13 ms·

Bitcoin rises from $14 to $40 in two months

87 points by oleganza 14y ago

dagge 14y ago
And it went from $35 to $40 in the last 24 hours.
Hermel 14y ago
By the end of the year, it will either be at 400 or back to 4. Interesting bet.
FreshCode 14y ago
I don't know enough about economics to judge, but is this growth sustainable and how high can it go?
- Zigurd 14y ago
  In theory it can go 2-4 orders of magnitude higher. The value of all bitcoin now is about the value of a dozen tons of gold, or about 1% of the gold backing SPDR. Bitcoin is still minor-league, but it's knocking on the door of being significant. It will be interesting to see if any major governments freak out about bitcoin, or if any governments embrace it for, say, selling oil.
  - eterm 14y ago
    It's just a commodity, why would Governments freak out about a commodity? Whether or not bitcoins are currently in a commodity bubble or not is speculation, but bitcoins are no more a currency than Iron, Gold or Tulips are. In theory commodities can go to very high heights indeed.
    - sanxiyn 14y ago
      Governments do freak about gold though.
    - ihsw 14y ago
      "There are people on many sides who want Bitcoin to fail, and who will do anything to stop it from growing. The banks hate it, because it will disintermediate and replace their business. The Statists dont like it because it will defund their socialist dreams. The gold bugs loathe it because it is not gold. Keynesian journalists bristle at the fact that the money supply in Bitcoin is limited, and dream of seeing it destroyed." Very interesting read[1] nonetheless. [1] http://it.slashdot.org/comments.pl?sid=2875465&cid=40120145 http://it.slashdot.org/comments.pl?sid=2875465&cid=40120...
bfwi 14y ago
I sold at $22 thinking the bubble was going to burst soon. Damnit. There's an understanding that a few big players have a lot of the total amount of bitcoins in circulation. This price must be extremely tempting for them to sell at. That could cause a crash like last time. I would be careful of buying at the current price.
- nwh 14y ago
  There's also a lot of early bitcoin that has been lost entirely, which probably skews the market a little bit.
  - andypants 14y ago
    I feel like I should go on my old laptop and dig up my ~0.5 bitcoins. I wonder just how many bitcoins have been permanently lost already.
    - zenon 14y ago
      If it goes high enough, it will be worth mining trashed HDs for lost wallets.
    - nwh 14y ago
      Early in the blockchain there are thousands of addresses with a single 50BTC block reward in them. Presumably people downloaded the client, mined a block and got bored. At that time you could only mine using Bitcoin-QT, which reuses the same addresses for each block reward. Most, if not all coins mined in this way are lost forever.
  - vitno 14y ago
    I have a few on my old desktop in my parents garage from the CPU mining days. If bitcoins REALLY take off, I'm gonna have to recover them.
    - pyre 14y ago
      If it does take off, and your drive didn't store well, you'll be facepalming. :P
Torn 14y ago
I wonder how much of this growth is driven by Silk Road - would be interesting to see some figure analysis if Silk Road makes any available
- jerguismi 14y ago
  http://arxiv.org/abs/1207.7139 http://arxiv.org/abs/1207.7139 Based on this analysis, not much. But then again, the estimation methods in the paper are not very good IMHO.
fabiandesimone 14y ago
I've been following it since it was at $7 saying, this won't go up from $10. Then a bit more...a bit more. Now is in $40 and I'm kicking my head against the wall. Surely this time, it won't go up again, right? ;)
- bti 14y ago
  Same here. I've been following it but have always talked myself out of throwing money into it. Guess I'll just make money the old fashion way. Curious what this guy [1] is thinking right now. [1] http://www.reddit.com/r/Bitcoin/comments/18f3pd/i_have_my_entire_retirement_and_savings_invested/ http://www.reddit.com/r/Bitcoin/comments/18f3pd/i_have_my_en...
simondlr 14y ago
My speculations of the current growth: 1) Halving of supply. Block rewards halved end of 2012. 2) SatoshiDice continues to become more popular. 3) Big names supporting it: Reddit, Mega, Namecheap. 4) Along with the above that would bring about a general rise in prices, is the speculators that will try to game it. My bet is there will be a correction again soon.
tirant 14y ago
I expect a correction soon, as It happened last year. I wouldnt invest now any dollar.
- lucb1e 14y ago
  I would expect the same, but I'm not in any way an economist so I'll wait and see. I also think that after the correction the price will rise again anyway.
  - celticninja 14y ago
    i think you are right, past corrections have been cause dby someone dumping between 100k and 200k btc, i dont think there are many early players left with that amount of BTC that they would dump any time soon.Even if they did this would not move the market as much as it would have in the past, perhaps dropping the price by $10-$15 on a day like today, which would not take long to correct upwards again. It is not likely to start a panic driven sell off instead people will buy in at the lower price cuaing it to gain again.
    - craftkiller 14y ago
      the big sellers on the silk roads will have that kind of volume to dump if they've been hoarding it.
      - celticninja 14y ago
        perhaps but most, if not all, will be selling it almost immediately as they need to re-stock, these people use BTC to facilitate their dealing it is not an investment for them. Plus moving the market takes approx 100,000 BTC, that is about $5m, no vendor is going to be selling drugs if they have that much in BTC.
  - tomrod 14y ago
    I wonder if people are worried about the US austerity measures? --am an economist, and am curious as you to see what will happen
tsmarsh 14y ago
If it ever becomes successful, we will marvel that individuals could ever afford a bitcoin. 21 million is a tiny number for a currency when compared to $40 trillion in global currency ($6000 per person). ~$1.25 billion spend on Cyber Monday ~$8 billion are traded for oil every day ~$150 billion NYSE daily If bitcoin became the trusted currency for any of these activities what would it be worth? If bitcoin became the global currency we all get 0.003 each, making the upper limit on a bitcoin around $1->2m depending on inflation. Of course wars will be fought before bitcoin becomes a global currency. I'm also not sure that people really want an inflation proof currency. But it is fun to speculate.
- nwh 14y ago
  Just keep dividing it, that's one of the key designs. Work in mini bitcoin, or micro bitcoin, or even single satoshi. There's nothing saying that you have to use full units.
  - hendzen 14y ago
    That doesn't actually solve the underlying problem, which is, why would I spend my bitcoin today when it will be worth more tomorrow? Now, if bitcoin merchants agreed on the expectation that bitcoin will continually rise, it would be rational to price things at a discounted rate. But that is a lot of risk to take considering bitcoin's volatility. In the end I think BTC speculation will do the most to harm its actual economic utility.
- Hortinstein 14y ago
  as someone who has been mining since mid 2011 on a 450 dollar PC...this would make me very happy. I have already done very well on that investment.
  - lignuist 14y ago
    And again: electricity was free?
    - 14y ago
ankeshk 14y ago
Other noteworthy charts: Number of bitcoin transactions go from 40,000 to 57,000 per day in 2 months. And from 6,000 to 57,000 in 1 year: http://blockchain.info/charts/n-transactions http://blockchain.info/charts/n-transactions The trade vs transaction volume remains relatively stable: http://blockchain.info/charts/tx-trade-ratio http://blockchain.info/charts/tx-trade-ratio (Lower the number = fewer people hoarding.)
cs702 14y ago
All else being equal, the more people who use Bitcoin (whether as a store of value or medium of exchange), the greater the demand for it -- and therefore the higher its price, because the supply is fixed asymptotically at 21 million bitcoins. In the long run, Bitcoin's price will be positively correlated with adoption.[1] -- [1] My thoughts on this haven't changed over the past two years: http://cs702.wordpress.com/2011/05/29/on-the-potential-adoption-and-price-appreciation-of-bitcoin-in-the-long-run/ http://cs702.wordpress.com/2011/05/29/on-the-potential-adopt...
- omellet 14y ago
  People will want to have it as an asset, not as a usable currency. Appreciating currencies are disastrous for any economy stuck with them, which is why we're no longer on the gold standard.
  - oleganza 14y ago
    We are no longer on the gold standard because the gold was confiscated under threat of 10 years in prison. Please explain how holding a piece of metal under mattress destroys someone else's wealth, so you can come to a person and extract gold by force. http://2012patriot.files.wordpress.com/2011/06/executive_order_6102-1933-gold-confiscation2.jpg http://2012patriot.files.wordpress.com/2011/06/executive_ord...
    - omellet 14y ago
      When you have a growing economy but a fixed money supply, money will appreciate. When this happens, people will prefer to keep money rather than spend it, and you get deflation-induced recessions/depressions. See the latter part of the 19th century in the US for repeated examples of this.
      - 3pt14159 14y ago
        And our GDP growth rate is so much high now, right? With our depreciating money that people spend within a month of earning it.
maeon3 14y ago
But how will the Federal Reserve be able to allocate new blocks of bit coins to give to one of the 12 federal reserve banks so we can fund more trillion dollar packages of spending borrowed money if all they can do is try to acquire bitcoins from other people who have them? In theory, would inflation be impossible with bitcoin provided that the number of humans who are willing to exchange labour for coins always increase?
- Nursie 14y ago
  You mean how will a central authority with the economic stability of the country as its central aim be able to help provide that stability? Yeah, not so much. Which is a shame because that's a feature of the current monetary systems that I like.
  - ahi 14y ago
    I don't think that is currently the central aim of the Federal Reserve, if it ever was.
    - Nursie 14y ago
      Wikipedia's page on the Federal Reserve, particularly the section on 'Purpose' would seem to disagree with you. But it is only wikipedia and may well be inaccurate.
      - maeon3 14y ago
        Which means, if bitcoins were to 100% replace US Dollar today, the US Government would have to immediately default on the treasury. I get the sinking feeling that when Bitcoin takes off for it to make any kind of fractional dent in society, it's going to be squished like a bug. After having been linked to WMD's and terrorism.
- deleted 14y ago
  [deleted]
tokenadult 14y ago
What is the price of tulip bulbs in the Netherlands these days? What have been the ups and downs in that commodity over the years?
- crntaylor 14y ago
  I don't know why you're being downvoted. This is a very valid point. We've had speculative bubbles for as long as we've had financial markets - I don't see any reason why this one should be different.
- oleganza 14y ago
  I've posted that on HN because Bitcoin is not just some commodity, but a useful technology that allows you to do many interesting things besides payments. See http://blog.oleganza.com/post/42262765318/direct-use-value-of-bitcoin http://blog.oleganza.com/post/42262765318/direct-use-value-o...
  - jellicle 14y ago
    If I recall correctly, tulip bulbs are a useful technology that allow you to create beautiful flower gardens.
- josephagoss 14y ago
  I'll always up-vote these comments, I have invested a small amount in Bitcoin but am fully aware the whole thing could tank and never return, I consider it to be an interesting experiment for myself. People do need to know how risky this is though.
tocomment 14y ago
I'm confused how a bitcoin bug fix or protocol fix would get implemented? Isn't it a distributed system, so everyone mining coins would have to agree at once?
- redegg 14y ago
  It requires more than 50% of the network to agree. Those who don't will live in their own little fork.
vijayboyapati 14y ago
http://unqualified-reservations.blogspot.dk/2011/04/on-monetary-restandardization.html http://unqualified-reservations.blogspot.dk/2011/04/on-monet... Finally, we examine a new contender - the mysterious and awesome Bitcoin. I'll be frank with you, dear reader. When I came up with the MoMT, my first thought was: how can I, Mencius Moldbug, make some damned money from this? As system software is my first love, it was not that hard to think of an answer. In some ways Bitcoin is actually much better designed than my design, which was not distributed. The use of Lamport hash chaining is particularly elegant. I did not wind up building my design, however, because I sensed a problem. Bitcoin has the same problem, but worse. But the basic economic design is the same: an artificial currency of limited supply. What is the currency backed by? Nothing but speculation and hot air. Note that this (contrary to its exponents' claims) violates Mises' classical "regression theorem." MoMT has no problem with an unbacked monetary candidate, because the required epsilon can be provided simply by the probability that the monetary system is adopted. If Bitcoin becomes the new global monetary system, one bitcoin purchased today (for 90 cents, last time I checked) will make you a very wealthy individual. You are essentially buying Manhattan for a quarter. There are only 21 million bitcoins (including those not yet minted). (In my design, this was a far more elegant 2^64, with quantities in exponential notation. Just sayin'.) Mapped to $100 trillion of global money, to pull a random number out of the air, you become a millionaire. Wow! So even if the probability of Bitcoin succeeding is epsilon, a million to one, it's still worthwhile for anyone to buy at least a few bitcoins now. The currency thus derives an initial value from this probability, and boots itself into existence from pure worthlessness - becoming a viable repository of savings. If a very strange, dangerous and unstable one. I think the probability of Bitcoin succeeding is very low. I would not put it at a million to one, though, so I recommend that you go out and buy a few bitcoins if you have the technical chops. My financial advice is to not buy more than ten, which should be F-U money if Bitcoin wins. Or, of course, you can invest in those alpaca socks. Here is the problem with Bitcoin: the tank, I think, will pop. This is not due to any technical fault in Bitcoin's algorithms or economics. It is due to a political fault in our society, which is that we're governed by dumb people. Because we're governed by dumb people, here is what I think will happen with Bitcoin. Stage 1: Bitcoin does not exist. Stage 2: Bitcoin exists, but is worthless. Stage 3: Bitcoin exists, and is used by strange and desperate weirdos and geeks. Stage 4: Bitcoin is used by Slashdot readers, perhaps slightly less desperate. (You are here.) Stage 5: Bitcoin is used by criminals. Stage 6: All Bitcoin exchanges are shut down by USG. Stage 7: Bitcoin exists, but is worthless. Stage 8: Bitcoin does not exist. At least on the surface, Bitcoin exchanges violate the critical know-your-customer rule which USG enforces on all money-transfer businesses. As a money-transfer business, you are essentially an agent of the government - a spy. To a regulator, Bitcoin seems like a way to transfer arbitrary quantities of money anonymously. This is a nonstarter, and the regulator knows exactly whose necks he has to squeeze - the spies who are not doing their jobs. He cannot shut down Bitcoin itself. He can trivially shut down Bitcoin-dollar exchanges, or even Bitcoin-gold exchanges. Probably seizing all their dollars, etc. He probably can't seize their bitcoins, but it doesn't really matter. To save in a currency is to place your trust in that currency. If you put energy into this great collective battery, you have to be able to get it back out. If that trust can be convincingly damaged, the currency has no chance. If people lose money in bitcoins, the currency can never recover. No one will ever again exchange it for dollars, or even alpaca socks. It will be dead. Its chances, now and forever, will be zero - not even epsilon. If Bitcoin was centralized - sacrificing all real coolness - it could deal with this problem, perhaps, by applying KYC to all dollar transactions. But Bitcoin is not centralized, so there is no way the development team can prevent exchanges from operating. These exchanges are obvious targets for numerous predatory authorities. When they are destroyed, the currency dies. What is Bitcoin's only chance? Perhaps that Bitcoin is not really anonymous. In fact, it is anything but. All transactions, though pseudonymous (named by a random key), are public and can be tracked by anyone, including said authorities. There is no financial secrecy in Bitcoin - it's a completely transparent system. Which means that, if money launderers try to launder money through Bitcoin, they are actually doing the authorities a massive favor. It is very easy to track dirty bitcoins. If you know Pablo, a drug dealer, is using Bitcoin address X, you can download the entire graph of parties that X trades with, and roll up Pablo's whole network. Instead of shutting down the real-money exchanges, you can secretly force them to send you their entire customer database. That way, the terrorists, drug dealers, etc, are not hiding their transactions at all - they are sharing their most intimate details with the government. Heck, the DEA probably understands Pablo's finances better than Pablo's own people. That's what he gets for using Bitcoin. But, as I said, we are governed by dumb people. Or, worse, committees of smart people. Therefore, I reiterate my target price on bitcoins: epsilon. Nonetheless, it probably wouldn't kill you to go buy five or ten - not that this is financial advice.
fixed_input 14y ago
damn, I missed out on being a successful arbitrageur
- deleted 14y ago
  [deleted]
saosebastiao 14y ago
Bitcoin threads are always the most interesting, due to the extremity of the positions conveyed. Why cant people see this as it is? A cryptocurrency that is illiquid due to volume, and subject to the ups and downs of hype.
Irregardless 14y ago
So when can we expect it to be $2 again this time? June? Maybe July? I think the last 90% drop only took about three months[1], so I'm gonna put my money on late June for this one. And by "put my money on" I really just mean "post this comment so I can quote it in June". [1] http://www.guardian.co.uk/technology/2011/oct/18/bitcoin-value-crash-cryptocurrency http://www.guardian.co.uk/technology/2011/oct/18/bitcoin-val...
- sltkr 14y ago
  In other words: you are not willing to put your money on anything; you just want to post baseless predictions so you can gloat later on the off-chance that you're right. If you actually believed the Bitcoin market will crash in June, you would be buying futures or put options right now.
darkmethod 14y ago
I'm trying to get perspective on the size of the bitcoin economy. As far as I can tell, there are 10.86m Bitcoins in existence at the current market rate $40.05. [1] That means there are almost $430m in "circulation". According to the federal reserve 1.17trillion USD currency is in circulation. [2] USD: $1,170,000,000.00 BTC: $0,000,430,000.00 0.0367% Not a perfect comparison, I realize that. It is more of a rough estimate. [1] http://www.bitcoincharts.com http://www.bitcoincharts.com [2] http://www.federalreserve.gov/faqs/currency_12773.htm http://www.federalreserve.gov/faqs/currency_12773.htm
snake_plissken 14y ago
the muppets are gonna get burned, again. only a matter of time.
daleknauss 14y ago
Is it possible to short bitcoins?

87 points by oleganza 14y ago

dagge 14y ago

And it went from $35 to $40 in the last 24 hours.

Hermel 14y ago

By the end of the year, it will either be at 400 or back to 4. Interesting bet.

FreshCode 14y ago

I don't know enough about economics to judge, but is this growth sustainable and how high can it go?

Zigurd 14y ago
In theory it can go 2-4 orders of magnitude higher. The value of all bitcoin now is about the value of a dozen tons of gold, or about 1% of the gold backing SPDR. Bitcoin is still minor-league, but it's knocking on the door of being significant. It will be interesting to see if any major governments freak out about bitcoin, or if any governments embrace it for, say, selling oil.
- eterm 14y ago
  It's just a commodity, why would Governments freak out about a commodity? Whether or not bitcoins are currently in a commodity bubble or not is speculation, but bitcoins are no more a currency than Iron, Gold or Tulips are. In theory commodities can go to very high heights indeed.
  - sanxiyn 14y ago
    Governments do freak about gold though.
  - ihsw 14y ago
    "There are people on many sides who want Bitcoin to fail, and who will do anything to stop it from growing. The banks hate it, because it will disintermediate and replace their business. The Statists dont like it because it will defund their socialist dreams. The gold bugs loathe it because it is not gold. Keynesian journalists bristle at the fact that the money supply in Bitcoin is limited, and dream of seeing it destroyed." Very interesting read[1] nonetheless. [1] http://it.slashdot.org/comments.pl?sid=2875465&cid=40120145 http://it.slashdot.org/comments.pl?sid=2875465&cid=40120...

bfwi 14y ago

I sold at $22 thinking the bubble was going to burst soon. Damnit. There's an understanding that a few big players have a lot of the total amount of bitcoins in circulation. This price must be extremely tempting for them to sell at. That could cause a crash like last time. I would be careful of buying at the current price.

nwh 14y ago
There's also a lot of early bitcoin that has been lost entirely, which probably skews the market a little bit.
- andypants 14y ago
  I feel like I should go on my old laptop and dig up my ~0.5 bitcoins. I wonder just how many bitcoins have been permanently lost already.
  - zenon 14y ago
    If it goes high enough, it will be worth mining trashed HDs for lost wallets.
  - nwh 14y ago
    Early in the blockchain there are thousands of addresses with a single 50BTC block reward in them. Presumably people downloaded the client, mined a block and got bored. At that time you could only mine using Bitcoin-QT, which reuses the same addresses for each block reward. Most, if not all coins mined in this way are lost forever.
- vitno 14y ago
  I have a few on my old desktop in my parents garage from the CPU mining days. If bitcoins REALLY take off, I'm gonna have to recover them.
  - pyre 14y ago
    If it does take off, and your drive didn't store well, you'll be facepalming. :P

Torn 14y ago

I wonder how much of this growth is driven by Silk Road - would be interesting to see some figure analysis if Silk Road makes any available

jerguismi 14y ago
http://arxiv.org/abs/1207.7139 http://arxiv.org/abs/1207.7139 Based on this analysis, not much. But then again, the estimation methods in the paper are not very good IMHO.

fabiandesimone 14y ago

I've been following it since it was at $7 saying, this won't go up from $10. Then a bit more...a bit more. Now is in $40 and I'm kicking my head against the wall. Surely this time, it won't go up again, right? ;)

bti 14y ago
Same here. I've been following it but have always talked myself out of throwing money into it. Guess I'll just make money the old fashion way. Curious what this guy [1] is thinking right now. [1] http://www.reddit.com/r/Bitcoin/comments/18f3pd/i_have_my_entire_retirement_and_savings_invested/ http://www.reddit.com/r/Bitcoin/comments/18f3pd/i_have_my_en...

simondlr 14y ago

My speculations of the current growth: 1) Halving of supply. Block rewards halved end of 2012. 2) SatoshiDice continues to become more popular. 3) Big names supporting it: Reddit, Mega, Namecheap. 4) Along with the above that would bring about a general rise in prices, is the speculators that will try to game it. My bet is there will be a correction again soon.

tirant 14y ago

I expect a correction soon, as It happened last year. I wouldnt invest now any dollar.

lucb1e 14y ago
I would expect the same, but I'm not in any way an economist so I'll wait and see. I also think that after the correction the price will rise again anyway.
- celticninja 14y ago
  i think you are right, past corrections have been cause dby someone dumping between 100k and 200k btc, i dont think there are many early players left with that amount of BTC that they would dump any time soon.Even if they did this would not move the market as much as it would have in the past, perhaps dropping the price by $10-$15 on a day like today, which would not take long to correct upwards again. It is not likely to start a panic driven sell off instead people will buy in at the lower price cuaing it to gain again.
  - craftkiller 14y ago
    the big sellers on the silk roads will have that kind of volume to dump if they've been hoarding it.
    - celticninja 14y ago
      perhaps but most, if not all, will be selling it almost immediately as they need to re-stock, these people use BTC to facilitate their dealing it is not an investment for them. Plus moving the market takes approx 100,000 BTC, that is about $5m, no vendor is going to be selling drugs if they have that much in BTC.
- tomrod 14y ago
  I wonder if people are worried about the US austerity measures? --am an economist, and am curious as you to see what will happen

tsmarsh 14y ago

If it ever becomes successful, we will marvel that individuals could ever afford a bitcoin. 21 million is a tiny number for a currency when compared to $40 trillion in global currency ($6000 per person). ~$1.25 billion spend on Cyber Monday ~$8 billion are traded for oil every day ~$150 billion NYSE daily If bitcoin became the trusted currency for any of these activities what would it be worth? If bitcoin became the global currency we all get 0.003 each, making the upper limit on a bitcoin around $1->2m depending on inflation. Of course wars will be fought before bitcoin becomes a global currency. I'm also not sure that people really want an inflation proof currency. But it is fun to speculate.

nwh 14y ago
Just keep dividing it, that's one of the key designs. Work in mini bitcoin, or micro bitcoin, or even single satoshi. There's nothing saying that you have to use full units.
- hendzen 14y ago
  That doesn't actually solve the underlying problem, which is, why would I spend my bitcoin today when it will be worth more tomorrow? Now, if bitcoin merchants agreed on the expectation that bitcoin will continually rise, it would be rational to price things at a discounted rate. But that is a lot of risk to take considering bitcoin's volatility. In the end I think BTC speculation will do the most to harm its actual economic utility.
Hortinstein 14y ago
as someone who has been mining since mid 2011 on a 450 dollar PC...this would make me very happy. I have already done very well on that investment.
- lignuist 14y ago
  And again: electricity was free?
  - 14y ago

ankeshk 14y ago

Other noteworthy charts: Number of bitcoin transactions go from 40,000 to 57,000 per day in 2 months. And from 6,000 to 57,000 in 1 year: http://blockchain.info/charts/n-transactions http://blockchain.info/charts/n-transactions The trade vs transaction volume remains relatively stable: http://blockchain.info/charts/tx-trade-ratio http://blockchain.info/charts/tx-trade-ratio (Lower the number = fewer people hoarding.)

cs702 14y ago

All else being equal, the more people who use Bitcoin (whether as a store of value or medium of exchange), the greater the demand for it -- and therefore the higher its price, because the supply is fixed asymptotically at 21 million bitcoins. In the long run, Bitcoin's price will be positively correlated with adoption.[1] -- [1] My thoughts on this haven't changed over the past two years: http://cs702.wordpress.com/2011/05/29/on-the-potential-adoption-and-price-appreciation-of-bitcoin-in-the-long-run/ http://cs702.wordpress.com/2011/05/29/on-the-potential-adopt...

omellet 14y ago
People will want to have it as an asset, not as a usable currency. Appreciating currencies are disastrous for any economy stuck with them, which is why we're no longer on the gold standard.
- oleganza 14y ago
  We are no longer on the gold standard because the gold was confiscated under threat of 10 years in prison. Please explain how holding a piece of metal under mattress destroys someone else's wealth, so you can come to a person and extract gold by force. http://2012patriot.files.wordpress.com/2011/06/executive_order_6102-1933-gold-confiscation2.jpg http://2012patriot.files.wordpress.com/2011/06/executive_ord...
  - omellet 14y ago
    When you have a growing economy but a fixed money supply, money will appreciate. When this happens, people will prefer to keep money rather than spend it, and you get deflation-induced recessions/depressions. See the latter part of the 19th century in the US for repeated examples of this.
    - 3pt14159 14y ago
      And our GDP growth rate is so much high now, right? With our depreciating money that people spend within a month of earning it.

maeon3 14y ago

But how will the Federal Reserve be able to allocate new blocks of bit coins to give to one of the 12 federal reserve banks so we can fund more trillion dollar packages of spending borrowed money if all they can do is try to acquire bitcoins from other people who have them? In theory, would inflation be impossible with bitcoin provided that the number of humans who are willing to exchange labour for coins always increase?

Nursie 14y ago
You mean how will a central authority with the economic stability of the country as its central aim be able to help provide that stability? Yeah, not so much. Which is a shame because that's a feature of the current monetary systems that I like.
- ahi 14y ago
  I don't think that is currently the central aim of the Federal Reserve, if it ever was.
  - Nursie 14y ago
    Wikipedia's page on the Federal Reserve, particularly the section on 'Purpose' would seem to disagree with you. But it is only wikipedia and may well be inaccurate.
    - maeon3 14y ago
      Which means, if bitcoins were to 100% replace US Dollar today, the US Government would have to immediately default on the treasury. I get the sinking feeling that when Bitcoin takes off for it to make any kind of fractional dent in society, it's going to be squished like a bug. After having been linked to WMD's and terrorism.
deleted 14y ago
[deleted]

tokenadult 14y ago

What is the price of tulip bulbs in the Netherlands these days? What have been the ups and downs in that commodity over the years?

crntaylor 14y ago
I don't know why you're being downvoted. This is a very valid point. We've had speculative bubbles for as long as we've had financial markets - I don't see any reason why this one should be different.
oleganza 14y ago
I've posted that on HN because Bitcoin is not just some commodity, but a useful technology that allows you to do many interesting things besides payments. See http://blog.oleganza.com/post/42262765318/direct-use-value-of-bitcoin http://blog.oleganza.com/post/42262765318/direct-use-value-o...
- jellicle 14y ago
  If I recall correctly, tulip bulbs are a useful technology that allow you to create beautiful flower gardens.
josephagoss 14y ago
I'll always up-vote these comments, I have invested a small amount in Bitcoin but am fully aware the whole thing could tank and never return, I consider it to be an interesting experiment for myself. People do need to know how risky this is though.

tocomment 14y ago

I'm confused how a bitcoin bug fix or protocol fix would get implemented? Isn't it a distributed system, so everyone mining coins would have to agree at once?

redegg 14y ago
It requires more than 50% of the network to agree. Those who don't will live in their own little fork.

vijayboyapati 14y ago

http://unqualified-reservations.blogspot.dk/2011/04/on-monetary-restandardization.html http://unqualified-reservations.blogspot.dk/2011/04/on-monet... Finally, we examine a new contender - the mysterious and awesome Bitcoin. I'll be frank with you, dear reader. When I came up with the MoMT, my first thought was: how can I, Mencius Moldbug, make some damned money from this? As system software is my first love, it was not that hard to think of an answer. In some ways Bitcoin is actually much better designed than my design, which was not distributed. The use of Lamport hash chaining is particularly elegant. I did not wind up building my design, however, because I sensed a problem. Bitcoin has the same problem, but worse. But the basic economic design is the same: an artificial currency of limited supply. What is the currency backed by? Nothing but speculation and hot air. Note that this (contrary to its exponents' claims) violates Mises' classical "regression theorem." MoMT has no problem with an unbacked monetary candidate, because the required epsilon can be provided simply by the probability that the monetary system is adopted. If Bitcoin becomes the new global monetary system, one bitcoin purchased today (for 90 cents, last time I checked) will make you a very wealthy individual. You are essentially buying Manhattan for a quarter. There are only 21 million bitcoins (including those not yet minted). (In my design, this was a far more elegant 2^64, with quantities in exponential notation. Just sayin'.) Mapped to $100 trillion of global money, to pull a random number out of the air, you become a millionaire. Wow! So even if the probability of Bitcoin succeeding is epsilon, a million to one, it's still worthwhile for anyone to buy at least a few bitcoins now. The currency thus derives an initial value from this probability, and boots itself into existence from pure worthlessness - becoming a viable repository of savings. If a very strange, dangerous and unstable one. I think the probability of Bitcoin succeeding is very low. I would not put it at a million to one, though, so I recommend that you go out and buy a few bitcoins if you have the technical chops. My financial advice is to not buy more than ten, which should be F-U money if Bitcoin wins. Or, of course, you can invest in those alpaca socks. Here is the problem with Bitcoin: the tank, I think, will pop. This is not due to any technical fault in Bitcoin's algorithms or economics. It is due to a political fault in our society, which is that we're governed by dumb people. Because we're governed by dumb people, here is what I think will happen with Bitcoin. Stage 1: Bitcoin does not exist. Stage 2: Bitcoin exists, but is worthless. Stage 3: Bitcoin exists, and is used by strange and desperate weirdos and geeks. Stage 4: Bitcoin is used by Slashdot readers, perhaps slightly less desperate. (You are here.) Stage 5: Bitcoin is used by criminals. Stage 6: All Bitcoin exchanges are shut down by USG. Stage 7: Bitcoin exists, but is worthless. Stage 8: Bitcoin does not exist. At least on the surface, Bitcoin exchanges violate the critical know-your-customer rule which USG enforces on all money-transfer businesses. As a money-transfer business, you are essentially an agent of the government - a spy. To a regulator, Bitcoin seems like a way to transfer arbitrary quantities of money anonymously. This is a nonstarter, and the regulator knows exactly whose necks he has to squeeze - the spies who are not doing their jobs. He cannot shut down Bitcoin itself. He can trivially shut down Bitcoin-dollar exchanges, or even Bitcoin-gold exchanges. Probably seizing all their dollars, etc. He probably can't seize their bitcoins, but it doesn't really matter. To save in a currency is to place your trust in that currency. If you put energy into this great collective battery, you have to be able to get it back out. If that trust can be convincingly damaged, the currency has no chance. If people lose money in bitcoins, the currency can never recover. No one will ever again exchange it for dollars, or even alpaca socks. It will be dead. Its chances, now and forever, will be zero - not even epsilon. If Bitcoin was centralized - sacrificing all real coolness - it could deal with this problem, perhaps, by applying KYC to all dollar transactions. But Bitcoin is not centralized, so there is no way the development team can prevent exchanges from operating. These exchanges are obvious targets for numerous predatory authorities. When they are destroyed, the currency dies. What is Bitcoin's only chance? Perhaps that Bitcoin is not really anonymous. In fact, it is anything but. All transactions, though pseudonymous (named by a random key), are public and can be tracked by anyone, including said authorities. There is no financial secrecy in Bitcoin - it's a completely transparent system. Which means that, if money launderers try to launder money through Bitcoin, they are actually doing the authorities a massive favor. It is very easy to track dirty bitcoins. If you know Pablo, a drug dealer, is using Bitcoin address X, you can download the entire graph of parties that X trades with, and roll up Pablo's whole network. Instead of shutting down the real-money exchanges, you can secretly force them to send you their entire customer database. That way, the terrorists, drug dealers, etc, are not hiding their transactions at all - they are sharing their most intimate details with the government. Heck, the DEA probably understands Pablo's finances better than Pablo's own people. That's what he gets for using Bitcoin. But, as I said, we are governed by dumb people. Or, worse, committees of smart people. Therefore, I reiterate my target price on bitcoins: epsilon. Nonetheless, it probably wouldn't kill you to go buy five or ten - not that this is financial advice.

fixed_input 14y ago

damn, I missed out on being a successful arbitrageur

deleted 14y ago
[deleted]

saosebastiao 14y ago

Bitcoin threads are always the most interesting, due to the extremity of the positions conveyed. Why cant people see this as it is? A cryptocurrency that is illiquid due to volume, and subject to the ups and downs of hype.

Irregardless 14y ago

So when can we expect it to be $2 again this time? June? Maybe July? I think the last 90% drop only took about three months[1], so I'm gonna put my money on late June for this one. And by "put my money on" I really just mean "post this comment so I can quote it in June". [1] http://www.guardian.co.uk/technology/2011/oct/18/bitcoin-value-crash-cryptocurrency http://www.guardian.co.uk/technology/2011/oct/18/bitcoin-val...

sltkr 14y ago
In other words: you are not willing to put your money on anything; you just want to post baseless predictions so you can gloat later on the off-chance that you're right. If you actually believed the Bitcoin market will crash in June, you would be buying futures or put options right now.

darkmethod 14y ago

I'm trying to get perspective on the size of the bitcoin economy. As far as I can tell, there are 10.86m Bitcoins in existence at the current market rate $40.05. [1] That means there are almost $430m in "circulation". According to the federal reserve 1.17trillion USD currency is in circulation. [2] USD: $1,170,000,000.00 BTC: $0,000,430,000.00 0.0367% Not a perfect comparison, I realize that. It is more of a rough estimate. [1] http://www.bitcoincharts.com http://www.bitcoincharts.com [2] http://www.federalreserve.gov/faqs/currency_12773.htm http://www.federalreserve.gov/faqs/currency_12773.htm

snake_plissken 14y ago

the muppets are gonna get burned, again. only a matter of time.

daleknauss 14y ago

Is it possible to short bitcoins?