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Bitcoin reaches an all-time trading high of over $33

arstechnica.com

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Re: Bitcoin reaches an all-time trading high of over $33

#101

Post by lmm »

mrb wrote: post #29
adambom wrote: post #2

Bitcoin is a deflationary currency since it's supply is limited. Doesn't that mean that it's expected to rise in price? This also ends up being the currency's downfall, since there's an incentive to hoard it rather than spend it.

Critics keep saying that there is no incentive to spend it. But all the numbers indicate that there is increased spending : http://news.ycombinator.com/item?id=5296889 Therefore, no, I do not think it will cause its downfall. I guess people are irrational and still spend bitcoins despite knowing about deflation.

Spending makes sense because the future of bitcoin is uncertain. If you could guarantee that bitcoin wasn't going to crash, hoarding would be a guaranteed winner and people would stop spending (and ironically enough, it then would crash).

Re: Bitcoin reaches an all-time trading high of over $33

#102

Post by epscylonb »

ankeshk wrote: post #97
epscylonb wrote: post #92

Earlier quoted context omitted.

I'm a fan of bitcoin, and I think it may well have a bright future, but this recent rise over the last couple of months is probably a bubble. New mining equipment called asics are being produced, at least one manufacturer, demands payment in bitcoin, and the price of bitcoin rises. Other people see the rising price and start thinking, hmmm should I buy an asic?. My prediction is that by the end of the summer the pric…

This is a chart for number of bitcoin transactions per day: http://blockchain.info/charts/n-transactions ASIC hardware sales don't even make 1 days worth of transactions (when we account for the "number" of transactions). I don't see the bitcoin price going back to where it was 3 months ago.

Interesting, I wonder how much of that is Satoshi Dice though?. Not that SD doesn't count as demand, but it's unlikely to be sustainable due to the way it bloats the blockchain.

Re: Bitcoin reaches an all-time trading high of over $33

#103

Post by acchow »

glesica wrote: post #42
eof wrote: post #38

Earlier quoted context omitted.

Well your logic is obviously flawed, because people do use bitcoins for transactions and they have changed by hundreds of percentage points. "No one" is patently false. Besides, illicit transactions are still transactions. And.. you are just plain wrong. Bitcoin is also useful for buying many completely legal things. Including a VPN that can't be linked to your identity. (Illicit you say? What about a journalist in a…

Illicit plus grey market and a few special cases. Fine, you win the Pedant's Prize for nitpicking. The point is that they don't make a good general-purpose currency. Just because they're awesome for buying drugs and secret VPNs doesn't mean very much in the grand scheme of things (most transactions, at least in the developed world, do not take place in the grey market). Also, just because some people do something doe…

Nobody is saying Bitcoin is currently awesome and better than standard currencies. However, what is clear is its long-term viability.

You should ask yourself from where currency originates. What is its predecessor and was its acceptance ubiquitous. And take note that there was a period not long ago where saffron was used as "currency".

Also, though you may be intelligent, it would good to take a note from Socrates and consider that perhaps you don't know everything about every field.

Re: Bitcoin reaches an all-time trading high of over $33

#104

Post by lmm »

justinmk wrote: post #18
adambom wrote: post #2

Bitcoin is a deflationary currency since it's supply is limited. Doesn't that mean that it's expected to rise in price? This also ends up being the currency's downfall, since there's an incentive to hoard it rather than spend it.

> deflationary ... there's an incentive to hoard it rather than spend it. By that logic, everyone would put their dollars into investments that beat inflation (this is a form of saving). Yet they do not. You can hold (hoard?) securities (VBLTX, HTS, JNJ) that beat inflation, yet people spend dollars on depreciating assets (cars, computers). There are other less-risky financial instruments [1] that beat nominal CPI, y…

>You can hold (hoard?) securities (VBLTX, HTS, JNJ) that beat inflation, yet people spend dollars on depreciating assets (cars, computers).

No-one buys a dozen computers and puts them in their basement as savings for retirement. People buy cars and computers to use, not as investments. People with nontrivial quantities of "spare" dollars generally do put them into inflation-beating investments.

Re: Bitcoin reaches an all-time trading high of over $33

#105

Post by ankeshk »

mehwoot wrote: post #77
downandout wrote: post #44

Earlier quoted context omitted.

You are correct that a rising price does not necessarily imply long-term viability. It indicates a sharp increase in demand. In Bitcoin's case, I believe demand is rising because of fundamental advantages it has over other forms of virtual currency that won't soon be rivaled. It enables new business models and transactions that would not have otherwise occurred (in many cases, for legal reasons). For this reason, I b…

> In Bitcoin's case, I believe demand is rising because of fundamental advantages it has over other forms of virtual currency that won't soon be rivaled. So demand has increased 1000% since the low of $3 less than a year ago? I don't buy that reasoning. I think it is 90% speculation and 10% increased demand. Demand is increasing, but nowhere near the amount to explain the large price shifts. Disclaimer: I have a reas…

Yes. The demand has increased 10x.

Last year, 6,000 bitcoin transactions occurred each day. Today, 60,000 transactions occur each day. Source: http://blockchain.info/charts/n-transactions

Re: Bitcoin reaches an all-time trading high of over $33

#106

Post by ankeshk »

epscylonb wrote: post #102
ankeshk wrote: post #97

Earlier quoted context omitted.

This is a chart for number of bitcoin transactions per day: http://blockchain.info/charts/n-transactions ASIC hardware sales don't even make 1 days worth of transactions (when we account for the "number" of transactions). I don't see the bitcoin price going back to where it was 3 months ago.

Interesting, I wonder how much of that is Satoshi Dice though?. Not that SD doesn't count as demand, but it's unlikely to be sustainable due to the way it bloats the blockchain.

I had read that 55% of all transactions are due to Satoshi Dice. Can't find the source right now, but it seems about right by going through the latest transactions on blockchain.info

Re: Bitcoin reaches an all-time trading high of over $33

#107

Post by bayesianhorse »

eof wrote: post #38
glesica wrote: post #30

Earlier quoted context omitted.

It says to me that there is a large amount of speculation. As a currency, Bitcoin is basically useless except for illicit transactions (which are usually pretty inefficient anyway). Would you use dollars if the value of a dollar could change by hundreds of percentage points in a few months? No one would.

Well your logic is obviously flawed, because people do use bitcoins for transactions and they have changed by hundreds of percentage points. "No one" is patently false. Besides, illicit transactions are still transactions. And.. you are just plain wrong. Bitcoin is also useful for buying many completely legal things. Including a VPN that can't be linked to your identity. (Illicit you say? What about a journalist in a…

Bitcoins are almost useless for legal and non-illicit transactions. Paypal is cheaper than bitcoins in these situations, if you account for the astronomical currency risk and thus the premium bitcoin-traders and shops accepting btc have to charge in order to not go out of bussiness in an eyeblink.

Re: Bitcoin reaches an all-time trading high of over $33

#108

Post by ankeshk »

glesica wrote: post #30
downandout wrote: post #19

The fact that Bitcoin has flourished despite numerous high profile incidents of theft and fraud, the relative difficulty associated with buying and selling them, and the rather unsavory nature of many of its most popular uses today, is a testament to its long-term viability as a currency. The Bitcoin ecosystem has a long way to go before it is considered mainstream, but I believe its long-term success is almost inevi…

It says to me that there is a large amount of speculation. As a currency, Bitcoin is basically useless except for illicit transactions (which are usually pretty inefficient anyway). Would you use dollars if the value of a dollar could change by hundreds of percentage points in a few months? No one would.

Here is a chart that shows bitcoin trade volume vs transaction volume. It gives a good idea of speculation vs demand. http://blockchain.info/charts/tx-trade-ratio

(This article may help in understanding the chart: http://codinginmysleep.com/measuring-bitcoin-speculation/)

The chart shows that the rise is not due to an insane rise in speculation.

Re: Bitcoin reaches an all-time trading high of over $33

#109

Post by bayesianhorse »

Trading bitcoins, even in an otherwise legal fashion, is essentially money laundering at this point.

Yes, there are legal bitcoin traders or bussinesses. And No, you can't pretend these are the majority.

And it's not really a problem that I am thinking this. The big problem is that the European Central Bank is saying this too. The legal status of Bitcoin businesses remains unsolved, even if the proponents don't run out of reasons why trading Bitcoins is purportedly legal.

Re: Bitcoin reaches an all-time trading high of over $33

#110

Post by bayesianhorse »

kybernetikos wrote: post #57
glesica wrote: post #30

Earlier quoted context omitted.

It says to me that there is a large amount of speculation. As a currency, Bitcoin is basically useless except for illicit transactions (which are usually pretty inefficient anyway). Would you use dollars if the value of a dollar could change by hundreds of percentage points in a few months? No one would.

Actually, with modern software bitcoins are among the easiest way to transfer money between people. I load up my phone app, point it at the relevant QR code and the money is transferred securely and quickly, usually with no transaction costs. If I want to receive money, I can just give the person my QR code (or show them on the screen of my phone) and they can give me money just as easily. I have been wishing for my…

Easy, maybe. Cheap, no. The costs associated with the currency risks are huge, and you ignore them at your own peril.
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