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1 Bitcoin Worth 10 USD

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Re: 1 Bitcoin Worth 10 USD

#101

Post by Steko »

Animus7 wrote: post #66
sylvinus wrote: post #27

Am I the only one to think Bitcoin is just a big Ponzi scheme benefiting the first users/creators who got all the first ones?

This argument never made sense to me. If I were designing a Ponzi scheme intending to defraud people, I wouldn't base it on a 100% transparent network of open source software using public domain crypto functions, where the wealth creation is by design not only randomly allocated, but mathematically capped to a static trickle rate. It's like the most badly designed Ponzi scheme ever.

It doesn't have to be intended or designed as a Ponzi scheme to end up as one. E.g a legitimate investment manager could cover up a bad month/quarter/year hoping to fix it down the road then wind up being flumoxed by compounding losses or seduced by the increased business they get by beating the rest of the market during a downturn.

Re: 1 Bitcoin Worth 10 USD

#102

Post by ewillbefull »

moonchrome wrote: post #100
cs702 wrote: post #64

In the view of many HN members, Bitcoin is a Ponzi scheme. In the view of other HN members, Bitcoin is an experimental crypto currency, the use of which is unlikely ever to expand beyond idealistic hackers, online gamblers, and underground characters. In my view, Bitcoin is likely to gain wide adoption worldwide over the long haul -- that is, over a period of many years or even decades. Its price is therefore bound t…

Many people don't realize how small Bitcoin is. It's trading in the $1M range. That's like few hundred people playing with their savings - low liquidity = high volatility - talking about this as something significant/newsworthy is silly.

Bitcoin trading volume over a 30 day period is more than $20 million dollars, which is incredibly notable for an open-source currency which isn't managed or operated by anybody. The technology involved and the implications of its growth are very significant/newsworthy.

The fact that it's trading at $10 again is also very significant to the Bitcoin community, it hasn't done that in more than a year. And it'll probably reach 12 by the end of the year before it stabilizes again.

Re: 1 Bitcoin Worth 10 USD

#103

Post by ewillbefull »

gwillen wrote: post #85
technotony wrote: post #12

If you look at this data over the max range ( http://bitcoincharts.com/charts/mtgoxUSD#tgSzm1g10zm2g25zv ) then it looks a lot like the Gartner Hype cycle ( http://bit.ly/N1XCnb ). I wonder if Bitcoin is past the trough of disillusionment and ready for a serious explosion?

I'm a strong supporter of bitcoin, and I have a bunch of it, so don't get me wrong. But I suspect we may well be seeing a second big bubble here. Only time will tell.

This isn't necessarily a bubble, but market reaction to the block reward halving later this year. The decreased inflation will double the value of bitcoins, and this trend was anticipated well in advance.

Re: 1 Bitcoin Worth 10 USD

#104

Post by jvm »

jimktrains2 wrote: post #90
hollerith wrote: post #84

Earlier quoted context omitted.

>in the past 2 weeks we've seen its value appreciate by 50%, something that just doesn't happen with traditional currencies It happens with gold, which could be viewed as a traditional currency.

To be pedantic, and to note I'm not an economist, I thought the value of gold or silver was always constant, it was the currencies based on them that inflate or deflate.

"I thought the value of gold or silver was always constant"

Value is relative, so if you only value gold then the value of gold is constant. But if what you value is goods and services, then the price of gold is extremely unstable. You can see it graphed here (CPI being a metric of the price of goods and services):

http://www.usagold.com/amk/gold20080315.gif

Gold used to have a stable price in terms of dollars because the central bank pegged the currency to the price of gold, which I think is the reason people like Ron Paul believe that gold has a "constant" price. now the central bank pegs the currency to CPI so CPI is stable and gold floats freely (in dollar terms). This is preferable if you value CPI price stability more than gold price stability.

Also note that gold and silver often diverge in value relative to one another, so no matter what your perspective, it cannot be the case that gold and silver have stable value. If Somebody hits a rich silver vein then silver drops relative to gold.

Re: 1 Bitcoin Worth 10 USD

#105

Post by Symmetry »

sp332 wrote: post #99
jimktrains2 wrote: post #90

Earlier quoted context omitted.

To be pedantic, and to note I'm not an economist, I thought the value of gold or silver was always constant, it was the currencies based on them that inflate or deflate.

Nope. As more gold was mined during gold rushes, the value of gold decreased. As people found more uses for gold and demand outstripped supply, the value increased. And of course the relative value of gold and silver changes over time.

Particularly, the discovery of the New World with all the gold there caused some huge disruptions in the Old World economy.

Re: 1 Bitcoin Worth 10 USD

#106

Post by moonchrome »

ewillbefull wrote: post #102
moonchrome wrote: post #100

Earlier quoted context omitted.

Many people don't realize how small Bitcoin is. It's trading in the $1M range. That's like few hundred people playing with their savings - low liquidity = high volatility - talking about this as something significant/newsworthy is silly.

Bitcoin trading volume over a 30 day period is more than $20 million dollars, which is incredibly notable for an open-source currency which isn't managed or operated by anybody. The technology involved and the implications of its growth are very significant/newsworthy. The fact that it's trading at $10 again is also very significant to the Bitcoin community, it hasn't done that in more than a year. And it'll probably…

>trading volume over a 30 day period is more than $20 million dollars

Again - as a currency this is insignificant. I agree that bitcoin is a great technical accomplishment but talking about it's price as it has any meaning outside of a few hackers playing traders is not realistic.

Re: 1 Bitcoin Worth 10 USD

#107

Post by rictic »

btilly wrote: post #37
mrb wrote: post #7

Earlier quoted context omitted.

As long as its crypto primitives remain secure (SHA-256, Elliptic Curve crypto, RIPEMD), if the Bitcoin economy continues to grow 5x, 10x, 20x, etc, then its value should increase 5x, 10x, 20x, etc, because there is a fixed number of coins available. Both of these assumptions are likely. So I would say, yes, this exchange rate should last (of course there will be some bumps on the road, bubbles, crashes, etc).

there is a fixed number of coins available. Not necessarily true! There is slow growth in coins. But if it takes off then we know all of the primitives to make a second bitcoin. Establish one with a price peg to existing bitcoin. If you maintain it long and well enough, it will become accepted as equivalent. Once that happens you've done a big one-time increase in the supply. In fact I would recommend doing this at s…

How would one peg the price to existing bitcoin (honest question)?

Re: 1 Bitcoin Worth 10 USD

#108

Post by WhoIsSatoshi »

tatsuke95 wrote: post #70
WhoIsSatoshi wrote: post #55

Earlier quoted context omitted.

This is a burden only if you do not use it. but the same applies to any investment - why invest at all? Bitcoins are capped by protocol - Quoting DeathAndTaxes @ https://bitcointalk.org/index.php?topic=80185.0 : (quote) The method used for determining the reward is to do a right shift on 50,000,000 satoshis every 210K blocks. That truncates any fractional satoshis. There are some truncation along the way. For example…

> "but the same applies to any investment - why invest at all" But "money" isn't an investment. It's a medium of exchange. If you're buying BTCs to hold them as an appreciating asset, that's one thing. If the intention is for them to be used as a currency, then deflation inhibits the exchange.

>But "money" isn't an investment. It's a medium of exchange. I disagree, many traders deal solely with currencies.

> deflation inhibits the exchange. Valid if you deal with fiat currencies - but with a finite volume that point doesn't hold its own too well. if there is any transaction going on (currently mostly underground) then the market levels itself on those. In other words, you can't hold it forever, particularly when it transitions toward mainstream use.

The beauty of BTCs is that it has no worth but it's own encryption. And that worth appears poised to grow as people worry more and more about secure digital transactions that no one entity can regulate. It is a tool to an ideology, that no government can secretly abuse, which is why it isn't seeing much love from that crowd.

Re: 1 Bitcoin Worth 10 USD

#109

Post by cs702 »

moonchrome wrote: post #100
cs702 wrote: post #64

In the view of many HN members, Bitcoin is a Ponzi scheme. In the view of other HN members, Bitcoin is an experimental crypto currency, the use of which is unlikely ever to expand beyond idealistic hackers, online gamblers, and underground characters. In my view, Bitcoin is likely to gain wide adoption worldwide over the long haul -- that is, over a period of many years or even decades. Its price is therefore bound t…

Many people don't realize how small Bitcoin is. It's trading in the $1M range. That's like few hundred people playing with their savings - low liquidity = high volatility - talking about this as something significant/newsworthy is silly.

Bitcoin looks pretty liquid to me in relation to its float.

According to the latest stats at http://www.bitcoinwatch.com, the market value of all bitcoins currently in existence is just under $100 million; so, trading volume of $1 million per day means that around 1% of Bitcoin's entire float turns over every day, around 30% of the float turns over every month, and the entire float turns over about once every three to four months. That's more liquid than a lot of publicly traded stocks with similar float.

PS. moonchrome, I'm not sure how your comment relates to my post, which is about trends over the long run ("many years or even decades"). Why are you responding with a comment about current trading volumes?

Re: 1 Bitcoin Worth 10 USD

#110

Post by davidklemke »

hollerith wrote: post #89
davidklemke wrote: post #52

This is exactly the last thing BitCoin needs to be successful as a currency. After the speculative bubble last year it started to make some headway as the price remained relatively stable. Now in the past 2 weeks we've seen its value appreciate by 50%, something that just doesn't happen with traditional currencies. It's dangerously reminiscent of what happened last year and shows that the BitCoin economy is still ver…

>in the past 2 weeks we've seen its value appreciate by 50%, something that just doesn't happen with traditional currencies You do not see deflation with fiat currencies because the issuers of the currency print more to counteract deflation. Gold however is prone to extended periods of deflation, and that does not prevent gold being useful as a medium of exchange and as a vehicle for investment or savings. (The reaso…

Indeed I agree that a changing price doesn't necessarily mean that the currency is useless as a medium for transporting wealth just that when the exchange rate is volatile it's much more attractive to see BitCoins as a speculative vehicle. That's what drove the bubble last year and could very well be the same thing that's happening now. The growth rates are similar (although starting from a higher base) and that's primarily what I'm worried about.

And don't worry I'm quite familiar with fiat currencies ;)

Yet again I agree with you, the BitCoin economy needs more investment in it in order to counteract the issues that I highlighted. Thankfully that seems to be happening (I believe YC just accepted its first BitCoin based start up) and as time goes on the market should stabilize. I think that's when we'll start to see BitCoin spread outside the high tech sector and I'll gladly count BitCoin among all the other "proper" currencies.

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