Bitcoin exchange rate reached $100 USD per BTC • Hacker News Board

Re: Bitcoin exchange rate reached $100 USD per BTC

#111

Post by numbsafari » Mon, Apr 01, 2013, 3:31 PM UTC

kaonashi wrote: post #92

grovulent wrote: post #42

Earlier quoted context omitted.

I'm not a bitcoin fanboy - but I see this sentiment around a lot and I'm not sure I agree with it. The claim is that the value of a currency is supposed to also be somehow related to its utility in acquiring goods and services. And if this isn't the case - then people will go off it. When was the last time someone acquired a good or service with an ounce of gold? Perhaps we shouldn't consider gold a currency? Well I'…

Gold is a commodity; same with bitcoins. Not that there's anything wrong with that, but it isn't the same thing as a currency. Gold was only ever a currency when it was stamped by the issuing authority.

As a commodity, gold always had an intrinsic value separate from its value as a currency. So if the authority stamping the coin disappeared, I could always melt down the gold and sell it as a simple commodity.

In the case of bitcoins, they do not have a utility outside of their use as a medium of value exchange. You can't really melt them down and use them to make jewelry, build cables or any of the myriad other uses that gold has.

Re: Bitcoin exchange rate reached $100 USD per BTC

#112

Post by jcampbell1 » Mon, Apr 01, 2013, 3:31 PM UTC

grovulent wrote: post #42

spartango wrote: post #28

I worry that as Bitcoin's value rises, people are buying in not to use it as payment for services or goods, but simply as an investment vehicle. In principle, there's nothing wrong with this; currency trading is common and well-explored. The problem is that the value of a currency is supposed to also be somehow related to its utility in acquiring goods and services. When it is rarely used to that effect, people may r…

I'm not a bitcoin fanboy - but I see this sentiment around a lot and I'm not sure I agree with it. The claim is that the value of a currency is supposed to also be somehow related to its utility in acquiring goods and services. And if this isn't the case - then people will go off it. When was the last time someone acquired a good or service with an ounce of gold? Perhaps we shouldn't consider gold a currency? Well I'…

The notion of "money" is quite well defined. You need 3 properties:

1) Store of value. Much easier to store gold/USD/Bitcoins than the food you will need in the future.

2) Medium of Exchange. Can be used to exchange for real goods, thus avoiding the headache of barter.

3) Unit of Account. e.g. is easily divisible.

Bitcoins aren't great at #2, but gold is terrible at #3. If bitcoins prove to be a lasting store of value, then it will almost certainly be more "money" like than gold.

Re: Bitcoin exchange rate reached $100 USD per BTC

#113

Post by MacsHeadroom » Mon, Apr 01, 2013, 3:31 PM UTC

acabal wrote: post #88

hilko wrote: post #77

Earlier quoted context omitted.

wouldn't it be possible to link the BTC price to the going rate at MtGox, so that it always translates to around $35?

Yeah but that's what I don't want to do--because that makes Bitcoin just a USD proxy, not a currency and economy of its own. I'm interested in BTC as its own economy, but unfortunately the price instability and tendency of most users to exchange for USD in the end makes it impossible to explore that.

A currency can have an economy fully its own and still have prices pegged to another currency. There is a lot of historic precedent for that. You act like its an abhorant practice. Prices will stabalize as the BTC price approaches something more workable on a global scale, like $21,000,000/BTC

Re: Bitcoin exchange rate reached $100 USD per BTC

#114

Post by logique » Mon, Apr 01, 2013, 3:31 PM UTC

xhrpost wrote: post #79

Everyone keeps saying that a crash is around the corner and the current price is unsustainable, been hearing it since $40/BTC, maybe earlier. I don't completely disagree, the question I keep pondering though is, if there is a big sustained crash coming, is it from $100 to $30, or $900 to $300?

Brilliant and subtle comment. I would recommend people to look at the idea of noumerosity. Just as an alternative perspective to the debate maybe.

http://en.wikipedia.org/wiki/Numerical_cognition

Re: Bitcoin exchange rate reached $100 USD per BTC

#115

Post by nawitus » Mon, Apr 01, 2013, 3:31 PM UTC

dragontamer wrote: post #43

oleganza wrote: post #35

Earlier quoted context omitted.

"The problem is that the value of a currency is supposed to also be somehow related to its utility in acquiring goods and services." Well, it is. As more people hold some BTC "for the future", they are more than willing to accept them as payment for their services. Imagine you are surrounded by people who have "hoarded" some BTC. Suddenly they can just trade in BTC without going to a bank (unless they have some spare…

But that is only one side of the coin. If people are hoarding BTC, then they aren't spending them on goods / services. IE: Deflationary Spiral. It becomes hard to be a merchant who accepts bitcoins, because everyone expects BTC to keep rising in prices. People who bought a domain name for 1 BTC a few weeks ago from Namecheap lost a lot of money. They should have instead "saved" that BTC. Therefore, people are discour…

"Currently, hoarders are the ones benefiting from BTC, but no one else is."

That's not true, BTC has many benefits to bitcoin users. There's plenty of bitcoin-only services, but more importantly, it provides freedom for many people who are facing government regulation. In the long run, bitcoin enables all kinds of innovation (good example is reddit's bitcointip service, which wouldn't really exist without bitcoins).

Re: Bitcoin exchange rate reached $100 USD per BTC

#116

Post by saalweachter » Mon, Apr 01, 2013, 3:31 PM UTC

kiba wrote: post #64

dragontamer wrote: post #43

Earlier quoted context omitted.

But that is only one side of the coin. If people are hoarding BTC, then they aren't spending them on goods / services. IE: Deflationary Spiral. It becomes hard to be a merchant who accepts bitcoins, because everyone expects BTC to keep rising in prices. People who bought a domain name for 1 BTC a few weeks ago from Namecheap lost a lot of money. They should have instead "saved" that BTC. Therefore, people are discour…

But that is only one side of the coin. If people are hoarding BTC, then they aren't spending them on goods / services. Sure they are. BitPay reports 2 million dollars in sale this month. The rate of transaction is accelerating too. What you meant is "they will horde more and spend less on goods / services", but sales and transactions are clearly accelerating. How do you account for this?

Is $2 million really significant? BTC famously passed $1 billion in the money supply recently. That means that about 0.2% of the money supply is turning over each month, and 99.8% being hoarded from month to month.

The US GDP is about $15 trillion, so about $1.25 trillion in transactions happen in a month. If you take M2 of about $10 trillion as the US money supply, about 12.5% of the US money supply turns over each month and 87.5% is being hoarded. If you take M1 of about $2 trillion as the money supply, about 62.5% of the US money supply is used in a transaction each month, with only 37.5% being hoarded.

Compared to 62.5% or even 12.5%, 0.2% seems pretty unhealthy.

Re: Bitcoin exchange rate reached $100 USD per BTC

#117

Post by mtgx » Mon, Apr 01, 2013, 3:31 PM UTC

spartango wrote: post #28

I worry that as Bitcoin's value rises, people are buying in not to use it as payment for services or goods, but simply as an investment vehicle. In principle, there's nothing wrong with this; currency trading is common and well-explored. The problem is that the value of a currency is supposed to also be somehow related to its utility in acquiring goods and services. When it is rarely used to that effect, people may r…

I worry about that, too, but I think it's unlikely to happen, because Bitcoin will stabilize eventually. But it first needs to become so big (think $100 billion - $1 trillion here) that every single transaction affects the value in a very small way, and any top HN or Reddit article about it has an almost insignificant effect on its value.

I do believe that will happen eventually, but it's too early right now. Bitcoin works by the law of numbers - after all it's all numbers and math. When its tiny in value, its growth can be very high. When it's already huge, the growth will slow down a lot.

Re: Bitcoin exchange rate reached $100 USD per BTC

#118

Post by ynniv » Mon, Apr 01, 2013, 3:32 PM UTC

balakk wrote: post #80

What would it take for somebody like Amazon or eBay to (even partially) support bitcoins? How much of a risk could it be?

If you hold the bitcoin for a very short amount of time, it's not especially risky. There's a company that facilitates payments in bitcoin: http://www.marketwatch.com/story/bitpay-integrates-bitcoin-w...

Re: Bitcoin exchange rate reached $100 USD per BTC

#119

Post by quasque » Mon, Apr 01, 2013, 3:32 PM UTC

stagas wrote: post #68

niggler wrote: post #46

Earlier quoted context omitted.

99% of the people who ultimately argue about avoiding the banking system engage in behavior that is either morally questionable or explicitly illegal. I'd say about 1% are true "what i do with my money is my business and my business only" libertarians

Maybe you missed the fact that money in the bank are no longer trusted and can be confiscated for any reason by whatever government or entity?

Bitcoin is vulnerable too. A dedicated effort by collaborating governments could destroy or severely damage Bitcoin, by e.g. blocking the protocol, seizing powerful hashing equipment, downing exchange websites, performing a 51% attack, and so on.

This notion that Bitcoin is some robust, untamperable currency system is simply incorrect.

Re: Bitcoin exchange rate reached $100 USD per BTC

#120

Post by grovulent » Mon, Apr 01, 2013, 3:32 PM UTC

kaonashi wrote: post #92

grovulent wrote: post #42

Earlier quoted context omitted.

I'm not a bitcoin fanboy - but I see this sentiment around a lot and I'm not sure I agree with it. The claim is that the value of a currency is supposed to also be somehow related to its utility in acquiring goods and services. And if this isn't the case - then people will go off it. When was the last time someone acquired a good or service with an ounce of gold? Perhaps we shouldn't consider gold a currency? Well I'…

Gold is a commodity; same with bitcoins. Not that there's anything wrong with that, but it isn't the same thing as a currency. Gold was only ever a currency when it was stamped by the issuing authority.

Gold has been used as currency (medium of exchange) at multiple points in history. It's not now. People are trying to use bitcoin as a currency atm - but it's very difficult with its fluctuations in value. It may perhaps be more successful as a medium of exchange in the future - but that won't be for a while.