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assuming this is even a peak - the economics of bitcoin are ideal for the price to just keep on rising. That's probably what the seller here's banking on - that

assuming this is even a peak - the economics of bitcoin are ideal for the price to just keep on rising. That's probably what the seller here's banking on - that the 6-figure dollar-equivalent bitcoins he now holds will be worth 8 figures in a few years.

Nursie 14y ago
IF (and I think that's a big if) bitcoin continues to expand in use, sure. Even then I think what we're seeing now is a speculation-driven local peak that will die down again. You're not trying to tell me that the recent spike is based entirely on a sudden spike in trade are you?
- alexjeffrey 14y ago
  I completely agree that the current spike will be largely speculative, driven most likely by Reddit and Mega accepting bitcoins now (a PR ploy no doubt). However, the inherent cap on the quantity of coins available means that if a market fit is found for bitcoin, and that market grows, the only way is up.
  - Nursie 14y ago
    Oh absolutely, that's true, the value has to keep rising if use keeps rising. This is part of why I think it's a terrible idea as a currency!
    - nateabele 14y ago
      Right, as opposed to USD, which has to keep falling. Yeah, that's much better.
      - Nursie 14y ago
        Actually it is, in my opinion. I know by your tone that you're going to disagree with everything I say here, but I'm going to say it anyway. Money is most useful as a medium of exchange. As such its value should be stable on the micro (day to day) level. Slow decrease in value over time ensures that it is not a very attractive store of value, meaning that cash is invested, recirculated and used rather than simply hoarded. Additionally, a central bank can (and should) act to stabilise the value further. When there are financial crises there are a variety of powers that can be used by a central bank to try and mitigate problems that could be exacerbated in a currency without this feature. Having a central bank with a variety of monetary powers is therefore a positive. With a fixed supply and an ever-increasing value, bitcoin discourages any investment (why bother with risk? I'm getting richer just sitting here). More than this it massively rewards people who have bitcoin over those just coming into the game, using the economic output of those that are actually productive (be they workers, business owners, entrepreneurs, whoever) to enrich those that just sit idly on a hoard of coins. This is why I think the fundamental parameters of the Bitcoin currency are unsuitable for large-scale or society-wide deployment.
        nateabele 14y ago
        > Additionally, a central bank can (and should) act to stabilise the value further. When there are financial crises there are a variety of powers that can be used by a central bank to try and mitigate problems that could be exacerbated in a currency without this feature. Having a central bank with a variety of monetary powers is therefore a positive. Right up until that central bank wipes out the middle class when 40 years worth of bills (i.e. inflation) finally come due.
        Nursie 14y ago
        Right up until that central bank wipes out the middle class... I do love a good bit of hyperbole! I'm not really sure that's happened, has it? In fact it looks to me like the central banks of the world have tried their darnedest not to let their respective currencies collapse, and mostly to good effect. I certainly wouldn't argue that every fiscal decision made by the powers that be is a good one, or even that they're overall doing a great job. I still prefer them over a currency where there is no ability to do this.
      - lmm 14y ago
        Yes it is. A falling dollar encourages people to start businesses rather than stuffing their cash under the mattress.
        nateabele 14y ago
        Business is driven by investment and investment is driven by savings, and a falling dollar hurts savers.
        Nursie 14y ago
        Investment by the current banking industry may well be driven/enabled in part by the deposits they have on the books. Keeping BTC in a wallet is very much more like just stuffing dollars in a shoebox, the money is dead and removed from the system. It's not driving anything.
        nateabele 14y ago
        > Investment by the current banking industry may well be driven/enabled in part by the deposits they have on the books. No, banking hasn't worked this way for a long, long time.
        Nursie 14y ago
        Then you agree that savings (especially BTC savings, which are effectively dead cash) are irrelevant to investment. Awesome.
- aredington 14y ago
  The recent spike in price is due to a recent drop in supply. The amount of BTC awarded from successfully mining was recently cut in half from 50 to 25BTC, and the difficulty rate has been rising as better mining hardware has been getting out into (a few) people's hands. It's harder to get your hands on BTC now than it used to be.
  - Nursie 14y ago
    I'm really not sure a halving in the generation rate accounts for the current spike, but clearly this is all just a matter of opinion and speculation.
  - Dylan16807 14y ago
    That's not a drop in supply, that's a drop in the inflation rate.
    - aredington 14y ago
      There's a growth in both supply and demand, let's call them ds and dd. ds is relatively constant, though every 4 years it halves. dd is stochastic and gets influenced by how many ways there are to use bitcoins as a store of wealth, speculative opinions on its future conversion to dollars, and how many actors will accept bitcoins as a transfer of wealth. Most of the pressure on dd has directed it to grow, so demand is going up, and it goes up faster over time. ds is a designed feature of the currency, and is designed to shrink quasi-deterministically. The supply of bitcoins is not growing in proportion to the growth of demand for bitcoins, thus the price goes up. So it's probably most fair to say that the demand is growing significantly faster than the suppply. However, the most recent halving day has significantly altered the differential between ds and dd.

Nursie 14y ago

IF (and I think that's a big if) bitcoin continues to expand in use, sure. Even then I think what we're seeing now is a speculation-driven local peak that will die down again. You're not trying to tell me that the recent spike is based entirely on a sudden spike in trade are you?

alexjeffrey 14y ago
I completely agree that the current spike will be largely speculative, driven most likely by Reddit and Mega accepting bitcoins now (a PR ploy no doubt). However, the inherent cap on the quantity of coins available means that if a market fit is found for bitcoin, and that market grows, the only way is up.
- Nursie 14y ago
  Oh absolutely, that's true, the value has to keep rising if use keeps rising. This is part of why I think it's a terrible idea as a currency!
  - nateabele 14y ago
    Right, as opposed to USD, which has to keep falling. Yeah, that's much better.
    - Nursie 14y ago
      Actually it is, in my opinion. I know by your tone that you're going to disagree with everything I say here, but I'm going to say it anyway. Money is most useful as a medium of exchange. As such its value should be stable on the micro (day to day) level. Slow decrease in value over time ensures that it is not a very attractive store of value, meaning that cash is invested, recirculated and used rather than simply hoarded. Additionally, a central bank can (and should) act to stabilise the value further. When there are financial crises there are a variety of powers that can be used by a central bank to try and mitigate problems that could be exacerbated in a currency without this feature. Having a central bank with a variety of monetary powers is therefore a positive. With a fixed supply and an ever-increasing value, bitcoin discourages any investment (why bother with risk? I'm getting richer just sitting here). More than this it massively rewards people who have bitcoin over those just coming into the game, using the economic output of those that are actually productive (be they workers, business owners, entrepreneurs, whoever) to enrich those that just sit idly on a hoard of coins. This is why I think the fundamental parameters of the Bitcoin currency are unsuitable for large-scale or society-wide deployment.
      - nateabele 14y ago
        > Additionally, a central bank can (and should) act to stabilise the value further. When there are financial crises there are a variety of powers that can be used by a central bank to try and mitigate problems that could be exacerbated in a currency without this feature. Having a central bank with a variety of monetary powers is therefore a positive. Right up until that central bank wipes out the middle class when 40 years worth of bills (i.e. inflation) finally come due.
        Nursie 14y ago
        Right up until that central bank wipes out the middle class... I do love a good bit of hyperbole! I'm not really sure that's happened, has it? In fact it looks to me like the central banks of the world have tried their darnedest not to let their respective currencies collapse, and mostly to good effect. I certainly wouldn't argue that every fiscal decision made by the powers that be is a good one, or even that they're overall doing a great job. I still prefer them over a currency where there is no ability to do this.
    - lmm 14y ago
      Yes it is. A falling dollar encourages people to start businesses rather than stuffing their cash under the mattress.
      - nateabele 14y ago
        Business is driven by investment and investment is driven by savings, and a falling dollar hurts savers.
        Nursie 14y ago
        Investment by the current banking industry may well be driven/enabled in part by the deposits they have on the books. Keeping BTC in a wallet is very much more like just stuffing dollars in a shoebox, the money is dead and removed from the system. It's not driving anything.
        nateabele 14y ago
        > Investment by the current banking industry may well be driven/enabled in part by the deposits they have on the books. No, banking hasn't worked this way for a long, long time.
        Nursie 14y ago
        Then you agree that savings (especially BTC savings, which are effectively dead cash) are irrelevant to investment. Awesome.
aredington 14y ago
The recent spike in price is due to a recent drop in supply. The amount of BTC awarded from successfully mining was recently cut in half from 50 to 25BTC, and the difficulty rate has been rising as better mining hardware has been getting out into (a few) people's hands. It's harder to get your hands on BTC now than it used to be.
- Nursie 14y ago
  I'm really not sure a halving in the generation rate accounts for the current spike, but clearly this is all just a matter of opinion and speculation.
- Dylan16807 14y ago
  That's not a drop in supply, that's a drop in the inflation rate.
  - aredington 14y ago
    There's a growth in both supply and demand, let's call them ds and dd. ds is relatively constant, though every 4 years it halves. dd is stochastic and gets influenced by how many ways there are to use bitcoins as a store of wealth, speculative opinions on its future conversion to dollars, and how many actors will accept bitcoins as a transfer of wealth. Most of the pressure on dd has directed it to grow, so demand is going up, and it goes up faster over time. ds is a designed feature of the currency, and is designed to shrink quasi-deterministically. The supply of bitcoins is not growing in proportion to the growth of demand for bitcoins, thus the price goes up. So it's probably most fair to say that the demand is growing significantly faster than the suppply. However, the most recent halving day has significantly altered the differential between ds and dd.