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Bitcoin hits $200

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Re: Bitcoin hits $200

#81

Post by nunb »

graeham wrote: post #7

Does anyone have a link or justification in anyway for the rise in the conversion rate? I like the idea of an independent (non-government), secure currency - but I can't see this as anything other than a speculation driven investment vehicle. Seems like tulip mania to me [1]. Also, is there any management of Bitcoin to prevent excessive currency fluctuations? Not having this would seem to be a flaw to me - you can't…

the real test of a bubble is to see if people are buying to hold or merely flip. their time horizon is also an important consideration.

if they're buying to flip with a short horizon, it's a bubble. the first buyer to feel they might be the greatest fool walks away, and the bubble pops.

> speculation driven

speculation is a normal economic mechanism. taking risk in expectation of reward.

> you can't have an exchange-based economic system without some expected stability in the value of the exchange

yes you can. especially if the value of the currency is only going up. probably not if it's going down.

currently the ratio of stock to flow is rather high. since there is less flow available, and lots of fiat chasing it, the price rises. since the value of the currency rises, people who sell in that currency benefit (especially if they keep the difference in bitcoin).

money is a shared societal delusion. it's a giffen good, where rising price acts as a signal that more should be owned. misesian/mengerian theory requires only an initial direct barter exchange, the rest of it is bootstrapped by historical events (given certain basic properties, which bitcoin has in abundance[2]).

we are living those historical events today, thanks to the ECB & Cyprus.

at the moment bitcoin is a transient medium of exchange (usd->btc->silkroad) on both sides and a few risk-takers are betting on it holding value, where few is relative to world population. most merchants (at least thru bitpay etc) don't hold it either.

for the price to drop consistently, bitcoin-busters would have to take a large position, driving up the price, and then consistently sell enough to trigger other people's latent limit-sell orders. the problem is that naked shorting is not possible, so on the way to building large positions, they will send out the rising-price signal, which will make downward price-pressure quite hard later (aka high prices will be sticky since people's expectations have been reset). [1]

when the price gets high enough, the realization will sink in that the only way to accumulate bitcoin is to participate in the economy with one's labor (ie, sell things for bitcoin).

that's the ultimate win for bitcoin.

[1] oddly, one of the criticisms of btc, namely that Satoshi holds a significant amount, will provide downward stickiness as long as that large cache isn't sold. [2] bitcoin has a lot more properties than most other monies, principally anonymity & distance-agnosticism, and also invisibility via the use of darknets/tor

Re: Bitcoin hits $200

#82

Post by [deleted] »

graeham wrote: post #7

Does anyone have a link or justification in anyway for the rise in the conversion rate? I like the idea of an independent (non-government), secure currency - but I can't see this as anything other than a speculation driven investment vehicle. Seems like tulip mania to me [1]. Also, is there any management of Bitcoin to prevent excessive currency fluctuations? Not having this would seem to be a flaw to me - you can't…

[deleted]

Re: Bitcoin hits $200

#83

Post by caf »

jbverschoor wrote: post #40
AndrewDucker wrote: post #23

It's fascinating to watch this, largely because Bitcoin has no "natural" value. The only utility it has is as a transfer of value from one place to another, and it can do that equally well with a bitcoin being worth $1 or $200. But it's really interesting to watch the value ratchet up, and easy to see how you can do this - if people will only ever sell a bitcoin for (say) 1% more than they bought it for, and people b…

Actually it's natural value is related with the power usage to mine these things. As the difficulty goes up and payouts go down, the natural value increases. Regardless of demand

The mining difficulty is driven by the value of the bitcoin (and the efficiency of mining hardware), not the other way around. If bitcoin's traded value were to drop precipitously, the least efficient miners would become unprofitable and eventually drop out, resulting in the difficulty decreasing.

Re: Bitcoin hits $200

#84

Post by guard-of-terra »

klipt wrote: post #44
AndrewDucker wrote: post #23

It's fascinating to watch this, largely because Bitcoin has no "natural" value. The only utility it has is as a transfer of value from one place to another, and it can do that equally well with a bitcoin being worth $1 or $200. But it's really interesting to watch the value ratchet up, and easy to see how you can do this - if people will only ever sell a bitcoin for (say) 1% more than they bought it for, and people b…

> The only utility it has is as a transfer of value from one place to another Which is a lot of utility. Consider that in the US we still write physical checks, and paying by credit card costs the vendor a few percent every time. However that utility is not limited to bitcoin. You can set up a similar algorithm using a slightly difference hash, and voila you have bitcoin2. Some people are worried that bitcoin is defl…

There are a lot of alternative currencies: litecoin, ppcoin, terracoin and so on. You can easily mine your own, but it trades at 1/100 of BTC usually.

"Mine your own new currency" -- pre-mining coins before releasing your coin to general public is considered very improper act.

Re: Bitcoin hits $200

#85

Post by dragontamer »

aneth4 wrote: post #59
midnightsine wrote: post #54

Earlier quoted context omitted.

Cashing out 100 000 BTC would crash the market down to 0 - right now the MtGox has exactly 105 708 BTC in the order book. Cashing out 100 000 USD however is a different story. It actually happened a few hours ago, you can see the impact for yourself[1]. [1] http://i.imgur.com/cjI9ZaT.png

> Cashing out 100 000 BTC would crash the market down to 0 - right now the MtGox has exactly 105 708 BTC in the order book. All demand is not reflected in the order book. In fact, most demand is not. The more sophisticated a trader is, the more likely he is to use limit orders to manipulate the market instead of the rather stupid move of telegraphing demand. If the market went down 10%, a flood of buy orders is not u…

If the market went down by 50% however, and then stayed low for an extended period (maybe two days), then a flood of sell orders will definitely appear.

It works in both directions, people who are speculating on Bitcoin will be easily spooked by a medium-term crash.

Re: Bitcoin hits $200

#86

Post by readme »

rms wrote: post #63
eduardordm wrote: post #57

This last price fluctuation is doing more harm to bitcoin than a moratory does to a country. No one can even explain formally why this is happening. Lack of liquidity? Penny stock behavior? Are there sharks driving the prices to make a spectacular exit? Why isn't mining regulating the prices? Is it too costly? My personal and completely uninformed opinion is that bitcoin is doomed.

It's happening because more and more people are buying Bitcoins are fewer are selling. Supply and demand. This interview talks about the real-time increased demand. https://news.ycombinator.com/item?id=5517634

The increased demand only matters if it lasts.

I suspect pump & dump. Just wait, it will plummet soon when the puppet masters sell their bitcoins.

Re: Bitcoin hits $200

#87

Post by dragontamer »

Diederich wrote: post #62
aneth4 wrote: post #27

Earlier quoted context omitted.

It's hard to say. There are many who justify prices far higher based on future adoption. Adoption is picking up at a remarkable rate. The USD money supply is around $3T or $10T, depending on whether you are counting money multiplied by leverage. The US GDP is $15T. If we presume that a currency then should be on the same order of magnitude of money supply as the GDP or transaction volume, it's not hard to project a $…

I've been asking my friends what they would consider the threshold for BTC to be considered a 'serious' global currency. We agreed that if it had $1T USD equivalent value, it will have arrived. So, 22M BTC valued at $1T USD comes to $45K USD/BTC. I have invested less than two thousand dollars into BTC. I consider it an epic gamble, but honestly, not an enormous one. On the other hand, if BTC does 'go long', I could v…

At what point would an airplane be considered "heavy" enough to fly? Some people agree that when its about as heavy as other planes.

Asking the wrong questions is silly. When bitcoins are used, that is when they'll be a serious currency. A bitcoin enthusiast should be looking at the number of bitcoin transactions and hoping it rises.

The price of bitcoin is irrelevant to its value to consumers. On the contrary, the more stable the price, the better.

Re: Bitcoin hits $200

#89

Post by deelowe »

shanelja wrote: post #2

Wasn't it like $130 a few days ago? This kind of inflation is really cool for the people invested in bitcoins but this is the point where I would panic sell, but perhaps I'm a coward. EDIT: Link's down, it was $203 at 12.06 GMT.

The word you're looking for is "deflation." Inflation is when currency becomes less valuable.

Re: Bitcoin hits $200

#90

Post by smosher »

andyhmltn wrote: post #13
shanelja wrote: post #2

Wasn't it like $130 a few days ago? This kind of inflation is really cool for the people invested in bitcoins but this is the point where I would panic sell, but perhaps I'm a coward. EDIT: Link's down, it was $203 at 12.06 GMT.

Yes and a few days before that it was $100. I was watching it out of curiosity yesterday and it went up about $20-$30 I believe just while I was at work. Hopefully it crashes, stables out and then gains use as a currency rather than an investment.

> Hopefully it crashes, stables out and then gains use as a currency rather than an investment.

That's impossible. The only low stable price is $0 which is useless as a currency. Only when its user base is no longer growing and there is enough value to satisfy the entire user base will it stabilize. My expectation is that unless it dies entirely it will continue to grow until it has more or less total global coverage. With the limited supply of BTC, it has to be worth much more than $200 apiece.

A crash just causes problems but if you want to use it as a currency I think what you really want to move the decimal, which is purely a representation issue: it's ~$2/centiBTC.

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