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Bitcoin Hits $1 Billion

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Re: Bitcoin Hits $1 Billion

#181

Post by zeteo »

eric_bullington wrote: post #178
zeteo wrote: post #170

Earlier quoted context omitted.

Your comment amounts to a rather naive "we should get excited about Bitcoin, it has great potential and critics are shortsighted". And it is precisely this excitement (with calls for more excitement) that generates Bitcoin's current value. But where will the decline stop once the first run inevitably occurs? All other currencies have a bottom floor that they can't fall below, be it either intrinsic value (jewelry, pl…

"All other currencies have a bottom floor that they can't fall below" I suspect holders of the Zimbabwean Dollar would disagree, as would the holders of many other hyperflationary currencies going back many centuries. Such currencies were all legal tender, but it didn't make any difference.

I'm not talking about the value of a single unit of currency, but about the aggregate value of the currency itself. A single Zimbabwean Dollar might have fallen very low indeed, but as long as it was legal tender - and the Zimbabwean government accepted payment in it - the value of all Zimbabwean dollars still had to be sufficient for paying taxes and debts in that country.

Re: Bitcoin Hits $1 Billion

#182

Post by mikeash »

cs702 wrote: post #35

As usual on HN, any submission about Bitcoin is met with concerned comments about its high volatility, present impracticality as a currency, disadvantages versus precious metals, current concentration of transactions in a single exchange (MtGox), potential for market manipulation by governments and/or speculators, etc. This is analogous to being present at the creation of the World Wide Web, but instead of getting ex…

"This is analogous to being present at the creation of the World Wide Web, but instead of getting excited about its obvious potential, one decides to stay on the sidelines because it's still unproven technology, almost no content has been made available online, commercial opportunities are virtually non-existent, etc."

There's nothing wrong with that. For every WWW, there are a thousand technologies that looked similar when they were young, and were a flop.

Re: Bitcoin Hits $1 Billion

#183

Post by tinco »

zeteo wrote: post #181
eric_bullington wrote: post #178

Earlier quoted context omitted.

"All other currencies have a bottom floor that they can't fall below" I suspect holders of the Zimbabwean Dollar would disagree, as would the holders of many other hyperflationary currencies going back many centuries. Such currencies were all legal tender, but it didn't make any difference.

I'm not talking about the value of a single unit of currency, but about the aggregate value of the currency itself. A single Zimbabwean Dollar might have fallen very low indeed, but as long as it was legal tender - and the Zimbabwean government accepted payment in it - the value of all Zimbabwean dollars still had to be sufficient for paying taxes and debts in that country.

That's assuming the Zimbabwean government actually survives. At some point people will lose all trust in the currency and start to use a more solid one, this can mean currencies from neighbouring countries, or stable ones from far away like the dollar, euro or yuan. If it that point the Zimbabwean government would still print money it can't back it would go bankrupt, and not be able to pay its staff and cease to be.

Re: Bitcoin Hits $1 Billion

#184

Post by rtra »

michaelochurch wrote: post #169
andrewljohnson wrote: post #163

Earlier quoted context omitted.

Even better though, it's like gold you can get for cheap for now. Assuming people don't stop using bitcoins, it's hard to imagine bitcoins not appreciating over time. Either a major calamity like government intervention will end BitCoin, or it will be supplanted by different technology, or BitCoins will appreciate for decades. They will either be worth zero, or a lot in my estimation. Disclosure: I own 20 bitcoins.

It's unstable. There's no barrier to entry. I could make a competing product called ZitCoin with a different inflation/deflation profile. At some point, it comes down to weird, fickle, and not especially meaningful brand effects. Then it's just speculation. If you buy BitCoin, you're betting on the prestige of its being the first. Do people even know what the first fiat currency is? Or care? People who sell at the to…

How would you get people to invest in ZitCoins? Isn't that problem a major barrier to entry?

Re: Bitcoin Hits $1 Billion

#185

Post by Helianthus »

cs702 wrote: post #35

As usual on HN, any submission about Bitcoin is met with concerned comments about its high volatility, present impracticality as a currency, disadvantages versus precious metals, current concentration of transactions in a single exchange (MtGox), potential for market manipulation by governments and/or speculators, etc. This is analogous to being present at the creation of the World Wide Web, but instead of getting ex…

The reason people are hesitant is because other people are writing breathless comments like this.

Re: Bitcoin Hits $1 Billion

#186

Post by eric-hu »

indrax wrote: post #173
adestefan wrote: post #134

People keep comparing the "value" of bitcoin against the USD. If bitcoins were a truly useful currency, then there would be no need to value them against another base currency.

All currencies can be valued in terms of other currencies. Bitcoin can also be valued directly against goods. (as can other currencies) The price of most goods is currently tied to some other currency, because most businesses have expenses in traditional currencies. But you get similar price fluctuations in international trade.

It sounds like a metric that would satisfy the parent post more is some sort of consumer price index in Bitcoins? Perhaps that would be useful to have side-by-side with a Bitcoin-to-USD metric.

Re: Bitcoin Hits $1 Billion

#187

Post by Helianthus »

cadetzero wrote: post #159
gyom wrote: post #130

Earlier quoted context omitted.

And maybe the 5k seller wasn't even trying to game the system. He/she just wanted to get out. Imagine a hedge fund with an order of magnitude more monetary mass trying to provoke those kind of sell offs and benefit from them.

It totally stands within reason that until it has wide spread adoption and regular people stop caring about what the exact exchange rate is that we will see large runs like that. As I stated, we have several people (myself included) invested to make money and take care of an investment, not to use a daily currency.

...this is exactly why it will fail.

Re: Bitcoin Hits $1 Billion

#188

Post by martinced »

tinco wrote: post #183
zeteo wrote: post #181

Earlier quoted context omitted.

I'm not talking about the value of a single unit of currency, but about the aggregate value of the currency itself. A single Zimbabwean Dollar might have fallen very low indeed, but as long as it was legal tender - and the Zimbabwean government accepted payment in it - the value of all Zimbabwean dollars still had to be sufficient for paying taxes and debts in that country.

That's assuming the Zimbabwean government actually survives. At some point people will lose all trust in the currency and start to use a more solid one, this can mean currencies from neighbouring countries, or stable ones from far away like the dollar, euro or yuan. If it that point the Zimbabwean government would still print money it can't back it would go bankrupt, and not be able to pay its staff and cease to be.

"At some point people will lose all trust in the currency and start to use a more solid one, this can mean currencies from neighbouring countries, or stable ones from far away like the dollar, euro or yuan."

Sometimes people don't have the choice: in Argentina you cannot exchange your money for other currencies if you're not a tourist and you have to live with 23% inflation per year or so. Not exactly great for the economy.

More recently, a few days ago, people in Cyprus cannot exchange their money anymore in other currencies: there are effectively two different euros in the eurozone now. One on which there are restriction and one on which there aren't. If you have a shitload of euro bills with a 'Y' (the code for Chyprus) on them I'd fastly change them to something else because there's a very high risk to lose everything.

Also, I can't help but laugh at you describing the euro as "stable". The eurozone is on the verge of gigantic collapse: the situation is very concerning. France just announced that they ran in 2012 at a deficit of 4,5% (!) and that in 2013 they won't be able to reach 3%. France getting out of the eurozone in 2014 is hardly unthinkable.

Actually, the probability that before the end of the year the entire eurozone will announce several bank failures and up to 40% confiscation (like in Cyprus) on all the eurozone citizen accounts above 100 K Euros is not zero.

Re: Bitcoin Hits $1 Billion

#189

Post by Helianthus »

eric-hu wrote: post #186
indrax wrote: post #173

Earlier quoted context omitted.

All currencies can be valued in terms of other currencies. Bitcoin can also be valued directly against goods. (as can other currencies) The price of most goods is currently tied to some other currency, because most businesses have expenses in traditional currencies. But you get similar price fluctuations in international trade.

It sounds like a metric that would satisfy the parent post more is some sort of consumer price index in Bitcoins? Perhaps that would be useful to have side-by-side with a Bitcoin-to-USD metric.

Sadly there isn't enough data for a consumer price index, because Bitcoin isn't a currency (in the extent that its main use is exchange for commercial goods), it's a financial sandbox.

Re: Bitcoin Hits $1 Billion

#190

Post by adestefan »

Helianthus wrote: post #189
eric-hu wrote: post #186

Earlier quoted context omitted.

It sounds like a metric that would satisfy the parent post more is some sort of consumer price index in Bitcoins? Perhaps that would be useful to have side-by-side with a Bitcoin-to-USD metric.

Sadly there isn't enough data for a consumer price index, because Bitcoin isn't a currency (in the extent that its main use is exchange for commercial goods), it's a financial sandbox.

Which means that it's susceptible to the wild fluctuations of any other financial security and is not the almighty digital currency that it's backers try to make it out to be.
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