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Why The Value of Bitcoin is Skyrocketing

81 points by mayop100 13y ago

joosters 13y ago
n.b. the article is about why (in the author's eyes) the price of bitcoin skyrocketed. It's all very much past-tense, observation not prediction.
wtracy 13y ago
"The Silk Road shutdown resulted in brief, but shallow sell off and subsequent rebounded within a few days. This event showed the world and governments that illegal activities were a very small fraction of the transactions taking place on the bitcoin network." I would say it showed that Silk Road was a small fraction of all BC transactions, but that still doesn't speak to the total amount of illegal activity going on BC. That said, it does imply to me that either: (1) The total percentage of BC transactions being used for illegal transactions really is low (as the article implies), or: (2) The remaining entities using BC for illegal purposes are confident that what happened to the Silk Road won't happen to them.
- gcb0 13y ago
  No matter how small it was, it was probably the largest money-bitcoin-money faction. Lots of people mine and trade coins. But only the few thousands (hundreds?) Silkroad users were actively pumping money constantly into the system, giving a much needed reality check of how much people will pay for a made up currency with established made up money.
rhizome 13y ago
Huh, nothing about the approach of a big buyer's holiday and the end of the tax period?
D9u 13y ago
Now I'm kicking myself for not buying into BTC last week!
- deleted 13y ago
  [deleted]
- SwellJoe 13y ago
  I did buy 1.5 BTC last week, just for fun. Bought another 1 BTC tonight. I may regret the latest purchase, or both purchases, I dunno. But, since I found myself wishing I'd bought more last week, I bought some more tonight. When I bought those 1.5 BTC at ~$200, I had planned to buy more when the inevitable crash came. It may still come, but I'm feeling pretty confident the size the BTC market has grown so much as to make it likely the new low that it falls to is gonna be well above that $200, maybe even above the $500 it's trading at now. Timing the market is often a bad idea, so I setup a small monthly buy tonight, as well, so I won't be tempted to try to figure it out.
  - vijayboyapati 13y ago
    My thinking is that if bitcoin becomes a monetary standard for online commerce it's orders of magnitude undervalued. If not, it's probably overvalued. So it's a perfect asymmetric bet. The most you can lose is the price of buying a few (or many) bitcoins. The most you could win is 100x or maybe even more. It's kind of like making an angel investment, except that instead of investing in a single company, you're investing in an entire economy. Imagine if instead of being able to buy shares in Pets.com or Altavista in 1995, you had a chance to buy a share in the Internet as a whole. That would have been an awesome asymmetric bet
    - SwellJoe 13y ago
      "Imagine if instead of being able to buy shares in Pets.com or Altavista in 1995, you had a chance to buy a share in the Internet as a whole." That's a really striking, and almost frightening, way to look at it. I felt my chest tighten when I read that analogy, actually. It is tempting to go overboard...but, if my gut instinct is right, there's no way to go overboard (aside from going bankrupt buying BTC). Which makes me think I'm probably missing something. Nonetheless, I'm long BTC, and I intend to go more long as the days go by and I have more disposable funds.
- 13y ago
peteretep 13y ago
Your idiotic mobile theme renders this as a gigantic, unscrollable "0%"
- tantalor 13y ago
  And breaks scrolling.
  - moe 13y ago
    And screws with scrolling in desktop browsers too. Seriously, why do people do this? Instant close tab...
    - gcb0 13y ago
      Fad. Most show hn sites have zoom disabled. As does most look-how-cool-and-web-2.0-this-designer-website-is start ups.
      - Fr0styMatt 13y ago
        Freaking zoom disable is the most pointless thing ever put in a mobile browser, ever.
        gcb0 13y ago
        Why browsers still respect that, even on custom ROMs is beyond me. My CM7 browser can bypass this. but my cm10 can't.
aresant 13y ago
At this point virtually everybody I know in the tech space is buying at least one coin to "hedge" against bitcoin achieving "gold 2.0" status. What are the chances that as this message echoes out to virtually any urban-dwelling or internet connected human on the planet we may all, as a human race, wind up accidentally embracing a unified digital currency while in pursuit of what amounts to a lottery ticket?
- pfraze 13y ago
  Only if it's real growth, and not just a speculation bubble. The only way bitcoin reprsents real value is if people transact with it. My vague guess is that it can do that if its users can exhange to/from it per-transaction, because otherwise the value fluctuations will make it too risky.
  - oleganza 13y ago
    It is a speculation bubble. People are betting that Bitcoin will become world money and be worth millions of products in many countries. Anything can become money only when it has value and acceptance which are created by speculators. Such bubble can pop only if some other, more promising thing may become money, or if there's a flaw in the currently hyped thing. http://unqualified-reservations.blogspot.fr/2013/04/bitcoin-is-money-bitcoin-is-bubble.html http://unqualified-reservations.blogspot.fr/2013/04/bitcoin-...
    - Lerc 13y ago
      Bubbles pop because people lose confidence. The ways in which that can happen are infinitely varied. While the reasons you list can cause that, people also can lose confidence for irrational reasons or decide that their confidence was not rational. Most commonly their confidence will just align with what they perceive other people's confidence to be, causing feeback. Remember there were people who dumped a lot of money into bitcoin at $200 last bubble and then bailed at $100 an extremely short time later. Something like that will probably happen again with the current rise. The long term probably doesn't really care about the blips along the way though.
andr3w321 13y ago
Forget these 10 reasons. The real 10 reasons are 1. The price keeps skyrocketing, so people hoard or buy 2. The price keeps skyrocketing, so people hoard or buy 3. The price keeps skyrocketing, so people hoard or buy 4. The price keeps skyrocketing, so people hoard or buy etc... it all works out until it doesn't... it's long overdue for a major correction
- cinquemb 13y ago
  It's pretty interesting how this comment can also be said for equities as well.
- teddyh 13y ago
  Does not “correction” imply that there is a “correct” price for Bitcoin? Since it has absolutely no inherent value, what would this be? Zero? Or does its value derive from its utility as a medium of exchange (and associated transfer mechanism)? In that case, should its value be derived from the size of the global economy? (As done here: http://falkvinge.net/2013/03/06/the-target-value-for-bitcoin-is-not-some-50-or-100-it-is-100000-to-1000000/ http://falkvinge.net/2013/03/06/the-target-value-for-bitcoin...)
  - XorNot 13y ago
    It's zero. Perfectly substitutable currencies have an exchange rate of either zero or infinity. If there's no reason to hold one over the other, you've no reason to ever give up your holdings of one or the other...until there's a slight imbalance, at which point 1 is clearly superior and you've a huge incentive to abandon ship as fast as possible. In practical terms, government money is backed by the necessity of extinguishing tax obligations and debts within it's jurisdiction, so it's not perfectly substitutable. Bitcoin has no such benefit - there's never a reason to hold it because everything provided by it can be provided by other currencies. Of course, the fact exchanging out requires selling to a greater fool provides some stability, but therin lies the nature of a bubble - once people want out, there's absolutely nothing that's going to convince anyone else they should want in. Of course if you hold Bitcoin, for any reason, you need to aggressively argue against this problem - and indeed all problems with Bitcoins, at least until you no longer hold Bitcoin.
javert 13y ago
Investment-wise, the prognosis is still the same as it ever was: BTC will either become a huge thing worth a lot, or it will be worth near zero. The only difference is the % of total BTC you can buy given your availabe assets. For some people that % is now close to nil, whereas before it wasn't, so they've missed their opportunity. For others, the % is still significant. Those people should probably still get into BTC if they agree with the premise of this comment.
- dualogy 13y ago
  > Investment-wise, the prognosis is still the same as it ever was: BTC will either become a huge thing worth a lot, or it will be worth near zero Almost but not quite: it must surely go to zero at some point, because chances are extremely high that we haven't accidentally hit the holy grail of digital cryptocurrencies and no better thing could ever be possibly come along for all eternity. Before that happens, it will most likely become a bigger thing than now. So I think most folks are just wondering two things: before we reach zero, how much bigger will it become (multitudes? exponentially bigger? orders of magnitude? or just another $3.50 higher?) and over what timeframe. And even the most educated guess at those two questions is as good as any other, truly.
  - javert 13y ago
    > Almost but not quite: it must surely go to zero at some point, because chances are extremely high that we haven't accidentally hit the holy grail of digital cryptocurrencies and no better thing could ever be possibly come along for all eternity. Bitcoin mathematically approximates Byzantine concensus with arbitrary parcitipants. This is the fundamental insight over the fundamental hurdle that made all prior attempts at cryptocurrencies (for decades) non-starters. What is the space of cryptocurrencies that exploit the Byzantine insight, but are somehow better than Bitcoin? I would suspect that it is very small, or nil. So unlike you, I don't think there is a high chance of something better coming along. I think there is a low but significant chance. A slight digression: I _do_ think that bitcoin may end up being the "gold" used to resolve balances between crypto-banks that have their own currencies. The advantage of such a system is confirmation in almost no time, and not having to pay a transaction fee to get your transaction into a block (which could be large as contention for block space rises). But other cryptocurrencies backed by bitcoin will have to be redeemable for bitcoin, always. If you sever the link, they become worthless. Now if they increase the block size limit to keep transaction fees low, there may never be any need for other cryptocurrencies backed by bitcoin.
vijayboyapati 13y ago
I still think Moldbug has by far the explanation of the increasing moneyness and price of bitcoin: http://unqualified-reservations.blogspot.com/2013/04/bitcoin-is-money-bitcoin-is-bubble.html http://unqualified-reservations.blogspot.com/2013/04/bitcoin... So when people say bitcoin is "bubble" they are essentially correct - although the condescension is usually misplaced. All money is a bubble in the sense that its reservation demand is far higher than its use value warrants. This is true for the dollar, and it's also true for gold, which also has a large element of "moneyness".
genericacct 13y ago
If goes btc keeps going up like this for 10 years 1 BTC will be worth more than all dollars in the world today. I think i'll keep hoarding 3 euro coins instead, at least you can make bullets out of them.
- dwaltrip 13y ago
  Some investments go up really fast for a while, and then go up more slowly after that. Do you have good arguments for why bitcoin couldn't do this?
  - genericacct 13y ago
    Nothing goes up forever. As for investments.. those usually have (or promise to have) a thing called yield. If i put my money in the bank, they give me an interest. BTC doesn't. If my bank goes bankrupt, my deposit is insured. If my BTC wallet is stolen... And this is before we even start talking about regulatory risk. Again: BTC is a fantastic technical endeavour, but to call it an "investment" is quite a long shot. Call it a bet.
yen223 13y ago
To Bitcoin owners out there: out of curiosity, what kind of stuff do you buy using Bitcoin?
- lennel 13y ago
  given the crazy rise in prices I doubt anybody is spending any, apart from people who maybe want to, uhm, clean some money.
  - darkFunction 13y ago
    That's not really true, a lot of us more sensible people want to 'cash out' a little slowly as the price goes up, and what better way to cash out than actually spending the bitcoin on an actual product and supporting the economy? I'd be willing to bet that as people suddenly find themselves with tens or hundreds of bitcoins, and that they can buy a pizza for 0.05 BTC, they are quite open to the idea of receiving what is essentially free pizza. Sure, that pizza could be worth five pizzas tomorrow but you still have a decent chunk in bitcoins and if the whole thing plummets to earth then at least you got something delicious.
    - XorNot 13y ago
      Hilariously this post highlights like, every reason why trading goods for BTC is a sucker's deal for the retailer.
      - user24 13y ago
        How? The retailer gets exactly what they would if they had just asked for local currency, except maybe a little extra business.
        XorNot 13y ago
        My point was rather meta, but it was the choice of language. "Pizza effectively for free" - lots of things about Bitcoin seem to involve people hoping they get something effectively for free. In the case of the price volatility for hoarding bitcoin while it rises, it underscores the deflationary nature of the currency - no economic value has been contributed by someone holding the BTC, but they've gotten richer regardless. Sitting around doing nothing with the BTC did not produce any economically valuable activity - it wasn't invested or used to finance starting that pizza place, for instance.
Kiro 13y ago
Completely OT but what's up with the scrolling? Why would you do that?
wilhelm 13y ago
How many of these transactions are tulip-style speculation, and how many are real use of bitcoins as a currency for exchanging labour and goods?
mmariani 13y ago
tl;dr JS_loader == BAD_UX I can't comment on the post because I'm on a train with spotty 3G coverage. Which begs the question. WTF is going on with this trend of JS loaders? If your site takes too much time to load, stop nagging users and just take the time to properly optimize the site.
bsaul 13y ago
Just like with every bubble, some people will wait and wait again to invest in... Only once all their friends will have gain some money speculating, once the main media will say it's an easy way to make money, when they'll have the feeling that eveybody else is making money, only then will they invest in... And loose everything the next day, after the bubble collapse. So, if you're planning on speculating with bitcoins, do it right now, or never do it... The chances are it's already too late btw, since people are already mentionning exponential growth.
- ashray 13y ago
  Case in point: I hold quite a few bitcoins. I am waiting to sell them. The deciding moment will be when my mom mentions bitcoins to me the first time. That will be the trigger ;)
  - betterunix 13y ago
    "I just heard about some kind of tech scam where everyone lost their money. Bitslab or something like that. Have you heard of this?"
  - pcrh 13y ago
    I thought one was supposed to wait until a taxi driver started giving related investment advice...
yason 13y ago
Anything that goes up fast will come down fast. That simple is that. The sooner you sell your speculative investment the more likely you'll get your money back (at the expense of other people). I sold some leftover coins of mine after 2x in price and that's still phenomenal gains from just some random coins I saved for any next purchase. The value of BTC will slowly rise but naively extrapolating from the last year or so only I'd say the realistic value is still below $100. I'm pretty confident that roughly $50 is a rather stable floor for the years coming.
- dwaltrip 13y ago
  Do you have any logical/economic basis for this speculation you have so confidently pronounced?
dschiptsov 13y ago
Bandwagon + Peer effects = a "gold" rush. btw, the current exchange rate - $600 is making it worthless for everyday payments or small shopping. It is just a mass hysteria.
- eurleif 13y ago
  >btw, the current exchange rate - $600 is making it worthless for everyday payments or small shopping. Huh? Why? You can buy fractions of a bitcoin, you know.
  - dschiptsov 13y ago
    Prices like 0.0167 are averse.)
    - dwaltrip 13y ago
      That'll be 17 millicoins, sir. Would you like a receipt? Or whatever hip term the youngsters come up with ;)
    - pi-rat 13y ago
      You will soon see prices in mBTC and maybe even μBTC. https://en.bitcoin.it/wiki/MilliBit https://en.bitcoin.it/wiki/MilliBit https://en.bitcoin.it/wiki/Units https://en.bitcoin.it/wiki/Units
    - epsylon 13y ago
      That's 1,670,000 satoshis!
grey-area 13y ago
This Bitcoin rise rases some interesting questions for me, even if it rings alarm bells at the same time. What is the value of a currency? Is it the inscription 'I promise to pay the bearer on demand...', which nowadays will not be fulfilled? Is it the power of the organisation backing it? Perhaps the simplest explanation is best - what can you buy in other goods you might want with this currency? But that leaves you open to manipulation as you are entirely dependent on your perception of what other people think this is worth, which can change in an instant as we have seen with stock markets or indeed government-backed currencies where confidence is lost. So a good confidence trick will be worth as much as or more than a solid currency, until a moment of panic. If you try to base it on the current value of goods in the world divided by the currency in circulation (say 11m coins), Bitcoin has a large climb in value ahead of it if it were to become a world currency, and if no other currency were in use. What is the USD worth if you price it this way though with only 3b in circulation and ? If you say the value of a currency is its ability to buy other goods Bitcoin is currently worth a lot compared to other currencies and prices in it are deflating rapidly, but it has crashed before and will again, because the only measure of value seems to be confidence in its possible future uses, and that makes it very hard to pin down the value. It would be interesting (but I suspect impossible) to try to calculate a value for each Bitcoin based on actual use to buy goods of known value at the present time (as opposed to speculative trading). If you base it on its use value as a medium of exchange, I have hesitations about the utility of Bitcoin, because of its anonymous nature (not tied to verified IDs), lack of regulation, deflationary policy, and lack of backing, and thus hesitations about its value. As a result of the free-floating value and lack of regulation, I suspect Bitcoin prices will behave far more like stock markets (a random walk) than like a normal currency which is pegged to others to some extent, and thus will be difficult to establish as a medium of exchange because of the volatility. I also find it hard to believe if it is successful that it will not be supplanted by some other digital currency which has fewer of its limitations and is more suited to transactions between people who do not value anonymity above all, and wish to be protected from fraud, and the govs and corps that would like to track them. All you have to do to set up a competitor is establish some rules and get people to use it - something which corporations or governments can easily achieve if their monopoly on the money-supply is threatened in a meaningful way.
ezl 13y ago
the price of bitcoin is skyrocketing. why? "more buyers than sellers"
Nodex 13y ago
Speed your site up. after the first 30 seconds I was bored of waiting for it to load, the next 45 seconds were even worse
thomhall 13y ago
What a headache. Just to buy a cup of coffee I need to boot up Linux on a USB disk, input a 500 digit hash, call my brother for the rest of the hash, and my cousin in Sweden for the rest of it, make the transfer an wait for 15 minutes for it to transact, then I get my coffee. Yea. I'd feather have GOLD, SILVER AND COPPER coins. Even digital representations maintained by a bank. Also, I'm glad I didn't agree to pay my mortgage in bit coins when the value was $11. The 70X increase in price would BITRUPT me! :)
thomhall 13y ago
TOO MANY BIT COIN QUESTIONS: If they were stolen, who do I call to help me get them back? If I loose the keys to get into my coins, who will help me get access back to my cash. Does the UN have a BitPolice squad hunting down bit theft? If I were to declare bankruptcy would I have to declare my bit coins as a part of my estate? Is there a BITRUPTSY court?

81 points by mayop100 13y ago

n.b. the article is about why (in the author's eyes) the price of bitcoin skyrocketed. It's all very much past-tense, observation not prediction.

wtracy 13y ago

"The Silk Road shutdown resulted in brief, but shallow sell off and subsequent rebounded within a few days. This event showed the world and governments that illegal activities were a very small fraction of the transactions taking place on the bitcoin network." I would say it showed that Silk Road was a small fraction of all BC transactions, but that still doesn't speak to the total amount of illegal activity going on BC. That said, it does imply to me that either: (1) The total percentage of BC transactions being used for illegal transactions really is low (as the article implies), or: (2) The remaining entities using BC for illegal purposes are confident that what happened to the Silk Road won't happen to them.

gcb0 13y ago
No matter how small it was, it was probably the largest money-bitcoin-money faction. Lots of people mine and trade coins. But only the few thousands (hundreds?) Silkroad users were actively pumping money constantly into the system, giving a much needed reality check of how much people will pay for a made up currency with established made up money.

rhizome 13y ago

Huh, nothing about the approach of a big buyer's holiday and the end of the tax period?

D9u 13y ago

Now I'm kicking myself for not buying into BTC last week!

deleted 13y ago
[deleted]
SwellJoe 13y ago
I did buy 1.5 BTC last week, just for fun. Bought another 1 BTC tonight. I may regret the latest purchase, or both purchases, I dunno. But, since I found myself wishing I'd bought more last week, I bought some more tonight. When I bought those 1.5 BTC at ~$200, I had planned to buy more when the inevitable crash came. It may still come, but I'm feeling pretty confident the size the BTC market has grown so much as to make it likely the new low that it falls to is gonna be well above that $200, maybe even above the $500 it's trading at now. Timing the market is often a bad idea, so I setup a small monthly buy tonight, as well, so I won't be tempted to try to figure it out.
- vijayboyapati 13y ago
  My thinking is that if bitcoin becomes a monetary standard for online commerce it's orders of magnitude undervalued. If not, it's probably overvalued. So it's a perfect asymmetric bet. The most you can lose is the price of buying a few (or many) bitcoins. The most you could win is 100x or maybe even more. It's kind of like making an angel investment, except that instead of investing in a single company, you're investing in an entire economy. Imagine if instead of being able to buy shares in Pets.com or Altavista in 1995, you had a chance to buy a share in the Internet as a whole. That would have been an awesome asymmetric bet
  - SwellJoe 13y ago
    "Imagine if instead of being able to buy shares in Pets.com or Altavista in 1995, you had a chance to buy a share in the Internet as a whole." That's a really striking, and almost frightening, way to look at it. I felt my chest tighten when I read that analogy, actually. It is tempting to go overboard...but, if my gut instinct is right, there's no way to go overboard (aside from going bankrupt buying BTC). Which makes me think I'm probably missing something. Nonetheless, I'm long BTC, and I intend to go more long as the days go by and I have more disposable funds.
13y ago

peteretep 13y ago

Your idiotic mobile theme renders this as a gigantic, unscrollable "0%"

tantalor 13y ago
And breaks scrolling.
- moe 13y ago
  And screws with scrolling in desktop browsers too. Seriously, why do people do this? Instant close tab...
  - gcb0 13y ago
    Fad. Most show hn sites have zoom disabled. As does most look-how-cool-and-web-2.0-this-designer-website-is start ups.
    - Fr0styMatt 13y ago
      Freaking zoom disable is the most pointless thing ever put in a mobile browser, ever.
      - gcb0 13y ago
        Why browsers still respect that, even on custom ROMs is beyond me. My CM7 browser can bypass this. but my cm10 can't.

aresant 13y ago

At this point virtually everybody I know in the tech space is buying at least one coin to "hedge" against bitcoin achieving "gold 2.0" status. What are the chances that as this message echoes out to virtually any urban-dwelling or internet connected human on the planet we may all, as a human race, wind up accidentally embracing a unified digital currency while in pursuit of what amounts to a lottery ticket?

pfraze 13y ago
Only if it's real growth, and not just a speculation bubble. The only way bitcoin reprsents real value is if people transact with it. My vague guess is that it can do that if its users can exhange to/from it per-transaction, because otherwise the value fluctuations will make it too risky.
- oleganza 13y ago
  It is a speculation bubble. People are betting that Bitcoin will become world money and be worth millions of products in many countries. Anything can become money only when it has value and acceptance which are created by speculators. Such bubble can pop only if some other, more promising thing may become money, or if there's a flaw in the currently hyped thing. http://unqualified-reservations.blogspot.fr/2013/04/bitcoin-is-money-bitcoin-is-bubble.html http://unqualified-reservations.blogspot.fr/2013/04/bitcoin-...
  - Lerc 13y ago
    Bubbles pop because people lose confidence. The ways in which that can happen are infinitely varied. While the reasons you list can cause that, people also can lose confidence for irrational reasons or decide that their confidence was not rational. Most commonly their confidence will just align with what they perceive other people's confidence to be, causing feeback. Remember there were people who dumped a lot of money into bitcoin at $200 last bubble and then bailed at $100 an extremely short time later. Something like that will probably happen again with the current rise. The long term probably doesn't really care about the blips along the way though.

andr3w321 13y ago

Forget these 10 reasons. The real 10 reasons are 1. The price keeps skyrocketing, so people hoard or buy 2. The price keeps skyrocketing, so people hoard or buy 3. The price keeps skyrocketing, so people hoard or buy 4. The price keeps skyrocketing, so people hoard or buy etc... it all works out until it doesn't... it's long overdue for a major correction

cinquemb 13y ago
It's pretty interesting how this comment can also be said for equities as well.
teddyh 13y ago
Does not “correction” imply that there is a “correct” price for Bitcoin? Since it has absolutely no inherent value, what would this be? Zero? Or does its value derive from its utility as a medium of exchange (and associated transfer mechanism)? In that case, should its value be derived from the size of the global economy? (As done here: http://falkvinge.net/2013/03/06/the-target-value-for-bitcoin-is-not-some-50-or-100-it-is-100000-to-1000000/ http://falkvinge.net/2013/03/06/the-target-value-for-bitcoin...)
- XorNot 13y ago
  It's zero. Perfectly substitutable currencies have an exchange rate of either zero or infinity. If there's no reason to hold one over the other, you've no reason to ever give up your holdings of one or the other...until there's a slight imbalance, at which point 1 is clearly superior and you've a huge incentive to abandon ship as fast as possible. In practical terms, government money is backed by the necessity of extinguishing tax obligations and debts within it's jurisdiction, so it's not perfectly substitutable. Bitcoin has no such benefit - there's never a reason to hold it because everything provided by it can be provided by other currencies. Of course, the fact exchanging out requires selling to a greater fool provides some stability, but therin lies the nature of a bubble - once people want out, there's absolutely nothing that's going to convince anyone else they should want in. Of course if you hold Bitcoin, for any reason, you need to aggressively argue against this problem - and indeed all problems with Bitcoins, at least until you no longer hold Bitcoin.

javert 13y ago

Investment-wise, the prognosis is still the same as it ever was: BTC will either become a huge thing worth a lot, or it will be worth near zero. The only difference is the % of total BTC you can buy given your availabe assets. For some people that % is now close to nil, whereas before it wasn't, so they've missed their opportunity. For others, the % is still significant. Those people should probably still get into BTC if they agree with the premise of this comment.

dualogy 13y ago
> Investment-wise, the prognosis is still the same as it ever was: BTC will either become a huge thing worth a lot, or it will be worth near zero Almost but not quite: it must surely go to zero at some point, because chances are extremely high that we haven't accidentally hit the holy grail of digital cryptocurrencies and no better thing could ever be possibly come along for all eternity. Before that happens, it will most likely become a bigger thing than now. So I think most folks are just wondering two things: before we reach zero, how much bigger will it become (multitudes? exponentially bigger? orders of magnitude? or just another $3.50 higher?) and over what timeframe. And even the most educated guess at those two questions is as good as any other, truly.
- javert 13y ago
  > Almost but not quite: it must surely go to zero at some point, because chances are extremely high that we haven't accidentally hit the holy grail of digital cryptocurrencies and no better thing could ever be possibly come along for all eternity. Bitcoin mathematically approximates Byzantine concensus with arbitrary parcitipants. This is the fundamental insight over the fundamental hurdle that made all prior attempts at cryptocurrencies (for decades) non-starters. What is the space of cryptocurrencies that exploit the Byzantine insight, but are somehow better than Bitcoin? I would suspect that it is very small, or nil. So unlike you, I don't think there is a high chance of something better coming along. I think there is a low but significant chance. A slight digression: I _do_ think that bitcoin may end up being the "gold" used to resolve balances between crypto-banks that have their own currencies. The advantage of such a system is confirmation in almost no time, and not having to pay a transaction fee to get your transaction into a block (which could be large as contention for block space rises). But other cryptocurrencies backed by bitcoin will have to be redeemable for bitcoin, always. If you sever the link, they become worthless. Now if they increase the block size limit to keep transaction fees low, there may never be any need for other cryptocurrencies backed by bitcoin.

vijayboyapati 13y ago

I still think Moldbug has by far the explanation of the increasing moneyness and price of bitcoin: http://unqualified-reservations.blogspot.com/2013/04/bitcoin-is-money-bitcoin-is-bubble.html http://unqualified-reservations.blogspot.com/2013/04/bitcoin... So when people say bitcoin is "bubble" they are essentially correct - although the condescension is usually misplaced. All money is a bubble in the sense that its reservation demand is far higher than its use value warrants. This is true for the dollar, and it's also true for gold, which also has a large element of "moneyness".

genericacct 13y ago

If goes btc keeps going up like this for 10 years 1 BTC will be worth more than all dollars in the world today. I think i'll keep hoarding 3 euro coins instead, at least you can make bullets out of them.

dwaltrip 13y ago
Some investments go up really fast for a while, and then go up more slowly after that. Do you have good arguments for why bitcoin couldn't do this?
- genericacct 13y ago
  Nothing goes up forever. As for investments.. those usually have (or promise to have) a thing called yield. If i put my money in the bank, they give me an interest. BTC doesn't. If my bank goes bankrupt, my deposit is insured. If my BTC wallet is stolen... And this is before we even start talking about regulatory risk. Again: BTC is a fantastic technical endeavour, but to call it an "investment" is quite a long shot. Call it a bet.

yen223 13y ago

To Bitcoin owners out there: out of curiosity, what kind of stuff do you buy using Bitcoin?

lennel 13y ago
given the crazy rise in prices I doubt anybody is spending any, apart from people who maybe want to, uhm, clean some money.
- darkFunction 13y ago
  That's not really true, a lot of us more sensible people want to 'cash out' a little slowly as the price goes up, and what better way to cash out than actually spending the bitcoin on an actual product and supporting the economy? I'd be willing to bet that as people suddenly find themselves with tens or hundreds of bitcoins, and that they can buy a pizza for 0.05 BTC, they are quite open to the idea of receiving what is essentially free pizza. Sure, that pizza could be worth five pizzas tomorrow but you still have a decent chunk in bitcoins and if the whole thing plummets to earth then at least you got something delicious.
  - XorNot 13y ago
    Hilariously this post highlights like, every reason why trading goods for BTC is a sucker's deal for the retailer.
    - user24 13y ago
      How? The retailer gets exactly what they would if they had just asked for local currency, except maybe a little extra business.
      - XorNot 13y ago
        My point was rather meta, but it was the choice of language. "Pizza effectively for free" - lots of things about Bitcoin seem to involve people hoping they get something effectively for free. In the case of the price volatility for hoarding bitcoin while it rises, it underscores the deflationary nature of the currency - no economic value has been contributed by someone holding the BTC, but they've gotten richer regardless. Sitting around doing nothing with the BTC did not produce any economically valuable activity - it wasn't invested or used to finance starting that pizza place, for instance.

Kiro 13y ago

Completely OT but what's up with the scrolling? Why would you do that?

wilhelm 13y ago

How many of these transactions are tulip-style speculation, and how many are real use of bitcoins as a currency for exchanging labour and goods?

mmariani 13y ago

tl;dr JS_loader == BAD_UX I can't comment on the post because I'm on a train with spotty 3G coverage. Which begs the question. WTF is going on with this trend of JS loaders? If your site takes too much time to load, stop nagging users and just take the time to properly optimize the site.

bsaul 13y ago

Just like with every bubble, some people will wait and wait again to invest in... Only once all their friends will have gain some money speculating, once the main media will say it's an easy way to make money, when they'll have the feeling that eveybody else is making money, only then will they invest in... And loose everything the next day, after the bubble collapse. So, if you're planning on speculating with bitcoins, do it right now, or never do it... The chances are it's already too late btw, since people are already mentionning exponential growth.

ashray 13y ago
Case in point: I hold quite a few bitcoins. I am waiting to sell them. The deciding moment will be when my mom mentions bitcoins to me the first time. That will be the trigger ;)
- betterunix 13y ago
  "I just heard about some kind of tech scam where everyone lost their money. Bitslab or something like that. Have you heard of this?"
- pcrh 13y ago
  I thought one was supposed to wait until a taxi driver started giving related investment advice...

yason 13y ago

Anything that goes up fast will come down fast. That simple is that. The sooner you sell your speculative investment the more likely you'll get your money back (at the expense of other people). I sold some leftover coins of mine after 2x in price and that's still phenomenal gains from just some random coins I saved for any next purchase. The value of BTC will slowly rise but naively extrapolating from the last year or so only I'd say the realistic value is still below $100. I'm pretty confident that roughly $50 is a rather stable floor for the years coming.

dwaltrip 13y ago
Do you have any logical/economic basis for this speculation you have so confidently pronounced?

dschiptsov 13y ago

Bandwagon + Peer effects = a "gold" rush. btw, the current exchange rate - $600 is making it worthless for everyday payments or small shopping. It is just a mass hysteria.

eurleif 13y ago
>btw, the current exchange rate - $600 is making it worthless for everyday payments or small shopping. Huh? Why? You can buy fractions of a bitcoin, you know.
- dschiptsov 13y ago
  Prices like 0.0167 are averse.)
  - dwaltrip 13y ago
    That'll be 17 millicoins, sir. Would you like a receipt? Or whatever hip term the youngsters come up with ;)
  - pi-rat 13y ago
    You will soon see prices in mBTC and maybe even μBTC. https://en.bitcoin.it/wiki/MilliBit https://en.bitcoin.it/wiki/MilliBit https://en.bitcoin.it/wiki/Units https://en.bitcoin.it/wiki/Units
  - epsylon 13y ago
    That's 1,670,000 satoshis!

grey-area 13y ago

This Bitcoin rise rases some interesting questions for me, even if it rings alarm bells at the same time. What is the value of a currency? Is it the inscription 'I promise to pay the bearer on demand...', which nowadays will not be fulfilled? Is it the power of the organisation backing it? Perhaps the simplest explanation is best - what can you buy in other goods you might want with this currency? But that leaves you open to manipulation as you are entirely dependent on your perception of what other people think this is worth, which can change in an instant as we have seen with stock markets or indeed government-backed currencies where confidence is lost. So a good confidence trick will be worth as much as or more than a solid currency, until a moment of panic. If you try to base it on the current value of goods in the world divided by the currency in circulation (say 11m coins), Bitcoin has a large climb in value ahead of it if it were to become a world currency, and if no other currency were in use. What is the USD worth if you price it this way though with only 3b in circulation and ? If you say the value of a currency is its ability to buy other goods Bitcoin is currently worth a lot compared to other currencies and prices in it are deflating rapidly, but it has crashed before and will again, because the only measure of value seems to be confidence in its possible future uses, and that makes it very hard to pin down the value. It would be interesting (but I suspect impossible) to try to calculate a value for each Bitcoin based on actual use to buy goods of known value at the present time (as opposed to speculative trading). If you base it on its use value as a medium of exchange, I have hesitations about the utility of Bitcoin, because of its anonymous nature (not tied to verified IDs), lack of regulation, deflationary policy, and lack of backing, and thus hesitations about its value. As a result of the free-floating value and lack of regulation, I suspect Bitcoin prices will behave far more like stock markets (a random walk) than like a normal currency which is pegged to others to some extent, and thus will be difficult to establish as a medium of exchange because of the volatility. I also find it hard to believe if it is successful that it will not be supplanted by some other digital currency which has fewer of its limitations and is more suited to transactions between people who do not value anonymity above all, and wish to be protected from fraud, and the govs and corps that would like to track them. All you have to do to set up a competitor is establish some rules and get people to use it - something which corporations or governments can easily achieve if their monopoly on the money-supply is threatened in a meaningful way.

ezl 13y ago

the price of bitcoin is skyrocketing. why? "more buyers than sellers"

Nodex 13y ago

Speed your site up. after the first 30 seconds I was bored of waiting for it to load, the next 45 seconds were even worse

thomhall 13y ago

What a headache. Just to buy a cup of coffee I need to boot up Linux on a USB disk, input a 500 digit hash, call my brother for the rest of the hash, and my cousin in Sweden for the rest of it, make the transfer an wait for 15 minutes for it to transact, then I get my coffee. Yea. I'd feather have GOLD, SILVER AND COPPER coins. Even digital representations maintained by a bank. Also, I'm glad I didn't agree to pay my mortgage in bit coins when the value was $11. The 70X increase in price would BITRUPT me! :)

thomhall 13y ago

TOO MANY BIT COIN QUESTIONS: If they were stolen, who do I call to help me get them back? If I loose the keys to get into my coins, who will help me get access back to my cash. Does the UN have a BitPolice squad hunting down bit theft? If I were to declare bankruptcy would I have to declare my bit coins as a part of my estate? Is there a BITRUPTSY court?