Bitcoin Tops $50USD on MtGox(mtgox.com) |
Bitcoin Tops $50USD on MtGox(mtgox.com) |
A few reasons I can think of why it would:
* The current banking system is inherently insecure. If you have an account number and a routing number (written on the bottom of every check), you can pull money. Bitcoin is potentially much more secure.
* It's way too difficult to send money today, especially internationally, and fraud is a huge issue. We shouldn't need something like PayPal. Bitcoin solves this.
* If you don't have faith in banks or central governments, Bitcoin doesn't require trust in any third party to function. You aren't dependent on any bank.
A few reasons it might not:
* It requires too much technical knowledge to use and is unapproachable for mainstream users.
* It's too tied up with illicit interests and won't break out of that image, leading it to an untimely demise in culture. A fax machine is no use if no one else has one.
* There are lurking fatal flaws in the underlying technology. Maybe a blockchain fork is much more possible than currently assumed, or there's found to be an error in the cryptographic scheme.
* Mining power ends up concentrated in the hands of few when ASICs are in full swing and transaction fees aren't enough to keep individuals at it, giving power over the blockchain to a few (potentially malicious) actors. There's no guarantee transaction fees will actually pick up the incentive slack.
If you think that Bitcoin will ultimately be widely adopted, buy now. $50 / btc is very cheap in that world. If you think Bitcoin will fail, then any price is too much. Any mumbling that "it's doubled in a month and therefore is set up to come back down to earth" is just hand waving.
If the company you store your wallet with is hacked you lose everything, if your laptop is stolen or your dropbox account is hacked... it's as safe as keeping cash in your apartment. If your bank fucks up your money is (almost always) insured.
http://arstechnica.com/tech-policy/2012/09/hacker-steals-250... http://arstechnica.com/business/2012/03/bitcoins-worth-22800... http://arstechnica.com/tech-policy/2011/06/bitcoin-price-plu...
> It's way too difficult to send money today, especially internationally, and fraud is a huge issue. We shouldn't need something like PayPal. Bitcoin solves this.
Fraud is a huge issue that Bitcoin does not solve. Send your money over bitcoin and it's gone, forever. Paypal etc. offer protections, they're not bulletproof but they're better than nothing.
Which is why it is not recommended to store Bitcoin wallets with third parties. Store it and secure it yourself.
"if your laptop is stolen or your dropbox account is hacked... it's as safe as keeping cash in your apartment."
Which is why it is recommended to encrypt your wallet, so that if your laptop is stolen, the attacker has no access to it.
"If your bank fucks up your money is (almost always) insured."
Eventually, if the Bitcoin economy continues to grow, an insurance market will develop itself.
"Fraud is a huge issue that Bitcoin does not solve"
Actually it does solve the biggest fraud issue of today: fraud during purchases. Merchants receiving bitcoins are guaranteed that transactions are irreversible and cannot be charged back.
What you mean, is not that Bitcoin does not solve fraud, it is that Bitcoin is hard to "secure". It is a hassle for a user to encrypt his local Bitcoin wallet with a secure passphrase and to ensure that his computer is not infected by keyloggers/malware attempting to steal the passphrase.
Fortunately, there are efforts from different groups to develop credit-card sized tamper-proof hardware Bitcoin wallets (think about typing a pin code on a small device, which sends a Bitcoin transaction via NFC or via showing a QR code on an e-paper display).
What unthinking person leaves his bitcoins with a third party or on a computer? Would you leave your RL wallet with a stranger? Would you leave something easily stolen in public?
Store bitcoins in a paper wallet until you need to use them. They'll never get lost or stolen unless one is just as careless with the paper as they might be with their live keys.
Bit of a strawman.
>If you think that Bitcoin will ultimately be widely adopted, buy now. $50 / btc is very cheap in that world. If you think Bitcoin will fail, then any price is too much. Any mumbling that "it's doubled in a month and therefore is set up to come back down to earth" is just hand waving.
Bitcoin's use as a currency does not depend in any way on its value. A shirt selling for 1 BTC can sell just as easily for 0.5 BTC. In such a case where the government-mandated currency becomes useless and BTC is used as a true currency fallback, if anything it becomes a major problem, but in this present world it's basically just a proxy for sending fiat currency and a speculative asset.
I love BTC. But I don't need to hold on to any amount of it, or depend on any particular value, to use it to buy stuff. When huge corporations deny donations to Wikileaks, or when Paypal randomly freezes assets, having a digital currency is not only desirable but a necessity. Those of us that would use BTC for its intended purpose (assuming it isn't just a massive social engineernig hack from Satoshi loloolololo) don't even care if it crashes.
That said, I see the price as purely speculative at this point.
I don't pretend to know whether Bitcoin is going to $5,000 or to $0, but I do see a big market opportunity along with some very large risks.
Here are a few more:
* Positive: increasing mainstream interest and investments -- Coinbase, Silicon Valley Bank, Wordpress, Reddit, Mega, Tradehill, etc.
* Positive: greater public awareness of the risks of government monetary systems -- Cyprus confiscating bank deposits, central banks printing money, etc.
* Negative: online exchanges and wallet services frequently compromised.
* Negative: association with conspiracy theorists, fringe media personalities, etc.
Let's have a fact-based discussion. Speculation about exchange rates based only on gut instinct is just noise.
That's discounting other deflationary factors.
I think it would be nuts to put all your savings in Bitcoin, but as a hedge against fiat currencies and interesting place to put play money: time to buy!
Second, time to buy is never when the price is sky-rocketing. Bitcoin is not perfect and we need to see what the devs do over the next year to decide if Bitcoin will ever be allowed to scale because at the moment Bitcoin cannot scale up beyond 2-4 times its current usage and adoption.
http://www.fincen.gov/statutes_regs/guidance/html/FIN-2013-G...
If BTC had anything actually underpinning its value we could work out the ratio of how overvalued it is. Unfortunately it doesn't - even the fact that real transactions are made with BTC doesn't change anything, as the value is so elastic that a T-shirt selling for 1 BTC 6 months ago would sell for a fraction of the BTC now.
If the currency is stable now, what exactly is making it stable? Where does the equilibrium come from? Isn't it unstable by definition anyway since it's rising uncontrollably?
Well it is incorrect to state that. Obviously, as the exchange rate increases, mining becomes more and more profitable. In fact, as of today ($50/BTC, difficulty factor around 4.9M, 25BTC/block) mining has never been so profitable in over a year(!) since January 2011 ($6/BTC, diff=1.1M, 50BTC/block)!
Personally, I dont think they're worth $50, but heck, thats a horrible reason for you not to buy them. A more objective reason not to buy now is that there are people holding thousands of bitcoins. If a few of them (or maybe even one big player) sells tons of them, it could cause a crash like last time, when the price fell from $33ish to almost 0.
Interesting times for bitcoin either way.
As of today there are so many bids on MtGox alone that selling 100k bitcoins is barely sufficient to crash the price to the low $30s. Anybody owning that much is obviously long on bitcoin. It will take a lot more than a "few large holders" to crash the price to $30 or below. It would take a massive market panic.
I guess human psychology could also play a part in thinking this is the time to sell, but do the fundamentals actually seem questionable to you?
Notice i did not say everyone using bitcoins are speculators.. but if you are say a merchant with goods available in bitcoins, (and you don't wish to speculate) you will peg your price to your local currency, and after selling your goods will sell your bitcoin immediately for local currency. Which means you are no longer holding bitcoin or having any impact on bitcoin demand.
Increasing demand of a finite resource drives the price up. This drives the demand up even more.
The real value of a Bitcoin is still in USD, of course, so at some point it's going to cross over a line where the people holding Bitcoins want to get rid of it.
Decreasing demand of a finite resource drives the price down. This drives the demand down even more.
The fact that the price is accelerating so quickly indicates a runaway effect.
What, do you _really_ think the real-world USD value of all the Bitcoins in the world has doubled in two weeks?
http://mpex.co/ https://icbit.se/
I want to load some more, so the more you short them the merrier.
Shorting isn't possible within the Bitcoin protocol itself, since there's no mechanism for the lender to compel the short-seller to cover and return the borrowed bitcoins. And Bitcoins are usually not kept in custody with a broker that could lend them, since doing so would defeat the purpose of the protocol in the first place, that only you can spend your coins. (Any lending or any other means of paying a bitcoin is spending it as far as the protocol is concerned.)
Such an exchange could exist, if it established its own trustworthiness outside of the Bitcoin protocol. It would have power to spend depositors' bitcoins on their behalf, like a bank for fiat currency does, but unlike a bank there is no higher authority such as a government to appeal to if the bank breaches its trust. The exchange would have to do something really really compelling to entice Bitcoin depositors and earn their trust. This set of problems would appear to be deep enough that a Bitcoin short exchange does not currently exist.
Can a global financial system conceivably give the world just 10% of the value of Facebook? Because just ten percent ... and one BTC is $500.
Oh, but clearly society demands Farmville, you say? Clearly we don't need a new financial system ... more than we need to know who Joe Bob hooked up with this weekend.
As if there's no pain being solved here by Bitcoin. As if there are no problems with USD or the EUR. As if Cypriots are just pissed off over spilled milk right now. After all it's only a "haircut".
It's so funny to see how most people on HN are here to make businesses that scale infinitely. What could possibly, POSSIBLY, scale faster and more widely than an open source global currency? The price increase in the last month represents a trickle of people around the globe exchanging fiat for BTC. Just a trickle. Whereas most people are obviously hesitant to invest. That would include most people on HN.
The supply of Bitcoin is ridiculously tiny. Only 11,000,000 in total are in circulation today, let alone available for purchase on the market.
Sellers wanted. I acquired enough BTC to make me happy without being over the top - and I'm not ever exchanging it back into any other ass backwards asset class, gold and silver (and USD) included. Early adopters of BTC are from what I can tell mostly the same way, if crazier than I am.
Bitcoin is valuable because the world desperately needs to escape the current financial system. Individual sovereignty and financial privacy are the most scarce resources on the planet, bar none. It's not too late to acquire BTC, put it in a brainwallet and carry around $10k at all times. Now let's all go back to flinging monkey poop at consumers over the Internet.
This is as predicted by those who say that Bitcoin is a deflationary currency.
Bitcoins can be divided to 8 decimal places at the moment (it could be expanded). So instead of 1.1e7 units, isn't it 1.1e15 units?
Someone needs a way to sell firearms, ammo, and canned goods for BTC. That sounds funny, but I'm dead serious. Local laws against shipping arms can often be worked around.
I don't think Bitcoins are the answer to the problems they are trying to solve.
This is what traction looks like, sometimes it's messy. That doesn't mean it's not legitimate.
What does legitimising a currency mean anyway? It's already used as a medium of exchange and a store of value, that's legitimate.
But if you are going to try and compare it to the "legitimacy" of fiat money, you're not going to find what you're looking for.
Bitcoin is an anarchist concept, it does not seek to be legitimised. It is achieving exactly what is set out to do.
you could just see the fluctuations as the currency being honest about its value as opposed to fiat money which is just as vulnerable yet artificially stabilised (legitimised?).
If you still have Bitcoins, sell'em and don't buy more, except as an intermediary exchange for your discreet transactions.
SD notifies losers by sending them a very small transaction. Because of this SD generates the majority of BTC transactions and inflates the size of the generated blocks.
https://bitcointalk.org/index.php?topic=150481.0
There were a few more discussions around this time too, a few people including a pool operator want to block all businesses and applications that "abuse" the blockchain. This shows that a few higher ups in the Bitcoin community are short-sighted and very selfish, and also shows the problems Bitcoin will have at getting any larger.
Two things you're not taking into account: 1) There are no fundamentals in the bitcoin market and 2) Margin calls
Based on the price action of just the last few months, it's easy to imagine you might need to cover for BTC at $250 or more (log trend), yet your max upside would be $50.
At the moment Bitcoin cannot handle lots of transactions made with its smallest unit. This is being called spamming the block chain.
So far we're spending more money on accountants handling the non-trivial
reconciliation of our BTC transactions than revenue we're making in Bitcoin,
haha. Hopefully it will get better.
You are correct that I don't fully understand supply/demand economics, because as an Austrian theorist, my concepts relating to booms and busts use dynamic models and not the statics you are using to prove your point. In a static situation, increasing demand of a finite resource does drive the price up, which can drive up demand even more, but thats if you ignore the effect of substitutes, which for both the exchange and speculative value of bitcoins, there are several.
Do I really think that it has doubled? No. But I don't think that people expecting a large crash like before are doing so because they understand the fundamentals. I think, as in any market, you do have speculators, but I also think that the legitimate demand for bitcoins as a means for exchange has gone up since the previous crash providing a more solid basis for the higher price.
Then it sounds like the speculative bits are driving, even if there are other passengers in the car.
Therefore, why would I, a buyer use this vs a credit card?
Firstly, you just cannot use your credit card (or Paypal, or Western Union) to do certain transactions: sending any amount of money to a family member overseas (WU does not operate in many countries, and has limits), making a donation to an organization censored/oppressed by governments (PP blocks donations to Wikileaks), etc.
Secondly, even when you can use the traditional banking system, it is inconvenient: driving 30min to a WU office to receive money, waiting days for wire transfers to complete, etc.
Thirdly, your credit card is tied to an account that your government, bank, or a court can seize for whatever reason (your spouse making fraudulent claims during a divorce going badly, etc). Bitcoin protects you from that. With Bitcoin, you own a purchasing power that no one can regulate or block.
Fourthly, Bitcoin transactions fees are voluntary, hence very low: typically less than 0.01%. This benefits not only sellers, but also buyers. Credit card transactions cost 1-2% (even if you do not see them as a buyer, the seller increase its prices to cover them).
Fifthly, the USD in your account tied to a credit card depreciates over time, because the Federal Reserve prints money continuously (causing long-term inflation). Whereas with Bitcoin your purchasing power is preserved or increased over time, as the maximum number of Bitcoins is capped (causing long-term deflation). Therefore you do not have to resort to various more or less risky investment options to preserve your net worth over your lifetime.
Just one memorable example of market manipulation and unlimited exposure.
-_-
I found https://bitcointalk.org/index.php?PHPSESSID=h72gmr1luhb169j1...
which shows that the top two wallets are gone now and the 80,000BTC Wallet has grown to 111111.11
The top 400 goes down to about 3,000BTC. A bunch of those could be the former largest ones broken up.
http://www.zerohedge.com/news/2013-03-10/demographics-bitcoi...
I read somewhere (source unknown, possibly unreliable) that 75% of all BTC are hoarded (ie. not in circulation).
Yes, if the merchant steals from the buyer, the raw BTC transaction is not reversible. But normally merchant has much more to lose than you if he is not nice (and merchants show their commitment by investing a lot in marketing and development) and in rare cases when you transact more money, you can use escrow and extra paperwork. But that's totally optional and is not needed when paying for a coffee, a book, or some inexpensive service.
As volume picks up (market depth has nearly tripled in 2 months) this is a lesser problem.