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Bitcoin’s Price Falls 12%, to Lowest Value Since May

dealbook.nytimes.com

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Re: Bitcoin’s Price Falls 12%, to Lowest Value Since May

#61

Post by dragonwriter »

gexla wrote: post #60
gexla wrote: post #33

And I'm happy to be someone about to jump fully on the Bitcoin train and never have to think about the price of Bitcoin. As a U.S. citizen living abroad, Bitcoin is now at the intersection of cheapest, fast (but not instant) and most convenient for receiving my money. There are exchanges here which work automatically and have lots of options for me to receive my money. At this point, I can't say there is a better met…

You guys have got to be kidding me. I write a comment about transferring money to a 3rd world nation, which is one of the greatest possible uses of Bitcoin in the future and my comment is getting attacked? Of course people in 3rd world nations won't hold Bitcoin. Low income workers can't afford any volatility and they often can't afford to hold anything anyways. What I'm trying to say is that Bitcoin is emerging as t…

> In this scenario, we don't care about what the price is.

You don't, but you rely on people who do on both ends, which means that the long-term viability in the use case you are interested in is dependent on the viability of Bitcoin to people who do care about the price, even if the people using it for your use case do not directly care about that.

Re: Bitcoin’s Price Falls 12%, to Lowest Value Since May

#62

Post by gexla »

kasey_junk wrote: post #37
gexla wrote: post #33

And I'm happy to be someone about to jump fully on the Bitcoin train and never have to think about the price of Bitcoin. As a U.S. citizen living abroad, Bitcoin is now at the intersection of cheapest, fast (but not instant) and most convenient for receiving my money. There are exchanges here which work automatically and have lots of options for me to receive my money. At this point, I can't say there is a better met…

Just as a heads up, you will still need to care about price for volatility risk reasons. Hedging bitcoin volatility risk is a major concern for its adoption.

Bitcoin has a lot of utility outside of just holding. I didn't specifically say I would be holding. Rather, I would be using it for money transfer.

Re: Bitcoin’s Price Falls 12%, to Lowest Value Since May

#63

Post by breadbox »

avyfain wrote: post #46

At the end of the article the guy says: “What really defines the price is its reputation and expectations for the future.” But isn't that true of any currency? Isn't that why a green piece of paper with Benjamin Franklin's face on it is worth anything at all, just because we believe in the US government's stability?

Perhaps a better comparison than US currency would be with currency with a nation that had only recently formed, and that many people doubt that it will be around in 20 years. The volatility of their currency may attract people into making short-term purchases, but long-term investors will be harder to find.

Re: Bitcoin’s Price Falls 12%, to Lowest Value Since May

#64

Post by ars »

rsynnott wrote: post #16
nhaehnle wrote: post #12

This is pretty much a cheap and default comment, but I would be so happy if everybody ( especially websites calling themselves the "DealBook") would start plotting prices on a logarithmic scale.

Why? Highly misleading if you don't know what you're looking at, and of dubious value for prices of most things even if you do.

Did you reply to the wrong person?

Did you mean to say that a non-logarithmic graph is highly misleading?

Because a logarithmic graph is the only way to see the true value of anything financial that has price changes.

Re: Bitcoin’s Price Falls 12%, to Lowest Value Since May

#65

Post by uiri »

avyfain wrote: post #46

At the end of the article the guy says: “What really defines the price is its reputation and expectations for the future.” But isn't that true of any currency? Isn't that why a green piece of paper with Benjamin Franklin's face on it is worth anything at all, just because we believe in the US government's stability?

One thing which government-issued fiat currencies have going for them which cryptographically secured fiat currencies do not is taxes. Someone who lives in Windsor and commutes to Detroit every day will have to pay taxes in US dollars for the work performed in the US and then pay taxes in Canadian dollars because that person lives in Canada. They need to have some amount of US dollars and some amount of Canadian dollars even if they can do all of their shopping, rent, utility bills, etc. in Bitcoin.

Since taxes are done in the local government-issued fiat currency, local businesses need to hold some amount of that currency anyways. It is simpler and cheaper for local businesses to do all of their business in that currency not to mention it sidesteps the issue of dealing with currency risk.

Re: Bitcoin’s Price Falls 12%, to Lowest Value Since May

#66

Post by ars »

rsynnott wrote: post #22
grmarcil wrote: post #18

Earlier quoted context omitted.

A log scale plot shows fluctuations of equal percentage with equal visual size, so it is particularly useful in the case of bitcoin, where you may be interested in comparing price swings at $100 levels and $1 levels. Eg. A log scale plot shows a $1 to $2 increase as the same vertical hight as a $100 to $200 increase. In a linear scale plot, all you notice is the $100 to $200 increase and the $1 to $2 swing looks like…

Bitcoin's no longer really fluctuating at such a rate that this feature is valuable enough to offset potential confusion in a news article for general consumption, though.

> to offset potential confusion

I don't understand how you can say that. A logarithmic graph is LESS confusing.

With a non-logarithmic graph you have to mentally "warp" the graph to learn anything from it - I doubt people can do that in their head. It makes little difference how much the value changes - that's the entire POINT of a logarithmic graph, it works perfectly for small changes and for large.

Re: Bitcoin’s Price Falls 12%, to Lowest Value Since May

#67

Post by ars »

idlewords wrote: post #19
nhaehnle wrote: post #12

This is pretty much a cheap and default comment, but I would be so happy if everybody ( especially websites calling themselves the "DealBook") would start plotting prices on a logarithmic scale.

Currency exchange rates aren't supposed to need a logarithmic scale. That would be a visual equivalent of burying the lede.

> Currency exchange rates aren't supposed to need a logarithmic scale.

That makes no sense at all. A logarithmic scale works perfectly for small fluctuations or large.

Re: Bitcoin’s Price Falls 12%, to Lowest Value Since May

#68

Post by ars »

idlewords wrote: post #28
oleganza wrote: post #24

Earlier quoted context omitted.

Logarithmic scale makes sense for everyone. If you buy at X dollars and has 100% return when the price is 2X it does not matter what X actually is. Logarithmic scale reflects relative changes which is the only interesting metric for investors. If Bitcoin was traded at $98 12 months ago and now trades at $480, it shows relative change of 400% while the prices themselves do not tell you much.

If bitcoin can go from $98 to $480 in twelve months, that's a glowing sign to merchants saying "BITCOIN TOO VOLATILE TO USE". Investors are not the only audience. I want that big, scary, spiky graph.

> I want that big, scary, spiky graph.

You can also just fake the numbers if that's what you want. A non-logarithmically graph is just completely misleading.

If you see spikes on a logarithmically graph then you are talking volatile. Spikes on a non-logarithmically graph mean nothing whatsoever.

Re: Bitcoin’s Price Falls 12%, to Lowest Value Since May

#69

Post by gexla »

dragonwriter wrote: post #61
gexla wrote: post #60

Earlier quoted context omitted.

You guys have got to be kidding me. I write a comment about transferring money to a 3rd world nation, which is one of the greatest possible uses of Bitcoin in the future and my comment is getting attacked? Of course people in 3rd world nations won't hold Bitcoin. Low income workers can't afford any volatility and they often can't afford to hold anything anyways. What I'm trying to say is that Bitcoin is emerging as t…

> In this scenario, we don't care about what the price is. You don't, but you rely on people who do on both ends, which means that the long-term viability in the use case you are interested in is dependent on the viability of Bitcoin to people who do care about the price, even if the people using it for your use case do not directly care about that.

Maybe. We are getting into something which is a bit complex here. And I'm assuming neither one of us are experts.

People who are interested in holding Bitcoin probably aren't people I'm going to be interacting with. If you are holding, you aren't selling.

My use case will help Bitcoin by creating demand, and helping liquidity. I'm buying and then turning around and selling. I using up available liquidity and then selling to create more liquidity. That liquidity also helps other people looking to do the same as me. You then have a pool of Bitcoin which is basically just zipping between people who aren't affected by price.

People who are speculating on the very short term don't necessarily care about price either. They may only care about up and down movements. Just as day traders of stocks don't necessarily care about the name of the stock or even the history. All they see is movement. In this case, volatility may actually be good for these people (I don't know, I'm not a day trader.)

Re: Bitcoin’s Price Falls 12%, to Lowest Value Since May

#70

Post by 3pt14159 »

rsynnott wrote: post #16
nhaehnle wrote: post #12

This is pretty much a cheap and default comment, but I would be so happy if everybody ( especially websites calling themselves the "DealBook") would start plotting prices on a logarithmic scale.

Why? Highly misleading if you don't know what you're looking at, and of dubious value for prices of most things even if you do.

Because a straight line means constant compounding gains.
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