Bitcoin exchange rate reached $100 USD per BTC • Hacker News Board

Re: Bitcoin exchange rate reached $100 USD per BTC

#411

Post by millstone » Mon, Apr 01, 2013, 9:48 PM UTC

vrotaru wrote: post #393

lolcraft wrote: post #176

Some people here seem to think that this is temporary, that sometime in the future Bitcoin will stabilize into a glorious future global currency -- never mind the new class of cryptobarons it will have created from its inner circle, through shameless hoarding. My question is, what then will happen when Bitcoin stabilizes, that is, when the time to new coin mined approaches practically infinity? Let's assume the globa…

You totally wrong, and the reason you are wrong, is because you do not understand growth. Like... totally. Yes, I'm arrogant and I'll deal with an idealized model where the same set of resources is transformed into final goods, but bear with me. In order to get a real growth of 4% be it per year or per century in such a scenario, you need to find a better use of resources so that with the same resources you may produ…

> In order to get a real growth of 4% be it per year or per century in such a scenario, you need to find a better use of resources so that with the same resources you may produce an output which is 4% greater than before

Let's work through an example. I buy 100 seeds for $1 each. I plant them, let them grow, and harvest the result. I now have 104 seeds. My real growth is 4%!

Now I want to sell the seeds back to recoup my investment. But I discover that prices have dropped by 4%: seeds now go for 96 cents apiece. My 104 seeds now are worth $99.84! I would have been better off not buying seeds at all, and instead just holding on to my money. Real output is reduced.

This illustrates how deflation inhibits growth.

Re: Bitcoin exchange rate reached $100 USD per BTC

#412

Post by jvm » Mon, Apr 01, 2013, 9:49 PM UTC

jwallaceparker wrote: post #78

spartango wrote: post #28

I worry that as Bitcoin's value rises, people are buying in not to use it as payment for services or goods, but simply as an investment vehicle. In principle, there's nothing wrong with this; currency trading is common and well-explored. The problem is that the value of a currency is supposed to also be somehow related to its utility in acquiring goods and services. When it is rarely used to that effect, people may r…

"The problem is that the value of a currency is supposed to also be somehow related to its utility in acquiring goods and services. When it is rarely used to that effect, people may reconsider their investment in the currency." Gold and silver stand in opposition to this statement. You can't buy groceries with gold or silver coins, but they're a fantastic store of value and time-tested investment. Furthermore, accord…

> You can't buy groceries with gold or silver coins, but they're a fantastic store of value and time-tested investment.

Real value of gold:

http://static.cdn-seekingalpha.com/uploads/2013/2/18/1019887...

That is very much not my idea of a "fantastic store of value." Not unlike bitcoin, its value appears to vacillate wildly. The S&P 500 looks tame by comparison, and also has the added benefit of a much higher long-run rate of return.

Re: Bitcoin exchange rate reached $100 USD per BTC

#413

Post by bitcartel » Mon, Apr 01, 2013, 9:51 PM UTC

dragontamer wrote: post #375

bitcartel wrote: post #366

Earlier quoted context omitted.

> Gold is a piss poor investment. Do you know something that the Chinese, Germans and Russians don't ? "Central Banks Bought Most Gold in Nearly 50 Years" http://www.cnbc.com/id/100458951 "The Russian central bank will continue to buy gold as it seeks to diversify its foreign reserves away from paper assets it views as risky" http://www.reuters.com/article/2013/01/24/russia-cbank-idUSL... "The startling news that Ger…

Did you read your articles? Germans are bringing gold back into their own country, as opposed to holding it in other exchanges. They have neither increased nor decreased their supply. China and India are world-class consumers of gold for jewelry, as expected of the world's most populous countries with a rising middle class. Gold is also used in microelectronic components. Chinese Banks on the other hand, have not inc…

Er, yes, I can read:

Why are Germany repatriating their gold? Why do they want it in their own hands? Why go through all that trouble instead of just selling? Why would they want to keep holding onto a "piss poor investment"?

Regarding China, the article's author believes that China has been accumulating gold. The last known official figure is from 2009 and since then imports continue to rise, which in the authors opinion, have been destined for the Central Bank.

As for Russia, they have been accumulating gold for a few years now, and it's right there in the article. "It owned 400 tonnes of gold at end of 2006... At the end of last year, the central bank held nearly 950 tonnes of gold".

If you want to dismiss gold as a "piss poor investment" that's fine, but not everyone shares your view or your investment objectives.

Re: Bitcoin exchange rate reached $100 USD per BTC

#414

Post by LarrySDonald » Mon, Apr 01, 2013, 9:54 PM UTC

baddox wrote: post #363

AnIrishDuck wrote: post #312

Earlier quoted context omitted.

> Wouldn't it follow that they will wait in perpetuity and never buy that new phone/laptop/etc? People derive utility from those things. They make calls with their phone and do work on their laptop. Bitcoin is entirely different. It's only purpose is to allow you to buy other stuff.

> It's only purpose is to allow you to buy other stuff. There is certainly utility in being able to buy stuff that cannot easily be bought with traditional (government) currencies. Namely, things that are illegal in various countries, like drugs or gambling.

That's the "use it to buy things" which isn't utility. The laptop I'm typing on will not be worth more later. Ever. This very second is as much as it'll be worth, which is perhaps half of what I bought it for a year and a half ago. But I bought it, because I need a laptop. I fully expect it to be continually worth less, just like the couch I'm sitting on, the watch I'm wearing, the table I keep the laptop on, etc. But I put up with that because I'm using them. Bitcoins are useful for these things, but that's not utility - you don't buy a bitcoin and (supposing they dropped heavily in value year after year) shrugged and said "Oh well, I need this bitcoin for this so I'm keeping it even if I get very little in return for it in five years when I craigslist it as '1 used bitcoin, still in pretty good shape'".

Re: Bitcoin exchange rate reached $100 USD per BTC

#415

Post by millstone » Mon, Apr 01, 2013, 9:58 PM UTC

BrianEatWorld wrote: post #396

dragontamer wrote: post #212

Earlier quoted context omitted.

Have you even read the parent post? https://news.ycombinator.com/item?id=5473508 Scribophile cannot sell services based on BTC at the moment, because the BTC market keeps swinging by 50% or more each month. It is impossible to peg the price of anything to BTC right now.

Have you read my post? I even mentioned "menu costs" in my response. The issue is not that the currency has volatility, but that they refuse to peg the value. Scribophile is facing menu costs, but the menu costs are of their own creation. Simply allowing their prices to fluctuate with value would solve the problem. My point was that technology can make volatility a much smaller issue than it was in the past, hence wh…

How would you suggest Scribophile allow their prices to fluctuate with a bitcoin's value? How should they measure the value of a bitcoin?

Setting a target price in USD is the obvious answer, but then bitcoin becomes merely a way of exchanging dollars, not a currency in its own right.

Re: Bitcoin exchange rate reached $100 USD per BTC

#416

Post by SilasX » Mon, Apr 01, 2013, 10:00 PM UTC

leot wrote: post #324

jamoes wrote: post #188

Earlier quoted context omitted.

> shameless hoarding Hoarding is a derogatory term, intended to evoke an emotional response from the reader. I prefer the term "saving". > Why lend, why build new companies, when simply storing it is more than enough? Take shocks such as bubbles and demand-side crises. Most bitcoin proponents to indeed reject Keyensian, demand-side economics. I, for one, think entrepreneurs would typically benefit from not relying on…

"Saving" fails to distinguish between different uses of assets. "Investing" one's resources means putting them to work to create value. "Hoarding" them means the assets are as good as if they were buried in the ground. Investing is riskier and takes more work and more smarts, but any idiot can hoard. What creates (or is more likely to create) more value? 1 million dollars distributed among promising startups, or 1 mi…

That depends entirely on whether the investments are producing genuine value or, say, new ways to hide the risk in mortgages.

Yes, sometimes saying "no" in the aggregate is the right call.

Re: Bitcoin exchange rate reached $100 USD per BTC

#417

Post by bitcartel » Mon, Apr 01, 2013, 10:00 PM UTC

jonknee wrote: post #387

bitcartel wrote: post #366

Earlier quoted context omitted.

> Gold is a piss poor investment. Do you know something that the Chinese, Germans and Russians don't ? "Central Banks Bought Most Gold in Nearly 50 Years" http://www.cnbc.com/id/100458951 "The Russian central bank will continue to buy gold as it seeks to diversify its foreign reserves away from paper assets it views as risky" http://www.reuters.com/article/2013/01/24/russia-cbank-idUSL... "The startling news that Ger…

Central banks and average people have vastly different goals. Also, large investment banks don't seem to keep their immense wealth in gold.

Large investment banks don't really exist anymore :-)

http://www.guardian.co.uk/business/2008/sep/22/wallstreet.mo...

"Morgan Stanley and Goldman Sachs, the last two investment banks left standing, will become traditional bank holding companies, marking the end of an era for Wall Street.

The Federal Reserve's surprise announcement, which came at 2.30am London time, places the banks under the supervision the bank regulators and gives them easier access to credit to help them ride out the financial crisis."

Re: Bitcoin exchange rate reached $100 USD per BTC

#418

Post by dragontamer » Mon, Apr 01, 2013, 10:09 PM UTC

bitcartel wrote: post #413

dragontamer wrote: post #375

Earlier quoted context omitted.

Did you read your articles? Germans are bringing gold back into their own country, as opposed to holding it in other exchanges. They have neither increased nor decreased their supply. China and India are world-class consumers of gold for jewelry, as expected of the world's most populous countries with a rising middle class. Gold is also used in microelectronic components. Chinese Banks on the other hand, have not inc…

Er, yes, I can read: Why are Germany repatriating their gold? Why do they want it in their own hands? Why go through all that trouble instead of just selling? Why would they want to keep holding onto a "piss poor investment"? Regarding China, the article's author believes that China has been accumulating gold. The last known official figure is from 2009 and since then imports continue to rise, which in the authors op…

Fair enough :-)

I still disagree with you of course, but that is what the free market is for. Good luck with your investments.

Re: Bitcoin exchange rate reached $100 USD per BTC

#419

Post by mrb » Mon, Apr 01, 2013, 10:16 PM UTC

knowaveragejoe wrote: post #38

spartango wrote: post #28

I worry that as Bitcoin's value rises, people are buying in not to use it as payment for services or goods, but simply as an investment vehicle. In principle, there's nothing wrong with this; currency trading is common and well-explored. The problem is that the value of a currency is supposed to also be somehow related to its utility in acquiring goods and services. When it is rarely used to that effect, people may r…

That is my sentiment exactly. There is much talk of growing bitcoin adoption, but I've yet to see anything beyond a few web-based services(which, beyond their time, are almost free for the operators to begin with).

"A few web-based services" ?? Here is a list of more than a thousand merchants accepting Bitcoin: https://en.bitcoin.it/wiki/Trade

And there are a lot more not on this list. Bitpay alone (a Bitcoin payment processor) claims to have multiple thousands of merchants.

Re: Bitcoin exchange rate reached $100 USD per BTC

#420

Post by Evbn » Mon, Apr 01, 2013, 10:17 PM UTC

dragontamer wrote: post #268

aneth4 wrote: post #256

Earlier quoted context omitted.

That is one theory, and is the prevailing one. It is not necessarily correct. Regardless, it is certainly a consumer's right to store their assets in something that is not inflationary, as most do. Is the population holding empty real estate or gold instead of currency really that much better for the economy? No. Smart money will simply shift out of cash in an inflationary environment, and the value will not necessar…

Gold is a piss poor investment. Owning Real Estate (and making money off of it) entails taking care of it. People taking care of their land (so that it can appreciate in value) is a good thing. The typical Real Estate "investor" adds a ton of value to their home, not just through maintenance, but also additions (ie: a new deck). This maintenance is true value added to the economy. True value that wouldn't have been a…

You are severely miscategorizing real estate. Look at what happened in the 2000s bubble. Property was flipping with no value adds, and even with added wear and tear.

Buying desert property today and selling it for profit in 10 years when the city next door expands-- that is not wealth creation.