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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 b

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.
  - ximeng 13y ago
    It can be transferred more cheaply and easily than traditional government money, particularly across borders, so it does have some advantage.
  - oscilloscope 13y ago
    How can a currency have an exchange rate of infinity?
    - XorNot 13y ago
      Infinity isn't a number to start with, it's an expression of a limit. i.e. if you need something, then how much you'll pay for it is effectively unlimited. The idea is, that how the price changes is basically only limited by how quickly your various agents can buy it. You see the problem with this when artificial agents get into bidding wars - because they react so quickly, they end up creating massive price volatility because when it's worth buying its worth buying and when it should be sold they can't dump it quick enough. In practice every thing has some type of limits - i.e. even computers operate over limited time intervals, and any individual actor has limited resources so eventually something exhausts itself (i.e. everyone might have dumped Currency 1 for Currency 2, but even if no one holds any any more, they'd still be trying to sell it off if they did - ergo, we never reached a finite "price" for it.
  - Ologn 13y ago
    Yes. Of course even the US dollar was backed by gold until 42 years ago. As you said, I can pay taxes with dollars. I can go to the NYC 24 hour USPS post office right now and buy commodities with a dollar. The government could privatize the Grand Canyon and compensate dollar holders thusly. The kind of delusion thinking seen here about Bitcoins is akin to the delusional thinking I heard in 1999 regarding tech stock prices. Does anyone remember when Cisco's market cap was over half a trillion dollars? But Cisco actually did (and does) something that creates and stores real value. There's all this talk of how Bitcoin is easier than this or that currency. Well it's (possible but) not easy to short Bitcoin. I certainly can short the dollar in a number of ways. I'm sure if Bitcoin was shortable it's price would not be where it is. It certainly means the inevitable fall will be harder though. It's hard to say when Bitcoin's worth will crash, there's a lot of money sitting out there, waiting to speculate on something. But inevitably it will crash.
pmorici 13y ago
I don't think it is "long over due" There will probably be another correction just like there have been two or three already but if you look at each BitCoin "bubble" each is about 5x larger than the previous one so I would think we will see prices rise to at least the 1,000 neighborhood before retracting and when it does I don't see it going lower than $250 - $300 ever again unless something happens to make it worth zero.
jamesrom 13y ago
What do you mean by long overdue?
- andr3w321 13y ago
  I mean it hasn't gone down two days in a row for over a month now and is increasing in price 10% per day. It's not just going to straight up to the moon like people think. There will be bumps along the way and it's overdue for one.

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.
- ximeng 13y ago
  It can be transferred more cheaply and easily than traditional government money, particularly across borders, so it does have some advantage.
- oscilloscope 13y ago
  How can a currency have an exchange rate of infinity?
  - XorNot 13y ago
    Infinity isn't a number to start with, it's an expression of a limit. i.e. if you need something, then how much you'll pay for it is effectively unlimited. The idea is, that how the price changes is basically only limited by how quickly your various agents can buy it. You see the problem with this when artificial agents get into bidding wars - because they react so quickly, they end up creating massive price volatility because when it's worth buying its worth buying and when it should be sold they can't dump it quick enough. In practice every thing has some type of limits - i.e. even computers operate over limited time intervals, and any individual actor has limited resources so eventually something exhausts itself (i.e. everyone might have dumped Currency 1 for Currency 2, but even if no one holds any any more, they'd still be trying to sell it off if they did - ergo, we never reached a finite "price" for it.
- Ologn 13y ago
  Yes. Of course even the US dollar was backed by gold until 42 years ago. As you said, I can pay taxes with dollars. I can go to the NYC 24 hour USPS post office right now and buy commodities with a dollar. The government could privatize the Grand Canyon and compensate dollar holders thusly. The kind of delusion thinking seen here about Bitcoins is akin to the delusional thinking I heard in 1999 regarding tech stock prices. Does anyone remember when Cisco's market cap was over half a trillion dollars? But Cisco actually did (and does) something that creates and stores real value. There's all this talk of how Bitcoin is easier than this or that currency. Well it's (possible but) not easy to short Bitcoin. I certainly can short the dollar in a number of ways. I'm sure if Bitcoin was shortable it's price would not be where it is. It certainly means the inevitable fall will be harder though. It's hard to say when Bitcoin's worth will crash, there's a lot of money sitting out there, waiting to speculate on something. But inevitably it will crash.

pmorici 13y ago

I don't think it is "long over due" There will probably be another correction just like there have been two or three already but if you look at each BitCoin "bubble" each is about 5x larger than the previous one so I would think we will see prices rise to at least the 1,000 neighborhood before retracting and when it does I don't see it going lower than $250 - $300 ever again unless something happens to make it worth zero.

jamesrom 13y ago

What do you mean by long overdue?

andr3w321 13y ago
I mean it hasn't gone down two days in a row for over a month now and is increasing in price 10% per day. It's not just going to straight up to the moon like people think. There will be bumps along the way and it's overdue for one.