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Bitcoin falls below $300, lowest in 11 months

bitcoinwisdom.com

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Re: Bitcoin falls below $300, lowest in 11 months

#91

Post by sillysaurus3 »

thom wrote: post #76
Animats wrote: post #74

Bitcoin should have been the petty cash of the Internet. People should be buying music tracks, in-game items, and junk food from vending machines with Bitcoins. But, as discussed in a previous topic, it doesn't do small or quick transactions very well. That may not necessarily be a bad thing. Enthusiasm for micropayments, which predates the Internet (look up Ted Nelson and Xanadu) comes from the people who want to co…

Was part of the rise last year due to MtGox's increasingly desperate market manipulation? I remember reading the theories, but don't know if a better picture has developed since then.

Yes it was. There was an Mt. Gox bot which was consistently buying bitcoin over a long period of time. The reason we know it was an Mt. Gox bot is because when Gox's API went down, the bot was still able to execute trades on Gox even though no one else could.

Of course, Karpeles will never stand for his crimes, because they weren't crimes. This is just what happens in an unregulated market, and everyone who buys into it is along for the ride.

Here's the rub: A price fluctuation at one exchange will always affect every other exchange. If Bitstamp drops by $50, someone is going to buy at Bitstamp and then sell at some other exchange in order to take advantage of that. That means any exchange that manipulates the market will literally be manipulating the entire Bitcoin market. There's no way for outsiders to know the difference between an artificial, manipulated price spike and a true increase in value. So if you see bitcoin rising sometime in the future, beware buying into it: you may be buying into a manipulation.

I don't know whether this problem is solvable. Even if America enforces regulations for American bitcoin exchanges, the rest of the world won't be playing by the same rules, and it only takes one dishonest exchange to mess with the global price. I'd like to know how the regular stock market deals with this. Are all stock exchanges regulated worldwide? Is there such a thing as a dishonest stock exchange? If so, how is that dealt with?

Re: Bitcoin falls below $300, lowest in 11 months

#92

Post by tzs »

Aqueous wrote: post #66
forthefuture wrote: post #62

Earlier quoted context omitted.

You're still paid in dollars.

Some people already aren't paid in fiat. I'm not one of those people - because I realize BitCoin still has a ways to go before I start to put more than the money I can afford to lose into it.

> Some people already aren't paid in fiat

(This is not directed at you. You just provided a convenient place to fork from)

I think the way many people in Bitcoin circles use the term "fiat" can be a bit misleading. Most people outside of Bitcoin circles use "fiat" as part of a dichotomy. In this dichotomy, a currency is either a fiat currency or a commodity-backed currency.

With Bitcoin, we have a trichotomy: government-backed fiat currency, commodity-backed currency, and non-government backed non-commodity-backed currency.

If Bitcoin has to be placed in the fiat/commodity-backed dichotomy, it is a lot closer to fiat than commodity-backed. Bitcoin is essentially a non-government fiat currency.

By using "fiat" as part of a different dichotomy, fiat vs. Bitcoin, Bitcoin people are risking inadvertently misleading people who use non-fiat to mean not commodity-backed. I'm pretty sure I've seen "gold bug" types misunderstand Bitcoin because of this. The "mining" terminology probably doesn't help here, either...

Re: Bitcoin falls below $300, lowest in 11 months

#93

Post by nivertech »

tzs wrote: post #92
Aqueous wrote: post #66

Earlier quoted context omitted.

Some people already aren't paid in fiat. I'm not one of those people - because I realize BitCoin still has a ways to go before I start to put more than the money I can afford to lose into it.

> Some people already aren't paid in fiat (This is not directed at you. You just provided a convenient place to fork from) I think the way many people in Bitcoin circles use the term "fiat" can be a bit misleading. Most people outside of Bitcoin circles use "fiat" as part of a dichotomy. In this dichotomy, a currency is either a fiat currency or a commodity-backed currency. With Bitcoin, we have a trichotomy: governm…

and non-government backed non-commodity-backed currency

I think hashing power is a commodity, just like electricity or bandwidth.

Re: Bitcoin falls below $300, lowest in 11 months

#94

Post by tzs »

nivertech wrote: post #93
tzs wrote: post #92

Earlier quoted context omitted.

> Some people already aren't paid in fiat (This is not directed at you. You just provided a convenient place to fork from) I think the way many people in Bitcoin circles use the term "fiat" can be a bit misleading. Most people outside of Bitcoin circles use "fiat" as part of a dichotomy. In this dichotomy, a currency is either a fiat currency or a commodity-backed currency. With Bitcoin, we have a trichotomy: governm…

and non-government backed non-commodity-backed currency I think hashing power is a commodity, just like electricity or bandwidth.

Hashing power may be a commodity, but does it back Bitcoin? Hashing is used to create a new Bitcoin, but that seems more like a resource consumed as part of production, not something that is backing the currency.

When a currency is backed by a commodity, such as a currency backed by gold, you can exchange the currency for the commodity at a fixed rate. The currency is a proxy for the commodity. When you hold a unit of a commodity backed currency, the appropriate amount of that commodity is being held for you somewhere.

When you hold a Bitcoin, there is not someone holding a fixed amount of hashing power in reserve for you somewhere. The Bitcoin represents not hashing power available but rather hashing power that has been expended. In terms of gold coins, hashing power in Bitcoin is like the labor of mining the gold. I don't think that there is anything in Bitcoin corresponding to the gold.

I suppose you could argue that Bitcoins themselves are the commodity, but that seems to me like calling USD a commodity-based currency based on its physical paper and ink. We don't count that because the commodity is essentially worthless compared to the value of the currency. The currency doesn't derive its value from the commodity.

Re: Bitcoin falls below $300, lowest in 11 months

#95

Post by mikeyouse »

rglullis wrote: post #89
mikeyouse wrote: post #84

Earlier quoted context omitted.

These people who don't have bank accounts and credit cards have internet and computers though (and the knowledge to harden these computers against attack)? Is there a problem that Bitcoin solves that isn't better solved by M-Pesa?

M-Pesa depends on the mobile carriers obtaining special licenses to operate as banking agents. AFAIK, very few countries in the developed world allow this. > don't have bank accounts and credit cards have internet and computers though. Yes. Think of "nigerian scammers". Think how easy it is to get prepaid cell phones in most of the world, etc, etc...

Most of the 'Nigerian Scammers' use public computers in cafes / lounges. Would you expect people to use public computers for BTC business? How could they possibly secure these computers against Keyloggers and other means of 'hacking'?

Re: Bitcoin falls below $300, lowest in 11 months

#96

Post by mikeyouse »

sillysaurus3 wrote: post #91
thom wrote: post #76

Earlier quoted context omitted.

Was part of the rise last year due to MtGox's increasingly desperate market manipulation? I remember reading the theories, but don't know if a better picture has developed since then.

Yes it was. There was an Mt. Gox bot which was consistently buying bitcoin over a long period of time. The reason we know it was an Mt. Gox bot is because when Gox's API went down, the bot was still able to execute trades on Gox even though no one else could. Of course, Karpeles will never stand for his crimes, because they weren't crimes. This is just what happens in an unregulated market, and everyone who buys into…

> I'd like to know how the regular stock market deals with this. Are all stock exchanges regulated worldwide? Is there such a thing as a dishonest stock exchange? If so, how is that dealt with?

Holding a stock certificate entitles you to a percentage of the profits of that company (via dividends / buybacks). So when Facebook lists on the NASDAQ, only those who have shares recognized by NASDAQ & FB have any claim to the profits of the company.

There are shitty foreign exchanges full of speculation and manipulation and you can trade "Facebook" there, but if you own a share of "Facebook" on some third-tier Armenian exchange, you have zero claim to Facebook's profits. Your arrangement in that situation is with the exchange or the counterparties on that exchange to swap the shares back and forth, not actually with the company in question -- so they have no way of impacting the 'real' stock price.

Re: Bitcoin falls below $300, lowest in 11 months

#97

Post by tim333 »

Animats wrote: post #74

Bitcoin should have been the petty cash of the Internet. People should be buying music tracks, in-game items, and junk food from vending machines with Bitcoins. But, as discussed in a previous topic, it doesn't do small or quick transactions very well. That may not necessarily be a bad thing. Enthusiasm for micropayments, which predates the Internet (look up Ted Nelson and Xanadu) comes from the people who want to co…

>As a speculation, Bitcoin is zero-sum.

Only if you assume bitcoins end up worthless so the guy who got a bitcoin for nothing and sold it for $500 is up $500 and the guy who bought it is down $500. That's quite possible but not inevitable. They could maintain value because people like them in the way similar to the way that art works do.

Re: Bitcoin falls below $300, lowest in 11 months

#99

Post by tim333 »

sillysaurus3 wrote: post #91
thom wrote: post #76

Earlier quoted context omitted.

Was part of the rise last year due to MtGox's increasingly desperate market manipulation? I remember reading the theories, but don't know if a better picture has developed since then.

Yes it was. There was an Mt. Gox bot which was consistently buying bitcoin over a long period of time. The reason we know it was an Mt. Gox bot is because when Gox's API went down, the bot was still able to execute trades on Gox even though no one else could. Of course, Karpeles will never stand for his crimes, because they weren't crimes. This is just what happens in an unregulated market, and everyone who buys into…

>Is there such a thing as a dishonest stock exchange? If so, how is that dealt with?

I'm not sure there is such a thing as a dishonest stock exchange but there are unethical players trading on most exchanges. The reputation for honesty of the traders varies a bit from exchange to excange, for example the reputation of the NYSE is generally good and of the Vancouver exchange generally bad. There are quite a variety of different scams and ways of dealing with them. The Mt Gox manipulation worked out as something like a ponzi scheme where players selling at a profit were bought out by Mt Gox's bot using money coming in from new players. To avoid that in the stock market I would recommend only buying shares backed by assets and earnings and avoid buying things with no intrinsic value because they are going up. So it's a bit buyer beware at the end of the day.

Re: Bitcoin falls below $300, lowest in 11 months

#100

Post by tim333 »

adamtucker wrote: post #98

What is preventing the Federal Reserve or any other central banks with endless supplies of liquidity, from collapsing the value of bitcoins or any other convertible currency, virtual or otherwise?

For the Fed to collapse the value of bitcoins they would have to sell lots of bitcoins. They can't do that because they don't have bitcoins to sell. The can print USD but not bitcoins.
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