...and what happens when a competing cryptocurrency is released?
Bitcoin exchange rate reached $100 USD per BTC
231–240 of 600 posts
Re: Bitcoin exchange rate reached $100 USD per BTC
#232Some people here seem to think that this is temporary, that sometime in the future Bitcoin will stabilize into a glorious future global currency -- never mind the new class of cryptobarons it will have created from its inner circle, through shameless hoarding. My question is, what then will happen when Bitcoin stabilizes, that is, when the time to new coin mined approaches practically infinity? Let's assume the globa…
There are a few replies here that seem to be reacting negatively to the OP due to the tone of the submission instead of the content. To be clear, deflation is categorically bad for a currency. It's terrible, like great depression terrible. The reason it's bad is that deflation makes it more profitable to do nothing than to invest. When this happens, people react by not spending money. The market dies. While inflation…
> The reason it's bad is that deflation makes it more profitable to do nothing than to invest.
This makes no sense to me. If keeping 100 units makes one richer because they are worth more in a year, then any investment which has a positive return (that is, you end up with more than 100 units in a year) must be that much better... What am I missing?
Re: Bitcoin exchange rate reached $100 USD per BTC
#233Earlier quoted context omitted.
Well - I was making the point that not being used as a currency of exchange does not hurt it's chances at serving as a store of value. In fact, volatility isn't necessarily bad either if you are using it to store wealth only and you take the long view. What would hurt its ability as a store of value would be a sustained and systemic trend downward in value (i.e. inflation). Short of complete collapse of the currency…
Not a world that can sustain 100% growth month-over-month :)
Yeah, I think it can, if USD collapses.
Re: Bitcoin exchange rate reached $100 USD per BTC
#234Some people here seem to think that this is temporary, that sometime in the future Bitcoin will stabilize into a glorious future global currency -- never mind the new class of cryptobarons it will have created from its inner circle, through shameless hoarding. My question is, what then will happen when Bitcoin stabilizes, that is, when the time to new coin mined approaches practically infinity? Let's assume the globa…
> cryptobarons it will have created from its inner circle, through shameless hoarding. This isn't 1941 England and bitcoins aren't sugar. Early adopters in the right thing often make money. Usually on HN they are called investors and congratulated. Sour grapes on missing out? (I did too)
I bought 30,000 bitcoins when they were worth less than a penny and sold them all when the value went up to $0.80. Lol, oops.
If you don't want to miss out again, buy Litecoins and Namecoins. Litecoin will never be worth as much as BTC (because there will be 80million of them as opposed to 20something million BTC) but it will slowly gain in value as it has some impressive features especially suited for online gaming payments with fast confirmation, secure online voting apps, or of course online gambling.
Litecoin is presently $1.30/each I see that going up to $4 at least by end of year now that more people are using it.
Re: Bitcoin exchange rate reached $100 USD per BTC
#235Earlier quoted context omitted.
There are a few replies here that seem to be reacting negatively to the OP due to the tone of the submission instead of the content. To be clear, deflation is categorically bad for a currency. It's terrible, like great depression terrible. The reason it's bad is that deflation makes it more profitable to do nothing than to invest. When this happens, people react by not spending money. The market dies. While inflation…
> The reason it's bad is that deflation makes it more profitable to do nothing than to invest. This makes no sense to me. If keeping 100 units makes one richer because they are worth more in a year, then any investment which has a positive return (that is, you end up with more than 100 units in a year) must be that much better... What am I missing?
I don't see why any investment would necessarily need to be much better. For one thing, investment is risky, while hoarding money is not.
Re: Bitcoin exchange rate reached $100 USD per BTC
#236Currencies have existed in a huge variety of forms over time. Basically anything can work as a medium of exchange as long as everyone has a high degree of confidence that if they are paid in the currency, that they too can pay someone else in that currency. But that's not to say all currency regimes are created equally -- we've learned a number of lessons, painfully, about how to manage currencies.
For a small-scale, but very instructive example that shows there are cases where simply increasing the money supply can sometimes create more value in the economy (or how deflation can destroy value), see the story of the Capitol Hill Babysitter Co-Op [0].
At a more serious scale, many prominent economists believe that an artificial restriction of the monetary supply led to, or exacerbated the Great Depression [1].
So, like Krugman [2], I think that BTC proponents really have to explain how the artificial restriction of the size of the BTC money supply is not a serious design flaw in the currency. Are BTC just crypotographic gold? If so, then is a successful BTC economy just a different gold standard (and all its associated problems)?
[0] http://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op
[1] http://en.wikipedia.org/wiki/Gold_standard#Prolongation_of_t...
[2] http://krugman.blogs.nytimes.com/2011/09/07/golden-cyberfett...
Re: Bitcoin exchange rate reached $100 USD per BTC
#237It gapped up on no volume whatsoever.. April Fools prank?
I believe there was some illiquidity early this morning, but I might be hallucinating.
Re: Bitcoin exchange rate reached $100 USD per BTC
#238It looks like a classic bubble now - while slow gains programmed in could be justifiable, this seems to be driven purely by expectations of future price rises - which is a classic bubble sign. So far, all bubbles popped sooner or later. Maybe this would be the only one in history that doesn't - I wouldn't bet on that, but maybe someone would and become a millionaire. Or lose all his money.
Re: Bitcoin exchange rate reached $100 USD per BTC
#239Earlier quoted context omitted.
> shameless hoarding Hoarding is a derogatory term, intended to evoke an emotional response from the reader. I prefer the term "saving". > Why lend, why build new companies, when simply storing it is more than enough? Take shocks such as bubbles and demand-side crises. Most bitcoin proponents to indeed reject Keyensian, demand-side economics. I, for one, think entrepreneurs would typically benefit from not relying on…
inflation is an absolutely necessary force in an economy; without inflation there is little incentive to spend money and as a result there is no real liquidity. tl;dr; money is useless if no one spends it, that's the whole point. another way to think about it is a stock. if a stock is priced, and no one is buying or selling at that price, is that price really valid? whats to keep another actor in the economy from pri…
> inflation is an absolutely necessary force in an economy
I don't think there is good evidence of this "fact". Economics is not a hard science.
A few points, one, you can't argue that bitcoin deflates and therefore is worthless. The is an obvious inconsistency there. Second, imagine if bitcoin had built-in inflation. What would happen if someone would release bitcoin+ with inflation equal to zero (i.e. current bitcoin)? Obviously the "good money" would drive out the bad and everyone would save bitcoin+.
It's not related to your comment, but I'd also like to comment on the Ponzi scheme arguments. My question is, how would you design a cypto-currency to avoid to problem of early adopters getting wealthy (the new ripple has a different scheme, a terrible one, IMHO)? You have to introduce the currency somehow. If you are an early adopter of bitcoin, should you sell now at $100? Maybe you should have sold out when it got to $1.
Re: Bitcoin exchange rate reached $100 USD per BTC
#240Earlier quoted context omitted.
Since Bitcoin's monetary supply is totally disconnected from economic activity, I wonder how it can ever stabilize (except perhaps by accident).
Right now a landgrab is going on. People want to hold some btc. At some point in the future, when everyone knows about btc and purchased as much as they want/can, the price will be more stable and grows only as much as new wealth is created by the global economy and new people are born.
> Right now a landgrab is going on. People want to hold some btc.
How's that different from tulips?
> the price will be more stable and grows only as much as new wealth is created by the global economy and new people are born.
Err...how so? Fiat money can do that, but how does bitcoin correlate to much of anything?