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Bitcoin exchange rate reached $100 USD per BTC

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Re: Bitcoin exchange rate reached $100 USD per BTC

#311

Post by SilasX »

lolcraft wrote: post #176

Some 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…

Prices change to reflect new knowledge, not "very old knowledge". Everyone buying bitcoins knows the supply growth path, and this expectation is priced in when non-stupid traders buy or sell them.

It's not like ~2035 (or whatever) rolls around and everyone's like "Holy crap! There aren't going to be any more of these! Better quadruple my bids!" No -- there's no profit to be made simply from the fact of supply increase stopping at some point, not when the entire market knows it as well.

So you can't really compare it to a situation in which a government (or affiliated central agency) controls the money supply, changing its mind at future dates, to arbitrarily hold the supply steady when it had been growing before -- which is what is required to get the results you've described.

Re: Bitcoin exchange rate reached $100 USD per BTC

#312

Post by AnIrishDuck »

walkon wrote: post #250
deelowe wrote: post #218

Earlier 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. When this happens, people react by not spending money. The market dies. If this is holds true, why do people buy from markets where prices regularly decrease? Wouldn't it follow that they will wait in perpetuity and never buy that new phone/laptop/etc?

> Wouldn't it follow that they will wait in perpetuity and never buy that new phone/laptop/etc?

People derive utility from those things. They make calls with their phone and do work on their laptop.

Bitcoin is entirely different. It's only purpose is to allow you to buy other stuff.

Re: Bitcoin exchange rate reached $100 USD per BTC

#313

Post by Eliezer »

deelowe wrote: post #280
teebs wrote: post #247

Earlier quoted context omitted.

This is part of the issue. The other part is that no one has any incentive to spend money, which can cause a recession. You can either 100 units of something today, or buy 110 units of it tomorrow. This gives you a very strong incentive to wait and not spend money. This means that no one buys anything, so no one needs to make or manufacture anything. People lose their jobs, so they don't have money, so they can't buy…

Which is why everyone in Washington was freaking out and throwing cash out the window in 2009. Crony capitalism aside, they were terrified of deflation(and rightly so).

They weren't throwing nearly enough cash out the window to make up for everyone suddenly wanting to hold more money. NGDP still crashed. Inflation dropped. The spread on inflation-indexed Treasury bonds warned that monetary policy was far too tight and the market knew it and was signalling this well in advance. Low interest rates do not mean loose money... oh, never mind, everyone just needs to go read The Money Illusion.

Re: Bitcoin exchange rate reached $100 USD per BTC

#314

Post by waterlesscloud »

acabal wrote: post #309
napoleoncomplex wrote: post #135

Earlier quoted context omitted.

Out of curiosity, did you see any uptake on that option? A lot of places seem to be adding the BTC option lately, but I haven't managed to find any good sources on how much use there is once the option is provided.

Nobody has bit, and for a few reasons I think: 1. The site audience tends to be a little older and not very tech-savvy, so Bitcoin isn't something that many are interested in comprehending. 2. Since the price was fixed at 2BTC a few weeks ago when 1BTC~=35USD, and now 1BTC~=100USD, people will see this is a raw deal. (The USD price for a membership is $65.) It's #2 that's the hard part. I'm not interested in acceptin…

Auto-adjusting to the rate doesn't require you to cash out to USD, though. You can easily both adjust and hold on to the resulting bitcoin.

Re: Bitcoin exchange rate reached $100 USD per BTC

#315

Post by gwern »

dghughes wrote: post #81
dragontamer wrote: post #33

Earlier quoted context omitted.

While I'd like to believe you, a link to the "Cyprus lie" would be nice. :-) I don't think "core bitcoin" users are scamming anyone. But at this point, the speed at which BTC has grown has triggered my "manipulation trigger". A decentralized currency is prone to manipulation... its not like there is an FCC out there to stop people from manipulating BTC.

http://arstechnica.com/business/2013/03/experts-pour-cold-wa...

That's incredibly stupid. They present no evidence, and here's the quote they lead with:

> “If I was looking for a store of value, I'd buy gold, wouldn't I?” Edward Castronova, a professor of telecommunications, and an expert on virtual worlds and currencies, told Ars. “It's a hell of a lot safer than Bitcoin.”

Castronova, have you ever heard of things like 'margins' or 'fungibility' or 'walking and chewing bubblegum'? You know, people can buy both bitcoins and gold - shocking as this may seem. The question is not 'are people physically on the island of Cyprus who would be buying gold instead buying bitcoins?', the question is 'on the margin, are people worldwide buying bitcoins because of Cyprus?'

Nor is pointing out the recent rise an objection. The rise over the past months to $30 was relatively slow and gradual. The rise to $50 and then $105 has been meteoric and directly correlates with the sudden Cyprus crisis. Bitcoin literally started with criticism of bank failures and bailouts (check out the first block, by Nakamoto, in the blockchain) and immunity to this sort of shit is one of its main selling points. The burden of proof is on anyone who thinks that Bitcoin has suddenly just sorta accidentally tripled for no reason at all relating to Cyprus.

Re: Bitcoin exchange rate reached $100 USD per BTC

#316

Post by gwern »

iblaine wrote: post #123
niggler wrote: post #3

I hope that people who got in last year or earlier this year are starting to sell some of their bitcoins, at least enough to cover the cost basis. I wouldn't be surprised to see a very sharp fall soon.

If by sell you mean buy more things on silk road from bitcoins purchased in 2011, then you are correct.

That may not be a good idea. The SR pegs are based on a moving average, so even if the vendor you're buying from priced his goods to the dollar, you may well still be overpaying. (And given how fast the exchange rate has increased, if the vendor did not peg to the dollar, you'll probably be overpaying a ton.)

Re: Bitcoin exchange rate reached $100 USD per BTC

#317

Post by jellicle »

jamoes wrote: post #188
lolcraft wrote: post #176

Some 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…

> 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…

> Most bitcoin proponents to indeed reject Keyensian, demand-side economics.

That's why we're laughing at you.

Re: Bitcoin exchange rate reached $100 USD per BTC

#318

Post by jamoes »

leot wrote: post #307
jamoes wrote: post #278

Earlier quoted context omitted.

> deflation makes it more profitable to do nothing than to invest Saving is investing. You're investing in your ability to manage your risk at a future date. If you have no savings, then you are at risk of any minor problem (e.g. an injury, decreased revenue, or a natural disaster) causing you a major setback. The "common wisdom" you've heard about inflation being necessary for an economy is a lie. It's a lie that ju…

No, it's not a lie. Why in heaven's name would the investor class want higher inflation? They don't. The really don't. Our understanding of the benefits of a small amount of inflation comes in spite of the interests of those who already possess of a lot of wealth. The investor class doesn't want bail-outs, though I'm sure they appreciate bail-outs when they happen. The wealthiest lost the most (in money, though not i…

The investor class doesn't benefit from inflation, it's the banker class that benefits.

Here's how it works: The banks have a balance sheet of debts owed to them. Some of the debts come from companies like General Motors and United Airlines. If one of those companies threatens to go bankrupt, then the bankers simply lobby the congress to "bail out" the troubled company. This allows the banks to keep the troubled asset on their balance sheet, and continue making an ongoing revenue stream. Of course, the "bail out" results in an increase in the money supply, which means every single holder of USD pays through a decrease in spending power of their dollars.

Re: Bitcoin exchange rate reached $100 USD per BTC

#319

Post by tlrobinson »

numbsafari wrote: post #304
tlrobinson wrote: post #149

Earlier quoted context omitted.

Is gold's intrinsic value anywhere near what it's currently trading at? edit: I think I mean it's "use value". The value of gold if it were not used a store of value.

Of course gold's value is inflated because of its dual role as a value store and as a commodity with practical applications. Even if gold loses favor as a value store, there will be some minimum boundary on its price based on its usefulness in practical applications. That is not true of bitcoin. The GP was implying that bitcoin has a commodity value, which it does not. It merely has value as a means of exchange. What…

So how much is gold's commodity value really? I've heard $30/oz thrown around (no idea how accurate that is).

If that's true, 30/1600 is about 2%, yet gold is still perceived as a fairly safe store of value.

Re: Bitcoin exchange rate reached $100 USD per BTC

#320

Post by calinet6 »

miles wrote: post #294
calinet6 wrote: post #197

Earlier quoted context omitted.

A currency can't make value out of nothing for long. Eventually reality will set in. I think that's the moral of this story.

A currency can't make value out of nothing for long. Why, my dear fellow, that is exactly how every government-backed currency works today! And, thanks to its inflationary nature, it becomes virtually worthless over time: Although inflation has remained low in recent years, it ravages the value of paper money over time. A dollar in 1900 is only worth about $0.04 in today's currency. Quoted from: http://finance.yahoo.…

Ah yes, of course, but that currency is undergoing inflation. Bitcoin is rapidly deflating. Huge difference.
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