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Bitcoin hits US$ 4, after being mentioned on CNN yesterday

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Re: Bitcoin hits US$ 4, after being mentioned on CNN yesterday

#41

Post by cheez »

patrickod wrote: post #6

I've been watching the price of BTC rise pretty steadily in the last few days but I can't bring myself to believe that this price range is in any way sustainable. $4 per bitcoin? Not even the EUR and GBP have ever reached that in my recollection. I guess it if does stay like this mining is going to become pretty lucrative and certainly financially worth it.

That's pretty much the same as saying: What? $3 for a Big Mac? (I'm assuming they're $3).

There will only ever be 21 million BTC. Considering that according to the US deficit, there exists at least 13 trillion USD, that would put the final exchange rate at $620K USD per BTC.

That is only possible, mind you, if BTC actually catches on.

Re: Bitcoin hits US$ 4, after being mentioned on CNN yesterday

#42

Post by 27182818284 »

xnerdr wrote: post #25
kiba wrote: post #24

Earlier quoted context omitted.

As a bitcoin veteran, I expect carnage, always. I learn that the hard way several months ago. Moreover, I tend to be fatalistic about the price of bitcoin. Whether or not the market is manipulated, as long goods and services are popping up in the bitcoin economy, we'll be alright in the long run.

As a bitcoin veteren, what, if any, do you expect will be the US reaction once it becomes big enough to cause problems?

So far the US reaction has been positive. The CIA is paying BitCoin members to give talks about it. As someone pointed out in a Bitcoin forum, unlike Liberty Dollars or E-Gold, Bitcoin could prove to be a useful way of securely and anonymously paying people off

Re: Bitcoin hits US$ 4, after being mentioned on CNN yesterday

#44

Post by sgornick »

sabat wrote: post #43

How can the SEC not be all over this? It's amazing to me that it has either escaped its attention or -- possibly -- it has absolutely no idea what to do about it.

Does the SEC regulate baseball cards?

If bitcoin were an equity, then the U.S. Securities and Exchange Commission might be looking at it.

But even if they did ... if you are in Brazil, Russia, India, China, or wherever, ... how would what the SEC does be relevant? (yes, I'm being purposely obtuse, but remember that bitcoin is data, and as such it knows no borders.)

Re: Bitcoin hits US$ 4, after being mentioned on CNN yesterday

#45

Post by JulianMorrison »

lsc wrote: post #38
JulianMorrison wrote: post #35

Earlier quoted context omitted.

There's nobody with an off-switch.

yeah; this is what scares me more about bitcoin than e-gold. With E-gold, the government went after the owners, and they were able to shut the whole operation down; I lost maybe two hundred bucks worth of gold. Now, when the government decides to shut down bitcoin, what happens? there is no central 'off switch' - just like drugs, they will have to go after the users, or like illegal information, they will have to go…

Interesting argument.

Trying to go against users is hard, the government is not as dumb as the music industry, to play whack-a-mole versus grandmothers and kids. My guess is they would attack exchanges trading BTC USD. There are fewer, and separating the BTC economy from the USD one would make the currency significantly less attractive. Even the threat to do so would crash its USD price.

Re: Bitcoin hits US$ 4, after being mentioned on CNN yesterday

#46

Post by JCB_K »

zbanks wrote: post #33
JCB_K wrote: post #5

So say I'd have a blog with a huge reach. I hear about bitcoins. I buy a million for $4 each. I blog about it. Next day it's at $8. I'd sell the bitcoins, maybe 10000 a day to not let the market crash, and in 3.5 months I've got $4 million more than I used to.

To be fair, the same happens in the stock market: http://en.wikipedia.org/wiki/Penny_stock#Artificial_Inflatio...

ha! that reminds me of my Economy class in high school. We used to do a weekly game, where in the beginning of the year we'd have a certain amount of money, and we'd have to buy stock. The teacher would every week update us with the latest stock information, and based on that we'd have to make decisions. The person with the biggest amount of money at the end of the year won.

So I picked stock of a company which was basically bankrupt already, but was still on the stock market (why I don't know, I'm not an expert.) I think the stock was £0.02. So I waited a few weeks, and it happened to be at £0.05. I sold everything, didn't do anything for the rest of the year, and won. Didn't make the game very exciting, but at 15 years old I mainly cared for winning :)

Re: Bitcoin hits US$ 4, after being mentioned on CNN yesterday

#47

Post by arohner »

sgornick wrote: post #44
sabat wrote: post #43

How can the SEC not be all over this? It's amazing to me that it has either escaped its attention or -- possibly -- it has absolutely no idea what to do about it.

Does the SEC regulate baseball cards? If bitcoin were an equity, then the U.S. Securities and Exchange Commission might be looking at it. But even if they did ... if you are in Brazil, Russia, India, China, or wherever, ... how would what the SEC does be relevant? (yes, I'm being purposely obtuse, but remember that bitcoin is data, and as such it knows no borders.)

There are lots of kinds of data that are illegal to possess. Classified documents, insider information, copyrighted music, etc.

And remember certain US agencies have huge power outside the US. The DEA and the IRS come to mind.

I don't know which US agency will flip out when bitcoin becomes popular, but I'm quite certain one of them will, once it becomes widespread to exchange for illegal items, and used for money laundering.

Re: Bitcoin hits US$ 4, after being mentioned on CNN yesterday

#48

Post by jarin »

cheez wrote: post #41
patrickod wrote: post #6

I've been watching the price of BTC rise pretty steadily in the last few days but I can't bring myself to believe that this price range is in any way sustainable. $4 per bitcoin? Not even the EUR and GBP have ever reached that in my recollection. I guess it if does stay like this mining is going to become pretty lucrative and certainly financially worth it.

That's pretty much the same as saying: What? $3 for a Big Mac? (I'm assuming they're $3). There will only ever be 21 million BTC. Considering that according to the US deficit, there exists at least 13 trillion USD, that would put the final exchange rate at $620K USD per BTC. That is only possible, mind you, if BTC actually catches on.

I wonder why they decided to make it 21 million BTC total instead of a larger number. It seems like you'd run into a situation like when I bought a shirt in Bahrain for some low-ish number of Dinar, not realizing that it was much higher in USD. Spending 0.1 BTC doesn't seem like it should be a lot, even though it could eventually be worth quite a bit.

Re: Bitcoin hits US$ 4, after being mentioned on CNN yesterday

#49

Post by gwern »

joe_the_user wrote: post #29
kiba wrote: post #24

Earlier quoted context omitted.

As a bitcoin veteran, I expect carnage, always. I learn that the hard way several months ago. Moreover, I tend to be fatalistic about the price of bitcoin. Whether or not the market is manipulated, as long goods and services are popping up in the bitcoin economy, we'll be alright in the long run.

But isn't bitcoin supposed to not just work but actually be somehow better than ordinary currency? Wouldn't that include being more stable? Or am I missing something?

Exchange rates are set by supply, and demand. Bitcoin has through technical means controlled the supply part of the equation, but how can it control demand? So fluctuations in demand will cause changes. In the growth period, Bitcoin can't be stable, and it would be impossible for any currency to do so without extremely precise statistics on how a currency was being used and control over inflation (so you could, say, adjust supply exactly to match fluctuations in demand).

In the long run, most of the obvious equilibriums for Bitcoin are very far away from whatever it's currently trading at. If Bitcoin fails and becomes playmoney, then it's overpriced by hundreds of times; if it succeeds and replaces any sovereign country's currency, then it's undervalued by hundreds or thousands or millions of times. So in the long run, you must expect it to not be 'stable', but to change drastically - in some direction.

(If this isn't convincing, try applying the double reversal test Nick Bostrom devised for combating the status quo bias (http://www.nickbostrom.com/ethics/statusquo.pdf) and anchoring (http://en.wikipedia.org/wiki/Anchoring). Suppose that Bitcoin were at $2 rather than $4. Would you be saying 'obviously the right price for Bitcoin is $4, so I should buy some'? I doubt it. )

When Bitcoin is supposed to be stable is when demand for it is not varying; supply will be stable by the Bitcoin architecture, and hence, the overall equation wouldn't change in that situation. This differs from fiat currency in that you are only vulnerable to changes in the demand part of the equation - there is no Fed or other cabal that can hurt you by manipulating the supply part of the equation.

Re: Bitcoin hits US$ 4, after being mentioned on CNN yesterday

#50

Post by JeremyBanks »

27182818284 wrote: post #42
xnerdr wrote: post #25

Earlier quoted context omitted.

As a bitcoin veteren, what, if any, do you expect will be the US reaction once it becomes big enough to cause problems?

So far the US reaction has been positive. The CIA is paying BitCoin members to give talks about it. As someone pointed out in a Bitcoin forum, unlike Liberty Dollars or E-Gold, Bitcoin could prove to be a useful way of securely and anonymously paying people off

> The CIA is paying BitCoin members to give talks about it.

A BitCoin developer to give a talk about it to them.

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