5 ms·

The bursting of the Bitcoin bubble

51 points by arihelgason 15y ago

Lexarius 15y ago
I did a little mining while it was profitable, but running the air conditioning to keep the GPUs from melting cannibalized most of it during the summer. I'll have to check back once things cool down a bit more - perhaps a drop in difficulty could make "free" heating for my apartment viable again. Not holding my breath, though.
- hippich 15y ago
  Do not expect it to happen soon tho. Before $30+ price difficulty was _doubling_ every two weeks. Today with 90+% price cut difficulty drops 10-15 % every two weeks... Now, if you really wants to make it right - buy water blocks for your cards, route water pipes outside your building and mine :) AC will thank you :)
mcantelon 15y ago
Bitcoin it ahead of its time. Bitcoin is has a lot of potential uses and these uses haven't gone away because a bubble burst.
- tadfisher 15y ago
  Moreover, the network (and thus Bitcoin) will continue to exist so long as one individual keeps mining.
  - eru 15y ago
    Yes, but that doesn't guarantee demand.
- SkyMarshal 15y ago
  Indeed. In the long term this is just statistical noise, as long as the underlying tech and theoretical foundations are solid. People weened on CNBC and other breathless, 24/7 financial news give way too much credence to short-term market flutterings and twitterings.
  - ubernostrum 15y ago
    Of course, the complement to this is that people whose knowledge of currency comes largely from Neal Stephenson novels give way too much credence to stories breathlessly championing Bitcoin as the future. Something that can trace its ancestry in a vague way to Bitcoin? Maybe. Bitcoin itself? Exceedingly unlikely.
    - SkyMarshal 15y ago
      I've been wondering about that too. The chances that version 1.0 got it all exactly right is less than perfect. The SolidCoin fork has some interesting criticisms of Bitcoin: http://solidcoin.info/faq.php http://solidcoin.info/faq.php Still some calibration and iteration for Bitcoin to do as new lessons are learned about P2P currency. But the Bitcoin protocol and implementation are under active development, so I wonder to what extent it can still evolve without a reboot.
- andrewljohnson 15y ago
  Deflationary currency is an oxymoron.
  - stevenwagner 15y ago
    Deflation - good for you, bad for the state. http://www.youtube.com/watch?v=a6E1k2YO9qU http://www.youtube.com/watch?v=a6E1k2YO9qU
  - anonymoushn 15y ago
    Mild deflation is the natural state of things - over time, most tasks should take less labor to accomplish because of improvements in technology and organization. Are we to prefer that a man who labors enough to buy four gallons of milk can only purchase a one if he chooses to do so 30 years later, even though the cost of producing milk in real terms (and indeed the price of milk in real terms) has decreased?
  - nandemo 15y ago
    A deflationary currency might be considered undesirable but it is not an oxymoron any more that "inflationary currency" is.
- olliesaunders 15y ago
  It’s ahead of its time socially but not technologically or even politically. We need bitcoin now, it’s just consumers don’t realize it yet.
Tichy 15y ago
I was about to sell my remaining bitcoins this morning when I realized: wait a minute, I don't even know how long the Euro will continue to exist (living in Euro country). As much as it pains me, because probably the price will fall even further, I'll keep some BTC around just in case... On the other hand I suppose the existence of Silk Road is not sufficient to drive prices up, because most vendors will just convert their BTC to dollars again immediately.
- katovatzschyn 15y ago
  >As much as it pains me, because probably the price will fall even further, I'll keep some BTC around just in case... Swiss Francs, CAD, and even USD are much safer if stability is your concern. If the Euro indeed collapses as you seem to fear, you may even find yourself making gains.
  - hugh3 15y ago
    Or the classic hedge currency: canned food and ammo. (Maybe not the ammo, in Europe. Get a bat.)
    - cpeterso 15y ago
      Plus alcohol and heroin for barter.
      - ericd 15y ago
        I doubt you're going to want to barter with people that desire heroin... Everclear is a good one, though.
  - jacques_chester 15y ago
    The Swiss Franc is, from a historical perspective, probably the safest currency in the world. Switzerland is an ideal banking country in geopolitical terms. It borders with three major economies, but is also an easily defendable mountain fortress. It has remained largely undisturbed because it would simply cost too much to invade. That's why, for hundreds of years, it has been a banking mecca. Europe has been wracked by war for centuries, during which banking houses are periodically plundered by invading armies. But Switzerland with its defensive advantages and long history of neutrality rises above the noise. If you're a rich European, the safest place to park your money in the past 1000 years has been Switzerland.
ww520 15y ago
Just a wild thought. Is there a way to associate an email with a future-created bitcoin account? The goal is to be able to send bitcoins easily to an email address even though the recipient has not created a bitcoin account. The recipient can create an account later on to pick up the bitcoins. This would make it easier to seed wider usage of bitcoins. That's how Paypal started. I guess this requires a trusted central third party as an eschew to hold the fund for the email recipent and for verifying the recipent's account via email.
- Andys 15y ago
  A paypal-style site can create a new bitcoin account on behalf of the new user. Then the payer can transfer funds to it, using a transaction that requires signing with keys that only the payer knows and can pass to the payee directly. Bitcoin transactions can also have timeouts and have the inputs locked while the outputs are still floating. https://en.bitcoin.it/wiki/Contracts https://en.bitcoin.it/wiki/Contracts
- euccastro 15y ago
  Create an account for them, send them the wallet.dat, let them log in and transfer to their own account whenever they want? Or just change password, if that's possible.
hippich 15y ago
Overall, reading comments on the economist site I now understand how public perception of bitcoin technology is wrong.
- QuestionWriter 15y ago
  Do share more. I thought many of the comments were surprisingly clued-in.
  - hippich 15y ago
    Well... First of all - bitcoin is not "digital coins" or "digital gold", but p2p distributed ledger in first place. Once you truly get it, most comments become irrelevant.
- cpeterso 15y ago
  I don't think the public is going to understand BitCoin for a long time. Many people don't know the difference between Google and their browser's address bar. Even for early adopters, BitCoin needs a better marketing to inspire confidence.
- aptwebapps 15y ago
  Well, the article is going to help that. Despite its title most of it is a very shallow overview of the currency in general while mentioning how the rate has fallen and some examples of how it is not universally accepted. Finally, in the second to last paragraph, it offers up the hypothesis that it was a speculative bubble. Usually you get better fare from the Economist.

51 points by arihelgason 15y ago

I did a little mining while it was profitable, but running the air conditioning to keep the GPUs from melting cannibalized most of it during the summer. I'll have to check back once things cool down a bit more - perhaps a drop in difficulty could make "free" heating for my apartment viable again. Not holding my breath, though.

hippich 15y ago
Do not expect it to happen soon tho. Before $30+ price difficulty was _doubling_ every two weeks. Today with 90+% price cut difficulty drops 10-15 % every two weeks... Now, if you really wants to make it right - buy water blocks for your cards, route water pipes outside your building and mine :) AC will thank you :)

mcantelon 15y ago

Bitcoin it ahead of its time. Bitcoin is has a lot of potential uses and these uses haven't gone away because a bubble burst.

tadfisher 15y ago
Moreover, the network (and thus Bitcoin) will continue to exist so long as one individual keeps mining.
- eru 15y ago
  Yes, but that doesn't guarantee demand.
SkyMarshal 15y ago
Indeed. In the long term this is just statistical noise, as long as the underlying tech and theoretical foundations are solid. People weened on CNBC and other breathless, 24/7 financial news give way too much credence to short-term market flutterings and twitterings.
- ubernostrum 15y ago
  Of course, the complement to this is that people whose knowledge of currency comes largely from Neal Stephenson novels give way too much credence to stories breathlessly championing Bitcoin as the future. Something that can trace its ancestry in a vague way to Bitcoin? Maybe. Bitcoin itself? Exceedingly unlikely.
  - SkyMarshal 15y ago
    I've been wondering about that too. The chances that version 1.0 got it all exactly right is less than perfect. The SolidCoin fork has some interesting criticisms of Bitcoin: http://solidcoin.info/faq.php http://solidcoin.info/faq.php Still some calibration and iteration for Bitcoin to do as new lessons are learned about P2P currency. But the Bitcoin protocol and implementation are under active development, so I wonder to what extent it can still evolve without a reboot.
andrewljohnson 15y ago
Deflationary currency is an oxymoron.
- stevenwagner 15y ago
  Deflation - good for you, bad for the state. http://www.youtube.com/watch?v=a6E1k2YO9qU http://www.youtube.com/watch?v=a6E1k2YO9qU
- anonymoushn 15y ago
  Mild deflation is the natural state of things - over time, most tasks should take less labor to accomplish because of improvements in technology and organization. Are we to prefer that a man who labors enough to buy four gallons of milk can only purchase a one if he chooses to do so 30 years later, even though the cost of producing milk in real terms (and indeed the price of milk in real terms) has decreased?
- nandemo 15y ago
  A deflationary currency might be considered undesirable but it is not an oxymoron any more that "inflationary currency" is.
olliesaunders 15y ago
It’s ahead of its time socially but not technologically or even politically. We need bitcoin now, it’s just consumers don’t realize it yet.

Tichy 15y ago

I was about to sell my remaining bitcoins this morning when I realized: wait a minute, I don't even know how long the Euro will continue to exist (living in Euro country). As much as it pains me, because probably the price will fall even further, I'll keep some BTC around just in case... On the other hand I suppose the existence of Silk Road is not sufficient to drive prices up, because most vendors will just convert their BTC to dollars again immediately.

katovatzschyn 15y ago
>As much as it pains me, because probably the price will fall even further, I'll keep some BTC around just in case... Swiss Francs, CAD, and even USD are much safer if stability is your concern. If the Euro indeed collapses as you seem to fear, you may even find yourself making gains.
- hugh3 15y ago
  Or the classic hedge currency: canned food and ammo. (Maybe not the ammo, in Europe. Get a bat.)
  - cpeterso 15y ago
    Plus alcohol and heroin for barter.
    - ericd 15y ago
      I doubt you're going to want to barter with people that desire heroin... Everclear is a good one, though.
- jacques_chester 15y ago
  The Swiss Franc is, from a historical perspective, probably the safest currency in the world. Switzerland is an ideal banking country in geopolitical terms. It borders with three major economies, but is also an easily defendable mountain fortress. It has remained largely undisturbed because it would simply cost too much to invade. That's why, for hundreds of years, it has been a banking mecca. Europe has been wracked by war for centuries, during which banking houses are periodically plundered by invading armies. But Switzerland with its defensive advantages and long history of neutrality rises above the noise. If you're a rich European, the safest place to park your money in the past 1000 years has been Switzerland.

ww520 15y ago

Just a wild thought. Is there a way to associate an email with a future-created bitcoin account? The goal is to be able to send bitcoins easily to an email address even though the recipient has not created a bitcoin account. The recipient can create an account later on to pick up the bitcoins. This would make it easier to seed wider usage of bitcoins. That's how Paypal started. I guess this requires a trusted central third party as an eschew to hold the fund for the email recipent and for verifying the recipent's account via email.

Andys 15y ago
A paypal-style site can create a new bitcoin account on behalf of the new user. Then the payer can transfer funds to it, using a transaction that requires signing with keys that only the payer knows and can pass to the payee directly. Bitcoin transactions can also have timeouts and have the inputs locked while the outputs are still floating. https://en.bitcoin.it/wiki/Contracts https://en.bitcoin.it/wiki/Contracts
euccastro 15y ago
Create an account for them, send them the wallet.dat, let them log in and transfer to their own account whenever they want? Or just change password, if that's possible.

hippich 15y ago

Overall, reading comments on the economist site I now understand how public perception of bitcoin technology is wrong.

QuestionWriter 15y ago
Do share more. I thought many of the comments were surprisingly clued-in.
- hippich 15y ago
  Well... First of all - bitcoin is not "digital coins" or "digital gold", but p2p distributed ledger in first place. Once you truly get it, most comments become irrelevant.
cpeterso 15y ago
I don't think the public is going to understand BitCoin for a long time. Many people don't know the difference between Google and their browser's address bar. Even for early adopters, BitCoin needs a better marketing to inspire confidence.
aptwebapps 15y ago
Well, the article is going to help that. Despite its title most of it is a very shallow overview of the currency in general while mentioning how the rate has fallen and some examples of how it is not universally accepted. Finally, in the second to last paragraph, it offers up the hypothesis that it was a speculative bubble. Usually you get better fare from the Economist.