Bitcoin value falls from above $33 to below $3 • Hacker News Board

Re: Bitcoin value falls from above $33 to below $3

#31

Post by jerguismi » Mon, Oct 17, 2011, 10:38 PM UTC

polshaw wrote: post #21

It is essential to remember that there is massive inflation of the money supply going on (by design), and that this is the key driver of the price downwards. ~35% increase in the money supply over the next 12 months; proportionately higher over the last 12 (as the same in absolute terms). Its rise to $30 was driven by hype and speculation. The falling prices stop any speculators jumping on board, and there is no sign…

> The rate of money supply increase will be halved in 2013, so don't expect any recovery before then.

The value is mostly driven by mass psychology, the inflation caused by miners is only one factor.

If some goverment-issued currency would start hyperinflating, bitcoin or similar cryptocurrency would be pretty good choice for people to move to.

Re: Bitcoin value falls from above $33 to below $3

#32

Post by daimyoyo » Mon, Oct 17, 2011, 10:42 PM UTC

Anyone know what the conversion rate between bitcoins and Dutch tulips is right now?

Re: Bitcoin value falls from above $33 to below $3

#33

Post by jerguismi » Mon, Oct 17, 2011, 10:45 PM UTC

polshaw wrote: post #29

jerguismi wrote: post #23

Earlier quoted context omitted.

It's free market, everyone is free to buy and sell as they wish. It's not a scam since there is the same information to everyone. I'm pretty sure that the early adopters couldn't guess this year's rise in value, and couldn't guess the price drop either. While I believe in bitcoin or cryptocurrencies in the longterm, I'm still pretty sure that bitcoin value will stay very volatile in the coming years. The stability wi…

Your reply missed his point as bitcoin is 'mined' not just bought and sold. The difficulty of that mining is set based upon the computing power of the miners. Add to this the fact that the number of coins available to be mined each day is designed to be reduced over time, and you end up with early adopters (formost of which being the creators) controlling a massive proportion of the total worth of bitcoins.

Well, I guess that most startups are pyramid scams, since the founders (early adopters) end up controlling massive proportion of the total worth of the company.

Re: Bitcoin value falls from above $33 to below $3

#34

Post by Andys » Mon, Oct 17, 2011, 10:48 PM UTC

polshaw wrote: post #21

It is essential to remember that there is massive inflation of the money supply going on (by design), and that this is the key driver of the price downwards. ~35% increase in the money supply over the next 12 months; proportionately higher over the last 12 (as the same in absolute terms). Its rise to $30 was driven by hype and speculation. The falling prices stop any speculators jumping on board, and there is no sign…

Second half of 2012 is when the rate will be halved, not 2013.

Re: Bitcoin value falls from above $33 to below $3

#35

Post by Andys » Mon, Oct 17, 2011, 10:50 PM UTC

lurch00 wrote: post #19

Bitcoin is essentially a giant pyramid scam. The early adopters have cashed out long ago. As mining gets more and more difficult, less people will cling to the liquid currency. Why trade with a deprecating currency, anonymous or not? The fact that the exchange rate is below the cost of mining should be alarming for many reasons. I'd assume the creator/first adopters do not care, either way.

As a small-time miner, I don't care. I always thought the value should be stable at roughly $1 at this point in time. I am in it for the long haul, I am waiting to see where it goes in the next 5 years, not trying to cash out to dollars.

Re: Bitcoin value falls from above $33 to below $3

#36

Post by tomkarlo » Mon, Oct 17, 2011, 10:53 PM UTC

jerguismi wrote: post #31

polshaw wrote: post #21

It is essential to remember that there is massive inflation of the money supply going on (by design), and that this is the key driver of the price downwards. ~35% increase in the money supply over the next 12 months; proportionately higher over the last 12 (as the same in absolute terms). Its rise to $30 was driven by hype and speculation. The falling prices stop any speculators jumping on board, and there is no sign…

> The rate of money supply increase will be halved in 2013, so don't expect any recovery before then. The value is mostly driven by mass psychology, the inflation caused by miners is only one factor. If some goverment-issued currency would start hyperinflating, bitcoin or similar cryptocurrency would be pretty good choice for people to move to.

So they should jump out of a highly liquid, government-backed security that's proving untrustworthy to go into an experimental currency that's relatively illiquid? I'd think they'd go towards gold, which seems like the opposite direction.

If people are jumping out of a printed currency to avoid inflation, they're going to want something where they know it's easy to convert back into something you can buy things with. Jumping into a cryptocurrency for their cash holdings would require they believe that they can easily jump back out.

Re: Bitcoin value falls from above $33 to below $3

#37

Post by bdonlan » Mon, Oct 17, 2011, 10:53 PM UTC

mikeryan wrote: post #15

Zodiakos wrote: post #11

Earlier quoted context omitted.

So, in other news - governments everywhere ban bitcoin. Bitcoin use soars wildly.

Not sure where you make that assumption from. If bitcoin never gets adopted as legal tender for real world goods its value gets severely limited. If Government's explicitly state that bitcoin is not legal tender, and I can't buy a latte at Starbucks with it then its not very useful.

Bitcoin is already not legal tender. Legal tender means you are _obligated_ to accept it as payment for a debt (eg, in the US, a lender cannot refuse a payment on a debt in dollar bills). It does not _necessarily_ mean that non-legal tenders _cannot_ be used for barter.

Re: Bitcoin value falls from above $33 to below $3

#38

Post by vrotaru » Mon, Oct 17, 2011, 10:54 PM UTC

polshaw wrote: post #21

It is essential to remember that there is massive inflation of the money supply going on (by design), and that this is the key driver of the price downwards. ~35% increase in the money supply over the next 12 months; proportionately higher over the last 12 (as the same in absolute terms). Its rise to $30 was driven by hype and speculation. The falling prices stop any speculators jumping on board, and there is no sign…

I'd say yes. All/almost early adopters are already enlisted so to speak, and most are already stocked with bitcoins.

And every hour 300 new bitcoins are mined, I'm still willing to buy some, but I'm a rather late adopter, and, obviously, there a limit for me too, after which I'll stop buying.

Anyway if bitcoin will survive until 2013 then... I'll be ready to accept bets (as in 10 to 1) that it will make it.

Re: Bitcoin value falls from above $33 to below $3

#39

Post by raganwald » Mon, Oct 17, 2011, 10:57 PM UTC

daimyoyo wrote: post #32

Anyone know what the conversion rate between bitcoins and Dutch tulips is right now?

Today the joke-explainer duty falls upon me:

http://en.wikipedia.org/wiki/Tulip_mania

Even if you are familiar with the expression, the full article is well worth reading.

Re: Bitcoin value falls from above $33 to below $3

#40

Post by joshontheweb » Mon, Oct 17, 2011, 10:58 PM UTC

Is this really a bad thing? Now people can stop hoarding them and start really using them as currency. It never really mattered what they were worth unless you were holding onto them. If you use bitcoins to enable transactions only and keep your money in real dollars then it can be pretty useful.