Bitcoin Price Pressure • Hacker News Board

Re: Bitcoin Price Pressure

#121

Post by vijayboyapati » Wed, Apr 30, 2014, 8:57 PM UTC

a_c_s wrote: post #118

vijayboyapati wrote: post #114

Sam writes: "It just means that for it to succeed, we’ll need significant external buy pressure. As I wrote awhile ago, I think the key thing we need for this is people actually using bitcoin for transactions instead of speculation (and merchants willing to hold bitcoin balances). " I think this is a very common meme about what success means for bitcoin and it's tied up with a misunderstanding of what money is; most…

"...it is superior to gold is almost every way" Except for the part where you can actually make things with gold: it is shiny, easy to work with and highly conductive. So worst case, if the value of gold plummeted you could still make some awesome jewelry, electronics, dental fillings, etc. While it may not be proportional to the current price, gold does have intrinsic value: Bitcoin has none.

Gold's use value is much, much lower than the current price reflects. Most of the price of gold is explained by its reservation demand - i.e., monetary demand, both by individuals and central banks.

And you're incorrect that bitcoin has no "intrisic value". As this author explains: http://blog.oleganza.com/post/42262765318/direct-use-value-o... ------ Bitcoin network has very interesting properties that allow you to use it not only as a currency. For example, the block chain (decentralized transaction history) is designed to be extremely hard to forge and very easy to verify. This, with some crypto features, allows it to be used for secure time-stamping, proving ownership of tangible property, decentralized DNS and new ways to sign contracts without having to fully trust any one party. Some of these things are already possible using existing software, some require already planned and compatible modifications. --------

There are a great many things that are now possible with the creation of bitcoin and the solving of the Byzantine Generals' problem that were previously impossible. If that's not "intrinsic value" then nothing is.

Re: Bitcoin Price Pressure

#122

Post by a_c_s » Wed, Apr 30, 2014, 8:57 PM UTC

acomjean wrote: post #87

IvyMike wrote: post #35

> Anecdotally, I hear from merchants who start taking bitcoin that after an initial spike they see almost no volume. To me, this is one of the biggest problems with adoption--bitcoin doesn't offer much benefit to the typical consumer for mundane transactions. I'm about to buy a coffee machine on Overstock.com. There's no practical reason that bitcoins are better than what I'm going to do which is put it on my masterc…

Odd because one of the benefits of Bit Coin is lower transaction fees that what credit card companies charge. One would think businesses would really like this and promote it.

The huge variations in price mean that a company could very easily lose more than the few, entirely predictable, percent the credit card companies charge.

Re: Bitcoin Price Pressure

#123

Post by MarkPNeyer » Wed, Apr 30, 2014, 8:59 PM UTC

dragontamer wrote: post #28

MarkPNeyer wrote: post #23

Earlier quoted context omitted.

read my updated comment. you don't _need_ an out if you have your needs met and have the cash liquidity you need. since a lot of the people holding these things are libertarians with money, why would they sell them for dollars they think are worthless? they don't NEED outs.

If you don't need outs, then you don't care about the value of BTC. Lets make this more explicit: Why are you so attached to the value of BTC? Dollars for instance, are worth less than a Euro and less than a British Pound. It is only in the insanity of the BTC market that people seem to care about making BTCs "worth more".

The value of a currency is a measurement of the faith of people holding it. That's all it is.

If people have no faith in a currency, they'll drop it like bad habit. If people have a ton of faith in a currency, they'll hoard it like crazy.

Everything you buy with a currency is, again, a decision you make based upon faith. You have _faith_ that a house will be a good place to live, that it'll provide for your needs and maybe be worth more in the future. Of course there are _reasons_ for this - and i can understand you objecting to me claiming that it's just faith. Reasons are great, for sure, because we've found that faith which is contradicted by all reason tends to fail. The reasons we have, though, are entirely historical. I have faith that the sun won't explode tomorrow. My _reasoning_ for this is based upon my understanding of the physics of stars and which ones explode and which ones don't, but i recognize that i may be wrong. That's faith. If someone has _no faith_ that the dollar wil be worth anything, he's not going to hold any. If he thinks 'well i dont think it'll be worth anything, but i'm sure other people will think it does' then he has faith that it will have value in the future - because other people having faith in it confers value to it.

Bitcoin is powered by the blockchain. If bitcoin is worth a lot of money, then the blockchain will be much harder to break or adulterate. It's not just a means of storing account balances - people can store whatever they want in the public records. No government can tamper with it, and no company can claim copyright and censor it.

I think that's something a lot of people would like to have faith in.

Re: Bitcoin Price Pressure

#124

Post by endeavor » Wed, Apr 30, 2014, 9:01 PM UTC

IvyMike wrote: post #35

> Anecdotally, I hear from merchants who start taking bitcoin that after an initial spike they see almost no volume. To me, this is one of the biggest problems with adoption--bitcoin doesn't offer much benefit to the typical consumer for mundane transactions. I'm about to buy a coffee machine on Overstock.com. There's no practical reason that bitcoins are better than what I'm going to do which is put it on my masterc…

When you say "the typical consumer", I think you are really saying "the typical, relatively wealthy consumer living in the first world". For the some billions of people on the Earth who don't have a stable currency, credit/debit cards, mortgages and other financial products Bitcoin has more benefits. Think of the WhatsApp demographic without a smart-phone.

Re: Bitcoin Price Pressure

#125

Post by wmf » Wed, Apr 30, 2014, 9:01 PM UTC

IvyMike wrote: post #100

atom-morgan wrote: post #93

Earlier quoted context omitted.

> If someone gets access to your bitcoin wallet or whatever storage mechanism you are using fails, then that money is gone forever with no way to recover it. Keep in mind that you're comparing two different markets in terms of maturity. One day, there may be a number I can call too when my bitcoin goes missing. I'm sure people made similar arguments before e-commerce. Surely it had to seem easier to just buy a produc…

> One day, there may be a number I can call to when my bitcoin goes missing. Genuinely curious--how would this work?

It would probably be insurance, so you'd have to pay for it and they could deny your claim if you didn't use a Trezor.

There may also be bounty hunters who try to recover stolen BTC on contingency, but that doesn't sound like a good business.

Re: Bitcoin Price Pressure

#126

Post by makomk » Wed, Apr 30, 2014, 9:02 PM UTC

sktrdie wrote: post #80

VMG wrote: post #18

> And even if bitcoin itself fails, I think the blockchain will be one of key technical innovations of this time period. A blockchain is only useful if it is heavily secured by hashing power. This is only the case if there is significant mining equipment devoted to validating blocks. That in turn only happens if there is a reward for validating a block. Long story short, it's currently very difficult to use a secure…

Actually Ripple's consensus algorithm can be used for a variety of different applications, the ones you would think to build using Bitcoin's blockchain. Because Ripple solves the double-spending problem without the need of mining [1]. The main thing that Bitcoin adds is of course the democratic distribution of coins based on hashing power. But if you don't intend to use "blockchain technology" as a currency, then Rip…

Ripple's consensus algorithm makes it effectively a centralized system though - there's a central clique of nodes run by the Ripple creators and a handful of people they trust, the consensus they come to cannot be influenced by anyone outside the clique unless they choose to allow it, and if any nodes decide on a different consensus this effectively hard-forks the Ripple transaction history into two branches (their version and the official version).

Re: Bitcoin Price Pressure

#127

Post by Ologn » Wed, Apr 30, 2014, 9:06 PM UTC

philrapo wrote: post #109

Ologn wrote: post #71

> The other way to get enough buy pressure would be if many people started deciding they want to hold bitcoin as a hedge or a speculation. This spurs occasional bubbles, but we haven’t yet seen it work long term. Bitcoin is doomed because it has no value. Commodities have value. Modern trade began by people trading commodities for each other. Some commodities had attributes which made them good currencies - they were…

>Gold can be used to fill teeth, to conduct electricity and so forth. Bitcoins can do nothing. If that's why gold has value, then $1290 an ounce seems quite pricey for fillings!

But people are paying $1290 an ounce for fillings. You might find it pricey, but plenty of people are getting gold fillings. Of course, not every filling needs a full ounce.

You can also go to an electronics store and find audio equipment etc. which uses gold. Too pricey for some, but others buy it.

When price flies away from value, like for subprime mortgages, a reckoning is always coming sooner or later. And collectively, even subprime mortgages have some value. Bitcoins have no value.

Re: Bitcoin Price Pressure

#128

Post by wmf » Wed, Apr 30, 2014, 9:13 PM UTC

mrb wrote: post #72

"as far as I can tell, mining is currently unprofitable with any reasonable cost of electricity." I have been mining for 3.5 years. This statement is utterly false. Current mining hardware, such as the KnC Jupiter, can mine at about 500 Ghash/s at less than 600 Watt at the wall. Over a month it mines: 500e9 (hash/sec) * 3600 (sec/hour) * 731 (hour/month) / (2^32 * 8.0e9 (current difficulty)) * 25 (btc/block) * 400 ($…

That's marginally profitable, but if it never pays back the capex it's not actually profitable.

Re: Bitcoin Price Pressure

#129

Post by Ologn » Wed, Apr 30, 2014, 9:13 PM UTC

gnaritas wrote: post #86

Ologn wrote: post #71

> The other way to get enough buy pressure would be if many people started deciding they want to hold bitcoin as a hedge or a speculation. This spurs occasional bubbles, but we haven’t yet seen it work long term. Bitcoin is doomed because it has no value. Commodities have value. Modern trade began by people trading commodities for each other. Some commodities had attributes which made them good currencies - they were…

You have no idea what you're talking about. Bitcoin has value as a remittance network, especially internationally, your argument is trivially invalid.

Can you tell me of any currencies or commodities, from antiquity to 1971, that had any price or value associated with them due to "value as a remittance network"?

Bitcoin's market cap was $13.9 billion four months ago. Now it is less than $6 billion. Bitcoin has only grown as a remittance network over the past four months, so if it derives its value from being a remittance network, why is its price sinking?

You say my argument is "trivially invalid", but people realizing Bitcoins are worthless has made Bitcoins worth half what they were four months ago.

Re: Bitcoin Price Pressure

#130

Post by sillysaurus3 » Wed, Apr 30, 2014, 9:14 PM UTC

panarky wrote: post #59

It's not worth much to speculate about upward or downward price pressure. People made the same arguments when the exchange rate was $5, $25, $50 on up to $1,150, and now back down to $440/BTC. These arguments have zero predictive value. What's interesting to me is the repeating boom-bust pattern that we see as more people learn about cryptocurrencies, and as the Bitcoin protocol holds its own against an onslaught of…

The way to combat this is with arithmetic. Calculate out "if Bitcoin reaches $2000, what would its market cap be? How many people are actually using it? Can it possibly be worth that much per user?"

It paints a pretty grim picture for Bitcoin achieving even a 5x boost over the past peak, at least for years to come.