Bitcoin rises from $14 to $40 in two months • Hacker News Board

Re: Bitcoin rises from $14 to $40 in two months

#101

Post by gyom » Tue, Mar 05, 2013, 4:56 PM UTC

sergiosgc wrote: post #54

tsmarsh wrote: post #12

If it ever becomes successful, we will marvel that individuals could ever afford a bitcoin. 21 million is a tiny number for a currency when compared to $40 trillion in global currency ($6000 per person). ~$1.25 billion spend on Cyber Monday ~$8 billion are traded for oil every day ~$150 billion NYSE daily If bitcoin became the trusted currency for any of these activities what would it be worth? If bitcoin became the…

This is the fundamental characteristic of bitcoin that puzzles me. Most currencies are inflationary, which in low doses is a good thing: it disincentivizes keeping the money under the mattress, maintaining a healthy flow of currency. Bitcoin is by design deflationary: it's value increases over time. Deflation is destructive to the economy, so if bitcoin is deflationary by design, it can't ever be a primary currency,…

To the person who just wants to save for retirement and doesn't want to invest in the rollercoaster stock market, the best thing that money could do is to at least retain its current purchasing power.

You can talk about "maintaining a healthy flow of currency", but to some people it's more like "use your dollar coupons before they expire" and they don't like playing that game.

Re: Bitcoin rises from $14 to $40 in two months

#102

Post by jbooth » Tue, Mar 05, 2013, 5:01 PM UTC

adventured wrote: post #100

jbooth wrote: post #95

Earlier quoted context omitted.

The RMB was 'depegged' as a press release but is only allowed to float in a narrow range of 0.3%. ( http://en.wikipedia.org/wiki/Renminbi#Managed_float ). Most of the increase in value from 2005 was a command decision from the CCP, not a result of market float. At any rate, 15% over 5 years is less than 3% inflation. That's low inflation. I don't think borrowing rates will stay this cheap over the next 2 decades beca…

I agree the USD is not going to collapse. It's going to continue to devalue at an accelerating pace, as it becomes increasingly less of a global reserve standard. Interest rates on US debt will climb from here forward. The Fed will increase its rate of debt monetization as the US economy flails, likely from $85 billion per month up above $125 billion per month in the coming year. The Fed will also never be able to ac…

Of course interest rates will climb -- what else are they going to do from 0.1%?

People have been making your predictions since January 2009. When's it going to start?

My prediction is specifically that inflation won't start until growth starts, at which point it's really much less dire than the picture you're painting.

Re: Bitcoin rises from $14 to $40 in two months

#103

Post by omellet » Tue, Mar 05, 2013, 5:14 PM UTC

adventured wrote: post #76

omellet wrote: post #24

Earlier quoted context omitted.

People will want to have it as an asset, not as a usable currency. Appreciating currencies are disastrous for any economy stuck with them, which is why we're no longer on the gold standard.

The gold standard worked in the US for about 170 years, which is part of why the US became the wealthiest nation in history: it had an extraordinarily trusted currency (green back = good as gold). Gold was worth $19 to $35 for 100+ years, and it worked, America had no problem growing dramatically. The US economy also had no problem growing fast during the 1990s, when the US Dollar was strong and had appreciated extre…

It never really worked in the sense that you mean. Economic growth was virtually nil until the industrial revolution. Not coincidentally, it was around the same time that gold-backed currencies came to be seen as a bad idea. If you have the time, 'The Populist Moment' is an excellent read.

Re: Bitcoin rises from $14 to $40 in two months

#104

Post by hendzen » Tue, Mar 05, 2013, 6:06 PM UTC

nwh wrote: post #14

tsmarsh wrote: post #12

If it ever becomes successful, we will marvel that individuals could ever afford a bitcoin. 21 million is a tiny number for a currency when compared to $40 trillion in global currency ($6000 per person). ~$1.25 billion spend on Cyber Monday ~$8 billion are traded for oil every day ~$150 billion NYSE daily If bitcoin became the trusted currency for any of these activities what would it be worth? If bitcoin became the…

Just keep dividing it, that's one of the key designs. Work in mini bitcoin, or micro bitcoin, or even single satoshi. There's nothing saying that you have to use full units.

That doesn't actually solve the underlying problem, which is, why would I spend my bitcoin today when it will be worth more tomorrow?

Now, if bitcoin merchants agreed on the expectation that bitcoin will continually rise, it would be rational to price things at a discounted rate. But that is a lot of risk to take considering bitcoin's volatility. In the end I think BTC speculation will do the most to harm its actual economic utility.

Re: Bitcoin rises from $14 to $40 in two months

#105

Post by craftkiller » Tue, Mar 05, 2013, 6:59 PM UTC

celticninja wrote: post #22

lucb1e wrote: post #20

Earlier quoted context omitted.

I would expect the same, but I'm not in any way an economist so I'll wait and see. I also think that after the correction the price will rise again anyway.

i think you are right, past corrections have been cause dby someone dumping between 100k and 200k btc, i dont think there are many early players left with that amount of BTC that they would dump any time soon.Even if they did this would not move the market as much as it would have in the past, perhaps dropping the price by $10-$15 on a day like today, which would not take long to correct upwards again. It is not like…

the big sellers on the silk roads will have that kind of volume to dump if they've been hoarding it.

Re: Bitcoin rises from $14 to $40 in two months

#106

Post by gamblor956 » Tue, Mar 05, 2013, 7:04 PM UTC

adventured wrote: post #79

oleganza wrote: post #56

Earlier quoted context omitted.

Do you have a single rational standard of what's "productive" and "not productive"? Should you have moral right to enforce this standard upon everyone around you? If millions of tourists make millions of pictures of Eiffel Tower an buy millions of cameras and iPhones for that - is it productive? Should they be prevented from buying cameras and instead "invest" money in something more "productive"? My answer to everyo…

willholloway: Hoarding does not make us all poorer. Your blanket statement is false. If you're living in a country with a gold standard, and that currency appreciates, it means you can purchase more real goods, not less. China's economy has seen its currency appreciate for the last decade, while they simultaneously get far richer. The same principle was demonstrated by the last manufacturing powerhouse: the USA. If I…

Yes, but the incentive not to purchase more real goods increases as the currency appreciates because every unit of currency not spent now will be able to purchase even more real goods in the future. Hence, people avoiding spending now except for essential goods.

This inevitably results in massive deflation and eventually destroys the economy, rendering the accumulated appreciation worthless.

China's economy has seen its currency appreciate for the last decade, while they simultaneously get far richer. The same principle was demonstrated by the last manufacturing powerhouse: the USA.

Yes, and in both cases this happened after the countries stopped fixing the supply of money. In the US, this was moving off the gold standard, in China, this was moving off of the USD standard.

Re: Bitcoin rises from $14 to $40 in two months

#107

Post by SilasX » Tue, Mar 05, 2013, 7:53 PM UTC

d23 wrote: post #57

vijayboyapati wrote: post #43

http://unqualified-reservations.blogspot.dk/2011/04/on-monet... Finally, we examine a new contender - the mysterious and awesome Bitcoin. I'll be frank with you, dear reader. When I came up with the MoMT, my first thought was: how can I, Mencius Moldbug, make some damned money from this? As system software is my first love, it was not that hard to think of an answer. In some ways Bitcoin is actually much better desig…

I thought the point of laundering was that yes, you can see where every individual bitcoin goes, but that when you put it through a "washing" service it then goes to people who are completely unrelated to whatever Pablo was doing. And Pablo gets money that was completely unrelated to what he was doing, probably at another account.

Indeed. The crucial questions are:

a) Can the washing services "mix up" owners' address well enough that you can plausibly say, "I got money that was in a drug deal? Wow, only six thousand other people did too!" (I think they can.)

b) If a) is true, will it be plausible to ban washing services? They're pretty much the definition of money laundering, so the legal case is a lot more airtight.

Re: Bitcoin rises from $14 to $40 in two months

#108

Post by Hermel » Tue, Mar 05, 2013, 8:39 PM UTC

snake_plissken wrote: post #88

sergiosgc wrote: post #54

Earlier quoted context omitted.

This is the fundamental characteristic of bitcoin that puzzles me. Most currencies are inflationary, which in low doses is a good thing: it disincentivizes keeping the money under the mattress, maintaining a healthy flow of currency. Bitcoin is by design deflationary: it's value increases over time. Deflation is destructive to the economy, so if bitcoin is deflationary by design, it can't ever be a primary currency,…

"This is the fundamental characteristic of bitcoin that puzzles me. Most currencies are inflationary, which in low doses is a good thing: it disincentivizes keeping the money under the mattress, maintaining a healthy flow of currency. Bitcoin is by design deflationary: it's value increases over time." Thank you for this. I constantly try to explain this to bitcoin fanatics and they don't get it.

No one is disputing that Bitcoin is deflationary.

What's less clear is how damaging that actually is. If you are looking for a way to preserve value, then being deflationary might even be beneficial. There are plenty of things that are deflationary (i.e. limited in supply), such as gold, stocks of a growing company, or real estate in Manhatten. Does that make these things worthless?

Re: Bitcoin rises from $14 to $40 in two months

#109

Post by maeon3 » Tue, Mar 05, 2013, 11:10 PM UTC

Nursie wrote: post #67

ahi wrote: post #62

Earlier quoted context omitted.

I don't think that is currently the central aim of the Federal Reserve, if it ever was.

Wikipedia's page on the Federal Reserve, particularly the section on 'Purpose' would seem to disagree with you. But it is only wikipedia and may well be inaccurate.

Which means, if bitcoins were to 100% replace US Dollar today, the US Government would have to immediately default on the treasury.

I get the sinking feeling that when Bitcoin takes off for it to make any kind of fractional dent in society, it's going to be squished like a bug. After having been linked to WMD's and terrorism.

Re: Bitcoin rises from $14 to $40 in two months

#110

Post by nhaehnle » Wed, Mar 06, 2013, 12:28 AM UTC

rtkwe wrote: post #68

nhaehnle wrote: post #47

Earlier quoted context omitted.

Yes all monetary value is ephemeral, intangible and based on the belief and good will of the market That's an overly simplistic view of the value of money. If the value of money were only based on belief, then one would except sudden collapses of monetary value without any connection to the real economy quite regularly. In a sense, money would be like the cartoon character who defies gravity until he looks down. In r…

A decent point but the government accepting payment in a certain currency requires that they are sure/believe that they will be able to use that currency to pay their debts. Same thing applies to the debt argument both rely on a communal acceptance that a dollar/euro/ruby/piece of eight/bitcoin/kongbuck will be accepted as payment. I suppose it'd be clearer if I said it's exchange value is ephemeral, ie completely de…

A decent point but the government accepting payment in a certain currency requires that they are sure/believe that they will be able to use that currency to pay their debts.

There are all sorts of ways to answer to this, but all of them amount to pointing out the bleedingly obvious: Most[0] governments issue debt in the same currency that they demand tax payments in, so your condition is not really a condition at all.

If somebody holds a government bond denominated in currency X, then they will be paid in currency X. If they suddenly decide that they would prefer to be paid in currency Y, well, take it to the foreign exchange: said government does not, and does not need to, care.

[0] The governments that don't do that almost invariably end up in trouble at some point because of precisely this. On a related note, almost all stories of hyperinflation are in fact stories about foreign-currency-denominated debt.