like the coinbase transaction creating the right number of BTC (25). So if miners all decided to give themselves a raise, non-miners would treat those blocks as invalid. Crucially, the exchanges are non-mining full nodes.
It seems to me that the incentive to hoard is counter-balanced by the seller's incentive to lower prices and invest themselves, causing the two to meet in the middle.
Can you cite a real-world example of a deflationary "economic basket case"?
It's more accurate to say "increasing prices lead to higher adoption." It's a classic bubble. Remember in the early 2000s with people buying houses because "house prices have never gone down nationally?"
A bubble will not lead to adoption. As I said it is negative for people actually wanting to use it. If by "use" you mean participate in a pump and dump scheme, well sure. You don't need a cryptocurrency for that, you just need sufficient stupid people with cash to burn.
But people expect BTC prices to go down at any time. They also expect it to recover, so who knows. It brings to mind Peter Thiel's recent comment about "the idea of money being a bubble which never ends." Of course, never say never, but until then...
Because increasing price will raise its visibility and attract more people to invest in bitcoins - and the more people hold bitcoins the more merchants will want to accept them
Most exchanges will ask you to buy at least $1 worth of bitcoins so that pushes your figure to about 0.001 BTC as a minimum purchase. However, you can certainly use them with up to 8 decimal places.
Back in 2010 I did mine 160 BTC in 3 days just with my average CPU, however at some point I stopped caring, because 3 years ago there weren't much blabling about bitcoin and everyone that I told at that time did't care. Months later I had to format hard disk because ArchLinux did a great job breaking the whole system in a update, in the moment I just didn't remember that there were a BitCoin wallet in my system. Now about 2 years later I am hopping to recovery the wallet using a recovery program, but I already know that there is almost no chance. Today I just can't stop thinking about what happened.
Damn ArchLinux, I really hope you die in hell. At the moment around USD160000 lost. Anyway I am still sticking with you, in sickness and in health, in poverty or in wealth. Because you know, despite what you have done, you will be always by my side.
Remember kids, it's only real once you sell. Until then it's paper money. With a price rise, either there's more demand from speculators or more people holding.
What does this even mean? So is the USD, which is backed by nothing. Need more? Just print more!
Bitcoin, as stated a hundred times before, is limited in supply. Merchants left and right are now accepting Bitcoin. In fact, Gyft[1] pretty much gives you access to all online merchants.
I think you missed the point. The difference brador highlighted is the difference between unrealized gains and realized gains. "Paper money" is just "(gains of) money on paper" if I'm reading his comment right.
Unless it becomes world money. USD is a promise paper like stocks. Bitcoin is like a gold coin. You can fully own the real thing without trusting someone to store it for you.
Well for a reserve currency, deflation is positive as a hedge for inflation. China have bought more gold than anyone else in the world for that reason, to mitigate holding foreign reserve currency (which they limited just last month) or debt priced in foreign currency that inflates beyond their control or liking. One would expect this is the role BitCoin would take, just like gold except a lot more convenient to move around.
It is a solution to the Triffin Dilemma, which in 2009 the Governor of The Bank of China wrote about. That same year Russia proposed a new international reserve currency backed by precious metals and a currency basket to solve the same problem. In South America there have been proposals for a petro dollar, backed by oil for the same reason.
Deflation is good for a reserve currency, in some ways it is fairer than gold because you don't have to rely on the geographical distribution of gold in the ground.
When the Wii was making record sales in the USA, Nintendo was reporting record losses. Why? Because the Yen to USD exchange hit 80 to 1, and all of a sudden Nintendo was making 20% less revenues on all US sales.
Deflation is BAD BAD BAD for companies who work with your currency.
It is bad for a national currency, but that is not what I was talking about. I was talking about a reserve currency, like gold represents in our world economy (which is also deflationary).
When a country wants to buy oil for its economy, the oil price is set in the worlds reserve currency, USD. So the fluctuations between the USD and some given country, or the inflation of the USD will either hurt or help that country (but is always good for the US as the demand is high for that currency, keeping the demand strong). This is why countries/companies buy oil with gold sometimes, this is why countries hold gold to hedge inflation in a foreign currency they must rely on.
So Nintendo was losing money why exactly? Because Japan was not printing money as fast as US? Maybe the problem is in printing money at all?
Do you see a symmetry of products vs. money? Both are assets that some people need and some other want to give. If one is in deflation, then another is in inflation to another. Why don't you buy MacBook 2 years from now, when it'll cost the same, but will be more awesome? Because you have non-infinite "time preference": you want certain things today vs. tomorrow.
Why people want to hold money? Because it gives them ability to spend it anytime on anything - it's most liquid, most desirable commodity. This is big value in having something in your wallet - freedom to make decisions in face of future uncertainty. If you can freely choose between money which loses in value and money which doesn't, which one every person would put their savings in? Then, everyone spends according to his own time preference - amount of desire to enjoy stuff today vs. tomorrow.
> So Nintendo was losing money why exactly? Because Japan was not printing money as fast as US? Maybe the problem is in printing money at all?
Because Japan's currency deflated, while the US currency inflated. Printing of money is simply a means to control deflation or inflation.
All of the "thought experiments" on deflationary spirals ignore the fact that one happened: the Great Depression of 1930s. And back then, the US Monetary system was pegged to the Gold Standard.
We fixed the problem by getting off the Gold Standard. It turns out, basing your country's economy on a deflating commodity was not a good idea.
Did someone propose that BitCoin serve as the peg for a national currency? I must have missed that part.
Deflation is bad, we know its bad and when its bad. So should you peg a national currency to a deflationary commodity like BitCoin or gold? No. Can I use gold right now as a means of exchange? Yes. Does it happen all the time in regular life? No, because that would be a pain in the ass but if it were more convenient, it might. Well that is what BitCoin is, its gold but convenient to transfer.
Stop thinking of BitCoin as a national currency or a replacement for a national currency. It is a commodity like gold which can serve as a supranational currency or store of value, your national economy can still be inflationary.
People want BTC to be a currency. You clearly don't have that goal.
But when you see websites saying "Pay for stuff here using BTC", it is clear that they are trying to make BTC into a currency.
Those who wish to use BTC as a currency are discouraged from doing so, as long as this stupid hyper-deflation is occurring. No one wants to spend BTC on anything anymore.
It is a currency. It satisfies the Coincidence of Wants, it is used as a means of exchange, that makes it a currency. Cigarettes have been used as a currency (in WW2 concentration camps, prison, times of famine or war etc.).
But nobody suggested cigarettes or tobacco be the thing we pegged our national currencies on, its just a thing that represented value that people traded for goods and services. That's a currency, not a national currency though (because as you mentioned earlier, that's probably a bad idea which we know from history with gold).
Money is valuable for "reservation demand". The more people want to hold it, the more useful it is to everyone. Only this way it can become a currency. You can't have currency without value and can't have value without holding and having many hands to hold.
Funny you chose gold as an example, when Gold is down 40% this year.
If you care about USD at the end of the day, then Gold has been a _terrible_ store of value this past year. After peaking at $1,800, Gold is currently trading at ~$1250.
If BTC follows the route that Gold has followed, we'll see a lot of sad investors.
The price going up or down is not success or failure of gold, it's the nature of supply and demand. Gold is used to store value as a hedge against inflation, so people investing in lots of gold would probably expect gold goes up when things are rough in the economy and goes down as things get better.
That's the investment function of gold and other precious metals. That's why big financial organisations keep gold.
Gold is dropping probably for its own flaws. It's heavy and expensive to handle, and you have to trust same banks you trust your other money to. Bitcoin has almost all positive qualities of gold and none of the negative ones. Plus some bonus uber-cool features.
Today 90% of economy is worldwide, instant, over the internet. Internet did not exist 30 years ago. Gold can't fly through the wire. New digital economy needs reliable digital money. USD and EUR are highly unreliable digital money and we all know it.
And as long as BTC decides to change its price by 100% every two weeks, it is a far more unreliable "storage of value" than USD (which is changing its value by approximately 3% a _year_).
Don't mistake the forest for the trees. When BTC learns to be less volatile, THEN we can start talking about replacing USD or EUR.
Until then, understand one thing. People want STABILITY in their currencies, at least if they are going to spend it.
> Until then, understand one thing. People want STABILITY in their currencies, at least if they are going to spend it.
Agreed. People are less likely to spend as the price climbs quickly. This can be mitigated with a viable options market, it would provide a hedge against bad movement and it would increase liquidity significantly which would lead to more stable growth.
See where the puck is going. Bitcoin goes to more and more hands. It can stabilize only when everyone who might want it, knows about it and has some of it. By that time BTC price will be 1000x higher than today, that's why many are rushing in to get it while it does not cost millions.
Secondly, only very recent investors may worry about volatility. Everyone who bought in 1 or more ago don't care about volatility. All fluctuations are well above their nice profit and they can spend 1% of their stash comfortably, knowing that the remaining 99% are growing in value faster that the stash is being depleted. Today's investors would have to wait another month or year before they also get 10x return and won't worry about volatility.
"Store of value" works pretty well when your value not only stays the same, but increases over time. 10% jumps do not matter if you have 10x more than a year ago.
As someone who sold shares for $8 that I got through my employer at $2.50, I always tell the kids nowadays: I should have waited until it hit $80. There are no easy answers.
In the past three years the same thing was said at $33 and $266. Whenever new global interest arises it goes even higher. While I agree there is a ceiling I can't really imagine what it will be in a truly global market.
Sell into what? Both dotcom shares and USD are promise-papers. Bitcoin is the only money in the entire world that you can truly own. Even gold you can't own completely. At some amount you have to put it in vault and hire people to guard it. But you can put millions of Bitcoins in your brainwallet.
The price of anything, especially Bitcoins, is driven by demand, greed, speculation, and irrational market behaviors. It's people running the price up, not math and science, but people. At this moment those people will be become either winners or suckers. The suckers will be the ones who believed the math of Bitcoin makes it magically valuable just as those who believed that Pets.com had a bright future.
I sold some of my bitcoins when it hit $300, just enough so that I paid for my previous investments (i.e. when I bought them at $8 and $70). Now it is basically a free ride for me. If they crash to 0, I haven't won anything, but neither have I lost anything. So I'll continue to hold on to them for now.
I'd say, only sell if you need the money. Otherwise see it as a lottery ticket. Or at least keep some that you can afford to loose for the long gamble.
If you're holding a winning ticket then cash it in before it blows away. Don't let greed and past peaks cloud your judgement. Sell now before the sell off frenzy starts.
My supply-side model, which I felt pretty smug about for the last couple of months, only calls for a price of $450-500, so it clearly can't account for the current price. So much for that.
Seems likely then that this is coming from an increase in demand. Does anyone have any good guesses about where that increase in demand is coming from?
The congressional hearings were very upbeat about Bitcoin. Once the word got out that there wasn't any intention to ban it, a lot more people got interested.
I agree - the hearings were great exposure. I disagree with the conclusions people take from them. Quite frankly I can imagine only two futures for Bitcoin: one in which the USG controls it, and one in which the USG destroys it. Still, no telling when it will happen and if its the first case the price may yet double a few more times.
Disclaimer: I have 4 BTC and probably will not cash out for less than $100K per.
It has to be speculative purchases. Demand for any real commodity or currency doesn't double in the real world without a major event of some kind [e.g. war, natural disaster].
People got exuberant with the fast ramp up to $500 and didn't want to get priced out. It happens often enough in other markets.
It's possible a speculative bubble would just fade into the supply-side trend.
I was expecting BTC to hit $1000 in a few months anyway, depending on how quickly difficulty increases. So what could happen is the buzz dies down and the price just sits at $1000 for a couple of months and then once the difficulty increased the price will be locked in.
Likewise, real user demand could increase fast enough to take the place of any speculative demand before the proposed speculative bubble collapses.
Honestly what I really want to see is what happens if the bottom falls out and the price stays well below the mining cost for a prolonged time period. Say, $100 for 3-6 months. There are a number of non-disastrous things which could happen, but it is hard to guess what will.
It's going to be way more exciting if when bitcoin hits $100 than if it hits $10000.
What sort of variables go into a model used to determine the price of something like bitcoin? And by "something like bitcoin" I mean something with no value beyond the trust people place in it. How do you determine a "true" value of something like that?
A supply-side model kinda sweeps all that under the rug. If everything else stays the same, and the difficulty of mining increases, the model predicts that the price will rise proportionally. Since it's rising really fast, that means something has changed on the demand side.
Ah, there's the kicker: "if everything else stays the same". Definitely not the case with the news going more and more crazy about bitcoin every time it spikes.
Speculation and true global interest. BTCChina has lots of activity which hasn't been as true in the past. I think it's mostly speculation fever opening in markets that had previously not been aware.
The Cryptolocker malware requires people to pay the ransom for their data in bitcoins. This may help drive up the price if enough people are infected.
However, one of the podcasts I was listening to said that a security company registered one of the random domains that Cryptolocker checks as its master control server so that they could measure the number of people who were infected. Their numbers showed around 15,000 unique IPs per week contacting their server. The ransom has been lowered to 0.5 BTC so if all 15k people paid the ransom this mean about $7.5 million dollars a week at current prices.
I'm not sure how much that would effect the price of bitcoin.
I remember a few years back there were stories about how broken the savings system was in China; something like the only two legal investments were state banks, which gave 1% interest when there was double-digit inflation, and real estate, where you could buy apartments in empty cities on the premise that it was really hard to do worse than the negative 10% real rate of return you got from banks. In that environment I could see how an investment vehicle like BTC could really take off.
man, this has been fascinating to watch (and not just because i have a little skin in the game).
the tech and theory underlying the currency; its mysterious founder; the idea of massive "mining" operations where people are essentially printing their own money; the fact that one of the major exchanges was orginally a MTG exchange; the senate hearings; the tor black markets and FBI "seizures"; the absurdly juvenile chatter in the "troll box" on BTC-E, a major exchange; and of course, the goldrush-like nature of the skyrocketing prices.
i'm looking forward to hearing what people have to say about all this a few years down the line
The value of any currency to someoneis how much real stuff they need that they can exchange it for.
Any cryptocurrency that is effectively limited in volume and viable to be used will grow. Because of the growing number users of the currency, some are developers who will make it easier for sellers to accept it.
What bitcoin had going for it is that it DIDNT have mass adoption - it had a long way to go. Now the same is true of peercoin and litecoin - they are where bitcoin was a year ago. There's no reason they can't go to 1000 also.
In short there are a few factors determining the price of a currency:
Short term fads:
1. being newly listed on an exchange as exchangeable for the local currency of the country
2. news stories about the currency
Long term fundamentals:
3. The increase in acceptance by merchants and metcalfe's law (I think n log n is more realistic than n^2 though)
4. Limit on new currency being produced.
In this respect I feel litecoin beats peercoin in #4 and peercoin beats litecoin in #3, it has a longer way to go but it is more sustainable and is further behind so it has a longer way to grow from now.
Academics hate Bitcoin for 51% attack and lack of formal proofs. Theoretically it's not cool invention. Practically, it can change the whole world and be viable economically for a very long time.
The lack of formal proofs has many reasons, not the least of which is that there is no security definition that one could base a proof on. Coming up with a good security definition is going to be a major undertaking. Last year's Turing award was given for the security definition of something much simpler.
Could someone explain how is the blockchain going to maintain integrity and the transfer lag is taken into account "when" bitcoin is globally used everywhere and thousands if not millions of transactions are happening every single second?
I'm curious about this too. Miners who maintain the blockchain will have to do more work for less bitcoins. If miners are earning less bitcoins, the value will have to continue increasing in order to encourage the miners to maintain the blockchain. At what point is this unsustainable?
Bitcoin just doesn't support thousands of transactions per second, so that won't happen. Most likely people will be driven to use some non-Bitcoin system that is denominated in BTC (e.g. banks).
holy cr!9 - I was thinking of trying to mine some to get a handle on the whole thing - last week when it was 800 bucks.What the hell?
If I understand it, there is a upper limit to number of bitcoins available ever - what is that number and when will it be equal to the total asset value of the planet? I mean is it feasible that bitcoins could really work?
Edit: ok there is a limit of 21million bitcoins by 2030, and a world assignable wealth of ~210 trillion USD. So, if bitcoin works and can be the repository for all worlds currency, it would have to be worth 10,000 USD per bitcoin.
Then any growth in value.
So ... this might just work folks. And if not it still makes for a great DHT
>Edit: ok there is a limit of 21million bitcoins by 2030, and a world assignable wealth of ~210 trillion USD. So, if bitcoin works and can be the repository for all worlds currency, it would have to be worth 10,000 USD per bitcoin.
There will be just under 21 million in 2140, but you have to remember many BTC private keys have been destroyed over the last few years so those can never be spent (unless they used a deterministic wallet, in which case they will probably be able to be cracked eventually).
I don't think it will ever be equal to the total world asset value. If it succeeds it will be in the short term as an online currency, in which case if it were to have a market cap the size of APPL, it would be around $36000 per coin. If it were to get long term use as a deflationary reserve currency to mitigate inflation and the Triffin Dilemma (which is what China was pushing for in 2009 when Zhou Xiaochuan released his paper[1]) then the price could easily clear $1000000 but keep in mind that is far from guaranteed as BitCoin still has some major scaling issues to sort out.
EDIT: In response to your edit, it is 2140, not 2030. The block reward (what miners get for solving a block) halves every 4 years and we are at a 25BTC reward (made every 10 minutes) with about 12 million BitCoins in existence, so it will take longer than this century to hit the 21 million mark.
So it seems ridiculously unfair that 50% of bitcoins now exist and it will taper off for another 130 years. I think the idea of a digital currency is here to stay. Bitcoins as a specific implementation seems so off kilter due to that one fact alone that I really don't see how to start it "fairly". it may not be possible (it's not "fair" that the queen has all the money - but that's now a stable equilibrium)
It does seem unfair but that's just how it goes. For instance consider that a third of the worlds gold ever mined comes from one country, South Africa. That's a bit geographically unfair. Since South Africa was in the empire (and now still in the CommonWealth), it means the mining rights for that gold went to Britain and other friendly countries. That's a bit politically unfair.
Or consider when gold became the gold standard in the 19th century, a lot of that gold was controlled by a single family, the Rothschild's because of success 100 years earlier though Mayer Amschel Rothschild. That is a bit unfair.
Economics has never been fair. Say you bootstrapped a new digital currency and gave it out to all the people in the world evenly and they all recognised it as holding value, eventually through luck, and intention, some people will have more of that currency than others.
The way BitCoin was bootstrapped took into account that the earlier someone got on board, the higher the risk they took. So if you think of it that way, its not completely unfair.
As a store of value, it's deflationary nature makes it unsuitable for widespread adoption. An economy doesn't function well if people get rich merely by holding the currency (as opposed to investing the currency).
Of course it's feasible. It already "works": i.e. I can buy things with it, which is how currency works. Will it displace all other currencies? Unlikely. There are major barriers such as lack of financial services, difficulty of use in any area without Internet (which is lots of places worldwide), volatility, etc, but there's no fundemental reason it can't work.
it does not need to displace them I guess - same way Euro does not need to displace USD, just needs to be a viable alternative. Which I suspect means being a viable repository of value of all current wealth so it can have a stable exchange rate
I am interested in its ability to be a more secure Distributed hash table ala namecoin, but the tulip mania has me itching to just start mining. Oh well, why did I not start earlier?
BTW do we know how many coins have been produced to date?
About 12 million coins have been produced. The reward halved a few months ago, so mining is probably not your best bet now. Of course, if the value increases, then I'm wrong, but mining is quickly becoming a professionals game.
If you're mining for profit then you're doing it for the wrong reasons. Most don't even make their money back on a mining machine [1]. Do it for the education and experience. Don't do it for the profit.
I think you missed a few zeros: $10,000,000 USD/btc. Also, btc is more akin M1 or currency in circulation--not total wealth. I'd guess world M1 supply is more around $10 trillion, so btc needs to go to $500k per USD to have the equivalent value.
What makes bitcoin special? It's not like we've seen widespread adoption of this particular cryptocurrency. Do litecoin, feathercoin, et al. use the same algorithm with different seeds? I dont't understand why bitcoin is gaining so much value. It seems that an identical cryptocurrency could be created with or without the coins already mined. It seems to me that $1000 per bc can only be speculation by the wealthy at this point. It is surely a bubble waiting to implode.
I was following BTC when it had hit $200-300 and was in the news quite often. I considered buying some but after reading lots of opinion pieces, decided against it. Many people were showing graphs comparing the dot com bubble and the bitcoin bubble and warning others that BTC would settle nicely into a lower price. Those people were obviously wrong, wish I hadn't listened to them.
Those people are not wrong at all. It's just that it's very hard to predict where this is going.
Those people are right in the sense that, based on history, the whole phenomenon has much in common with a speculative bubble.
As speculative bubbles, during the happening, you don't know where it's going.
Don't forget that bitcoins right now have little intrinsic value. If somebody today decides to spend them for purchases, they have very few or no options.
If it is a speculative bubble, then it's a risky game of assessing when it will explode.
Even if it's not going to be a speculative bubble, the price may still fall considerably before stabilizing.
These people may have not been wrong, just early. Keep inflating a balloon - it's hard to say when it's going to pop, but still accurate to say that it will at some point.
If I had money invested in bitcoin, I would pursue a strategy that kept in mind that it very well could be a bubble- and one that could lose most of it's value before you have a chance to get out.
The wisest plays aren't the ones that make the most money, but the ones that concrete gains by taking the profit off of the table: Sell out X% every time it hits a new arbitrary high.
I'm afraid of Bitcoin becoming the world's only currency. Someone with enough computing power can massively game the system. I'm not saying that that can't happen with today's government driven currencies, but that there are at least other options right now. Maybe we shouldn't all switch to Bitcoin.
I'd be afraid of it becoming even a common currency. The problem is bitcoin does not encourage economic growth. It is smarter to hold then to spend. In a good currency, the demand for the money itself should not cause prices to fluctuate.
I think this could be solved if instead of the difficulty target being determined based on a steady release, was instead determined in someway based on the quantity theory of money (MV = PY) so as there is greater demand for coins more coins would be produced, and the opposite, when we have enough coins, less are produced.
In other news, tulip bulbs can be had for $9.99 for a dozen,[1] a decline (for some varieties) from the historic high price.[2] The history of commodity prices provides some interesting insights into human behavior.[3]
Is the success of cryptolocker raising the value of this currency? Essentially, we have quite a bit of proof now that it is truly an untraceable currency and previously shy buyers might feel emboldened by this. More demand == higher value.
It is not untraceable, and in fact it's the most traceable currency ever. I can't imagine what a forensic gold mine it will be about spending patterns and who spends money where, especially when coupled with the online activity already used.
paypal claim to have done $44 billion of trade in Q3 2013(1). so lets assume paypal do $4x44 billion of trade for the year.
there will only ever be 21 million BTC in existence* , there are much less than that right now (12 million ish).
4x44,000,000,000/21,000,000 = $8380/BTC
this assumes of course, that Bitcoin totally replaces paypal and nothing else (which is already not true).
* - this ignores the fact that there are already thousands, if not millions of BTC that have been lost due to lost wallets, forgotten coins, invalid transactions, etc.
When it will be as easy to buy a bitcoin as it is to buy, say, an ebook, it will go up significantly.
For example, I tried to buy some last monday and realized that I had to justify my address, my bank account, my identity and so on. I still can't figure out why it's so complicated to buy a bitcoin. I've been waiting for my bitcoin-central account since then, and received confirmation for my account on bitstamp last saturday. I still have to transfer some money there.
My question is: why is it so complicated to buy bitcoins?
A lot of services that allowed its users to purchase bitcoins without having to verify their identity and buy bitcoin using PP or CCs were abused by people using stolen PP and CC info. So they lost money if the real owner issued chargeback and bitcoins were already transferred.
I actually never realized the banking system was not trustful. Obviously, I thought that when I entered my credit card number, you can easily check I have enough money, switch the money from one account to another, and let the store knows the money is now in his account. But it's obviously much more complicated.
Any Bitcoin exchange in the U.S. has been deemed by FINCEN as a "money transmitter", which invokes masses of onerous rules and regulations that they must abide by (including all the IDs required).
This despite the fact that FINCEN considers exchanges dealing with any other type of currency "foreign currency exchanges", which require much less regulation (such as no ID required for purchases under $1000).
In short, it's hard to buy Bitcoins because government.
Someone pointed out chargebacks, which is one issue. The other is financial regulation aimed at money laundering. Anyone who deals in this much money has lots of questions asked by governments. That's why your best bet for bitcoins is either to buy them locally from someone you meet up with or to use an exchange like Coinbase where you use bank transfer and it's all above board. Everything else is a lot of work.
> My question is: why is it so complicated to buy bitcoins?
Because bitcoin transfers are irreversible, unlike most methods of transferring currency to pay for them other than direct p2p cash transfer (which is, itself, somewhat inconvenient.)
If bitcoin concept gets popular, why would the next set of adopters buy into btc instead of trying to be early adopters in a different technically equivalent cryptocurrency?
What I'm hoping is that a bunch of other crypto-currencies will become more popular in the wake of Bitcoin news. Ideally this will give us a nice market for trading different crypto-currencies. Also, as a result, we'll see more and more businesses that accept these currencies. I just hope we don't end up with one worldwide currency. Where would be the fun in that?
I was surprised that there wasn't a dip when it hit 1000, I'm sure that there must have been quite a few people will sell orders at this round, but arbitrary point. If this was the case there would have been some dip, is it just being overly inflated by some rich backers who are slowly taking the cash out, but backing it up when it dips ?
Right but this demand is coming from China (for the last 3 hours) and the other markets are just closing the gap as they catch up (some nice arbitrage opportunities if you have a CNY account).
If the trade spikes were on MtGox for USD I would agree that it is an inaccurate price but as MtGox has more trade volume than CoinBase, I think they just close the gap sooner.
This may be the weak point of these crypto-currencies. The proponents market them as scarce commodity but in reality you can just think today of another scheme like that.
So why is it booming? It is booming because it is booming. It's a positive loop that will end when the new comers stop coming.
The price should be based on what people are able to _cash out_. Is this the case? Are people getting $1000 money in the hand for 1BTC or is it just the "valuation" we're talking about here?
What other markets are there besides coinbase? If the market is not liquid enough then the $1000 value is just smoke.
I have a hard time believing that the price is not rising artificially because of low transaction count with the outside world (people holding to BTC instead of cashing them out).
Because they are sold in different markets. Its just like a fish or vegetable market, supply and demand at the market will set the price. The difference with traditional currency markets is those markets are very deep and competitive so the slightest discrepancy in price between markets is an arbitrage opportunity for someone which then pushes the price in line with other markets.
The more liquidity there is on the BitCoin markets, the less the price will differ. BitCoin just doesn't have that sort of liquidity or market depth yet.
Nobody has an answer for you, but this is a very legitimate question. If you can't cash out at any time, the market is not liquid and the $1000 value is just smoke.
I believe that the BTC valuation is based more on newcomers expectations of growth and less on anything tangible - like trading it for goods or cash.
We will probably see the facebook scenario where everybody -before IPO- was shouting the incredible 100billion valuation while secretly hoping enough fools will jump to buy shares to raise the price so they could cash out in profit.
In 5 years Bitcoin will replace almost all world currencies and cause massive reallocation of wealth in EUR and USD territories. USD and EUR will hyperinflate and lose value dramatically and eventually become abandoned.
Of course I'd bet. I'd bet all the money I have + my firstborn child + my future income for the next 30 years. Only someone without the faintest understanding of economics can think bitcoin will become USA/Europe's official currency.
There are just 2 problems with this bet:
1. There is no escrow I'd trust to hold my money for 5 years.
2. The bet is obviously ridiculous for you to take. If you really believe what you say, then your bitcoins will be worth billions in 5 years and the money you win from me won't matter. Hence in this bet there is only downside for you. Hence, either you're crazy if you take it or you're just talking big trying to manipulate the crowds. I'm betting on the latter.
First, it's you, not me who is talking big. I suggested (to another guy) fixed amounts to bet while you bet your unborn children.
Second, who said Bitcoin must get some official stamp of approval from any government? People will use Bitcoin wether governments want it or not. And government will have to milk bitcoin economy, not USD economy.
Third, Bitcoin is valuable precisely because there's "no escrow to trust money for 5 years". You can split your BTC private key in 10 parts via SSSS 6-of-10 and give to your trusted friends. They individually can't steal from you and if 6 of them are still around in 5 years, you get your money. Bitcoin makes some things possible which are not possible otherwise.
Forth, I'm serious about formal bet and confident in what I say. My identity is public and I publish all my thoughts on subject frequently and honestly here: http://blog.oleganza.com
If you are so certain that Bitcoin goes nowhere in 5 years, give me your conditions.
I'm cool with the bet even if it doesn't involve "official stamp of approval" from any government. You say USD/EUR will hyperinflate.
We can probably agree that gold price is a good measure if something has hyperinflated. So, if a troy ounce of gold is worth less than $100K USD/EUR after 5 years, you pay me $10K and if it doesn't, I pay you 1 BTC (the terms you offered below). Escrow is John K from bitcointalk. Deal?
EDIT: fine, you don't want gold. Pick any commodity you fancy - grain, corn, rice, oil, copper, coffee...whatever. It rises 100 times in USD value, you win the bet. Just don't tell me nobody will want these either and we'll live just on bitcoins and fresh air :)
I bet gold at some point will go down massively too. Why hold gold somewhere in the vault of a bankrupt banker when you can hold bitcoins? I wouldn't bet on what happens to the gold. I only feel like it will go very low over the next 20 years. Shorter term - have no idea.
I won't bet because, as someone pointed out, it's an infeasible option.
I work indirectly with the publishing business (librarian) so I'll use a publishing analogy. Someone asked me if e-books would replace books and I generally say "Maybe, but probably not until after I retire". The truth is "no". Why? Because right now, at least, there's nothing wrong with the book. Zilch. And we've seen e-book purchasing level off because people who want to read e-books read them and people who don't want to don't and most people do both. Right now there's absolutly nothing wrong with my dollars. I can still buy stuff, wire them places, get them from ATMs and so on. The point at which that stops (major political meltdown) is also the point at which bitcoin is likely to become impractical as well (infrastructure failure) unless the transition happens so slowly a bet is pointless.
Books are not broken. They are just not suitable in some cases.
Financial system is utterly broken and breaks more and more lives every day.
1. Some people can't do international business because they can't have bank account.
2. People have their accounts frozen, taxed, "bailed-in" etc.
3. People pay huge fees for remittances.
4. People pay huge price via inflation.
5. People die in wars funded by money printed out of thin air by US.
6. People can't effectively protest against government's
actions by not paying taxes since all money is owned by monopoly of banks anyway.
Bitcoin gives so much more freedom and allows to save a lot of lives. Paper money is a modern instrument of enslavement, not just some older technology.
I don't know why I'm responding to this as I can tell I'm trying to have a discussion about pragmatism with someone who's goals are ideological.
Bitcoin solves none of these problems. Fractional reserve banking, the mutability of the money supply, interest: all of that will continue to exist regardless of currency. Just as people borrowed money on interest when gold was the currency (or the standard) people will do so with bitcoin. These financial tools were created from necessity, not as "tools of oppression". Bitcoin will be saddled with the same financial services (banks, credit and so on) that currencies always have been because, for better or worse, we need those services. I recommend The Ascent of Money as I feel it’s a fairly nice, brief history of financial services.
But that's really beside the point. People don't make decisions about their money based on ideology; they make it based on what they need to buy food, clothing, shelter, entertainment and all the other stuff they transact every day. If I go out to people on the street and give them bitcoins and tell them it will free them from oppression, they will still pull out their dollars to buy milk because that's what the supermarket takes. There's no shaking of the shackles of oppression here because the shackles are social, not financial. The exercise of power and oppression goes much deeper than the kind of currency we use.
I'd bet you Ron Paul Fun Bucks don't supplant USD or EUR in five years, but I'd bet you wouldn't be willing to pay out in the filthy fiat currency I'd demand.
So if in 5 years Bitcoin does not displace half of the sovereign currencies I pay you $10K. But if it does, you pay me 1 BTC. We need to formalise the measurement first, but what about the general outline?
Forget what I said above about not trusting an escrow :) With such lovely odds, I'll gladly take you on this bet. Contact John K from bitcointalk about doing the escrow and I'm in. We can even up the sum a bit :)
Did you ever get a response on this? I'd deposit a bitcoin into escrow if he deposits 10,000. Are the terms still 1/2 the sovereign currencies or are we going with your 100% rise in value? I think I'll stick with the 1/2 the sovereign currencies as all sorts of things can cause hyperinflation of commodities prices. Seems like a worthy bet.
Nope, he suddenly went silent after I agreed to the bet. But I'm sure he had some very important thing to do that's keeping him busy and not able to answer ;)
Or serious flaw will be discovered and it will go from $? to being worthless.
Or it will be declared illegal (unlikely IMO) so the businesses won't be able to accept it and it will be only used in markets dealing with illegal stuff, like SilkRoad.
Or it will be stable enough to be used as currency, and it will coexists with EUR/USD and other currencies.
I think that any of the above is more likely than your scenario.
The narrative around bitcoin is changing. It can be seen more of an investment now than a bet.
Up until now I think bitcoin has been an "as yet proven, volatile, geeky, alternate, viral internet currency with network effects."
And the conservative are left wondering if it's a fad or a bubble.
Now it's just an emerging asset class with unique fundamentals that could have real utility within the financial services community itself... eg to settle trades.
The "unique fundamental" is a built in pseudonomous chargeback-less, ACH-less, nearly instantaneous global transaction system that has proven extremely difficult to cheat. This fundamental alone gives BTC tremendous value.
