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Bitcoin exchange rate reached $100 USD per BTC

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Re: Bitcoin exchange rate reached $100 USD per BTC

#461

Post by zanny »

reedlaw wrote: post #447
stouset wrote: post #430

Earlier quoted context omitted.

Because the money supply of BTC is fixed, BTC are effectively proxies for the value of the entire economy that they're a part of. When the economy grows by 5%, so does the value of your BTC. It's at the absolute optimimum point of the risk/reward curve: you could hypothetically invest in a way that performs better than the average, but when factoring in the risk, your expected value is slightly worse than if you'd si…

So Keynesian economics forces everyone to invest in order to avoid the inflation tax while Austrian economics encourages saving allowing savers to reap the benefits of deflation. Both serve as proxies for the economy, so tell me again the downside of saving and prices going down over time?

Money you are saving that isn't being used for monetary exchange is effectively dead weight in an economy. Due to modern inflation rates, nobody really "saves" in any modern economy by just hoarding fiat currency - and because of this, the vast majority of the monetary supply is being used for exchange and commerce, and you get peak utility of the currency that way.

If you sit on money you get from the economy, you are taking it out of the exchange system as long as you don't spend it, which slows exchange.

Re: Bitcoin exchange rate reached $100 USD per BTC

#462

Post by vannevar »

jamoes wrote: post #293
smsm42 wrote: post #238

It looks like a classic bubble now - while slow gains programmed in could be justifiable, this seems to be driven purely by expectations of future price rises - which is a classic bubble sign. So far, all bubbles popped sooner or later. Maybe this would be the only one in history that doesn't - I wouldn't bet on that, but maybe someone would and become a millionaire. Or lose all his money.

From 2003 to 2013, the price of AAPL rose from $11/share to over $400/share. Rapid price increase doesn't always mean "bubble". Sometimes innovative things are created.

Apple is a company that created a lot of real value during that period. Bitcoin is a currency that claims to offer some marginal advantages over other currency, but certainly not enough to justify the rocket ride. The biggest advantage that Bitcoin is offering these days is that it will be worth 50% more next month than it is today. That's a hard advantage for speculators to ignore, but it is ultimately an unsustainable pyramid scheme.

Re: Bitcoin exchange rate reached $100 USD per BTC

#463

Post by DennisP »

rmc wrote: post #389
randallsquared wrote: post #232

Earlier quoted context omitted.

> The reason it's bad is that deflation makes it more profitable to do nothing than to invest. This makes no sense to me. If keeping 100 units makes one richer because they are worth more in a year, then any investment which has a positive return (that is, you end up with more than 100 units in a year) must be that much better... What am I missing?

Let's pretend the deflation is at 3% (i.e. there's a inflation rate of -3%). Then your 100 units will be worth 103 units (in today's money) in 1 years time. This is a guaranteed rate of deflation (bitcoin has a guaranteed rate of deflation, I don't know if it's 3%) So someone comes along and wants a loan, but they can't pay back 3% interest rate, only 2%. Why would you give that person your 100 units if you'll only g…

Assuming they pay you back in the same currency, they're actually paying you 2% on top of the 3%, giving you a 5% return.

Today, with dollars, you can get a risk-free return by investing in T-bills. Riskier investments pay a higher return in exchange for higher risk. The risk-free return from holding a deflationary currency plays essentially the same role as the risk-free return in T-bills.

Re: Bitcoin exchange rate reached $100 USD per BTC

#464

Post by vannevar »

grovulent wrote: post #42
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…

I'm not a bitcoin fanboy - but I see this sentiment around a lot and I'm not sure I agree with it. The claim is that the value of a currency is supposed to also be somehow related to its utility in acquiring goods and services. And if this isn't the case - then people will go off it. When was the last time someone acquired a good or service with an ounce of gold? Perhaps we shouldn't consider gold a currency? Well I'…

If gold rose as fast as Bitcoins are rising, people would be shorting it hand over foot. They don't have that opportunity with Bitcoin, so the ship of fools sails on unimpeded until the supply of fools is exhausted, as in any bubble. Which could nonetheless take awhile and make some people very rich, provided they are smart enough to get out in time. Not everyone lost in the real estate bubble.

Re: Bitcoin exchange rate reached $100 USD per BTC

#465

Post by aneth4 »

eli_gottlieb wrote: post #435
aneth4 wrote: post #215

Earlier quoted context omitted.

You are espousing one form of economics which many consider unsustainable. Regardless, many assets are deflationary. Rich people buy real estate and commodities because they are deflationary, or at least not inflationary. There is nothing wrong with assets that grow or maintain value. Bitcoin is a liquid and easily transferrable deflationary value store, just like gold. Telling people they should submit to inflation…

Inflation works because it keeps those too poor to have real assets on the gerbil wheel. Quite to the contrary, it gets the proletarians out of debt!

> Quite to the contrary, it gets the proletarians out of debt!

Yes. All the proletarians whose debt is at an interest rate under the rate of inflation. Which is exactly zero of them.

Re: Bitcoin exchange rate reached $100 USD per BTC

#466

Post by DennisP »

dobbsbob wrote: post #289
aneth4 wrote: post #262

Earlier quoted context omitted.

What you should be worrying about is the money supply, not the individual coin value. Is there any acceptance in commerce of these competitors? Unless there is an underlying demand created by available products, these coins will be worth nothing. In my opinion, features won't matter. Bitcoin has critical mass, and it's unlikely to face real competition.

Read about namecoin here: http://dot-bit.org/Main_Page It works perfectly as an open DNS p2p system, a decentralized p2p magnet tracker (think pirate bay but impossible to shut down), secure online voting, plenty of other possible uses. There's also PPcoin a low energy coin compatible with BTC miners that's getting more popular. Another advantage to Litecoin is you don't see it in the news everyday with the words 'Dr…

I've been getting pretty interested in PPcoin.

I assume that mining will tend to be modestly profitable. As Bitcoin scales up and as the reward goes down, either it will have to increase transaction fees and use an enormous amount of energy, or the mining reward will be too low compared to Bitcoin's value, there won't be enough miners, and 51% attacks will start to be profitable.

This isn't a problem for PPcoin, which gradually transitions to proof-of-stake instead of proof-of-work. It seems to me like it'd be more viable as a major currency.

Re: Bitcoin exchange rate reached $100 USD per BTC

#467

Post by jussij »

jamoes wrote: post #293
smsm42 wrote: post #238

It looks like a classic bubble now - while slow gains programmed in could be justifiable, this seems to be driven purely by expectations of future price rises - which is a classic bubble sign. So far, all bubbles popped sooner or later. Maybe this would be the only one in history that doesn't - I wouldn't bet on that, but maybe someone would and become a millionaire. Or lose all his money.

From 2003 to 2013, the price of AAPL rose from $11/share to over $400/share. Rapid price increase doesn't always mean "bubble". Sometimes innovative things are created.

And AAPL peaked just shy of $750-00 so that bubble may have a leak.

Re: Bitcoin exchange rate reached $100 USD per BTC

#468

Post by aneth4 »

Evbn wrote: post #431
aneth4 wrote: post #215

Earlier quoted context omitted.

You are espousing one form of economics which many consider unsustainable. Regardless, many assets are deflationary. Rich people buy real estate and commodities because they are deflationary, or at least not inflationary. There is nothing wrong with assets that grow or maintain value. Bitcoin is a liquid and easily transferrable deflationary value store, just like gold. Telling people they should submit to inflation…

That is backwards. Inflation helps debtors, punished capital holders, and is irrelevant to hand-to-mouth wage earners. Price inflation only hurts wage earners when it is coupled with flat nominal wages-- but that is merely a (too powerful) psychological trick that people don't notice.

All wrong:

- Inflation does not help debtors, unless they don't pay interest. Inflation is added to interest rates, so it has no effect. Inflation only helps debtors if they have a fixed interest rate and inflation goes up, which clearly not desirable or sustainable over a long period. In fact, inflation encourages debt, which creates a further enslaves debtor class and enriches capital holders.

- Inflation does not hurt capital holders. Anyone with sufficient capital holds assets that are not inflationary, such as gold or real estate.

- Price inflation hurts wage earners because real wages drop rapidly and requires nominal "raises" which creates a false reward, thus the hamster wheel. Got that 10% raise after 3 years? Congratulation, you make the same amount of real wage. Further, low wage earners can not afford or don't have the savvy to purchase inflation resistant assets, so what little they do have either depreciates or is inflated, thus the hamster wheel.

I may sound like a Marxist, but I am not. I believe in the free market and real currency, not the modern mess we have.

Re: Bitcoin exchange rate reached $100 USD per BTC

#469

Post by DennisP »

dragontamer wrote: post #129
nawitus wrote: post #115

Earlier quoted context omitted.

"Currently, hoarders are the ones benefiting from BTC, but no one else is." That's not true, BTC has many benefits to bitcoin users. There's plenty of bitcoin-only services, but more importantly, it provides freedom for many people who are facing government regulation. In the long run, bitcoin enables all kinds of innovation (good example is reddit's bitcointip service, which wouldn't really exist without bitcoins).

And tell me, what is a good BTC tip today? 1BTC used to be a decent tip at $5. Today that is a $100 tip I'm giving someone. Anyone who gave money to Bitcointip is suffering from the volatility in the marketplace. A true BTC enthusiast will be happy when BTC stops moving . It doesn't matter what value BTC has, as long as it is constant. Only hoarders want BTC to keep going up and up in value.

If it were to stop moving in the near future, BTC would be stuck at minor-currency status with a $1 billion valuation. I'll be happier if it stops moving with a $1 trillion valuation, so lots of people can use it instead of just a few geeks and druggies.

Re: Bitcoin exchange rate reached $100 USD per BTC

#470

Post by DennisP »

astrodust wrote: post #95
mikemoka wrote: post #70

How could the bitcoin exchange rate reverse its trend and start falling? Do you have any scenarios in mind?

A massive chain-split that erodes confidence in the perceived value of the currency. Gold is a tangible substance. BTCs are just data and we all know how volatile that can be.

They just had a split. They resolved it in short order and the value skyrocketed after that.
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