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The whole price of Bitcoin is an illusion that they use to get people to keep buying. It's the result of a bidding war. There is an article here about that bas

by fat0wl 13y ago

The whole price of Bitcoin is an illusion that they use to get people to keep buying. It's the result of a bidding war. There is an article here about that basically explains (this is my interpretation not his words) how the price of BTC is kindof like the sticker price on an item in the store. It doesn't represent the real value, it's simply the value as perceived by consumers and is, in a way, fixed -- http://falkvinge.net/2013/09/13/bitcoins-vast-overvaluation-seems-to-be-caused-by-usually-illegal-price-fixing/ http://falkvinge.net/2013/09/13/bitcoins-vast-overvaluation-... But the fact that early adopters are psychotically rich for doing nothing is... one of the many signs of a flawed system. Basically if everyone started selling the market would destabilize because supply/demand curve would change & I'm pretty sure the value of what they're selling would plummet before they can unload most of their stack. EDIT: Since I was immediately downvoted, please note that this happens regularly any time you speak ill of Bitcoin's pyramid scheme aspects and is completely expected/anticipated when I post these responses. It's a public service that I will drop eventually, but think about this -- even people who own a ton of BTC (article I linked to) criticize it as being insanely flawed. They only stay with it because as they point out, they believe the price will continue to rise. Speculators love it because they KNOW it's flawed, but still feel confident in a bet that the price will rise. I think it's why ultimately it will take gov intervention or a market catastrophe that screws over all the speculators to finally destroy such interest in Bitcoin and finally give it a chance to start over again... as a currency.

hahainternet 13y ago
> But the fact that early adopters are psychotically rich for doing nothing is... one of the many signs of a flawed system This is also the case with rich families. It doesn't make the system unusable.
- fat0wl 13y ago
  Hah rich families are usually rich because they spear-headed a manufacturing industry or rose to political power. Yes, their CHILDREN may not deserve the wealth, but they earned it. Bitcoiners are getting rich for designing a pump-and-dump scam & passing it along. It's called a pyramid scheme. You make a pitch that sounds convincing and then shop it out through "Multi-Level Marketing" strategies. Why do Bitcoiners believe so much in a currency that allowed the originator to pull so much wealth out of thin air? Say we estimate conservatively and say the Bitcoin ecosystem is only worth what was put into it. Well, now the founders own like 1/4 of all that money, for doing nothing but coming up with a convincing sounding scheme ("ummm... call it deflationary people will think that sounds intellectual"). A currency is not a currency if it is so distorted that it is radically reorganizing the wealth of those who convert to it.
  - pyre 13y ago
    What about old old money? I'm talking about people that have money because their ancestors were royalty of some sort. Can you really say that they earned it? How much of that could be being in the right place at the right time? E.g. You helped out the king and he granted you a lot of land. Several generations later, your descendents are ridiculously wealthy because you got in on the 'ground floor' of what would later become the world economy we have today.
    - fat0wl 13y ago
      Heh I agree with your concept a bit, I was thinking about that myself. But here's the counter -- WHO REALLY WANTS TO RELIVE THE DARK AGES?!! Great headline: "Crypto-Currency of the Future Promises a Return to Medieval Economics via Anonymous Self-Proclaimed King" Even in those systems, people had to WORK to get that $$. We're kindof seeing that now with those setting up the Bitcoin infrastructure, but early adopters are richer than they at this point -- just by trading for a couple magic beans before the masses decided they HAVE TO HAVE THEM!!! I think the coolest thing would be if cryptocurrency folks set up the Bitcoin ecosystem decided there was a BETTER digital currency, and just utilized that same tech stack with the better product. F--k Bitcoin it was an experiment and it can rot
      - grinnbearit 13y ago
        I don't understand, they made a very risky bet and it paid off. Would you have considered compensating them if the value went to 0?
        tedunangst 13y ago
        Was leaving your computer (or your work computer) on over night a few years ago really such a huge risk?
        fat0wl 13y ago
        eXACTLY! ughhhhhhh 100x yes. i'm always given this "risk" argument and I think "what's the risk in investing pocketchange & leaving on your pc.... it's not like you founded a start-up out-of-pocket". It's just a more ingenious version of Amway, because rather than pushing products around & trying to have to prod people into trying their hand at sales, they are being sold THE IDEA OF MONEY! And if people decide to buy that money, the value of the originator's money increases. And to make them feel as if they are equals he says "Oh well if you want you can work on these hash equations and free money will appear" but as long as it's propelling the greed for this "money" it will never hurt the value of his stash. Sad stuff. and the greatest beneficiaries are probably the criminal organizations who use it. Half the reason i wanna see it crash is because it will wipe a lot of bank accounts used by gambling organizations etc. who prey on misery to begin with.
knodi 13y ago
This!! A rumor is all its going to take to tank the price.
- user24 13y ago
  I think you're wrong about that. 51% attack publication didn't kill it. Silk road bust didn't kill it. Selfish miner attack publication didn't kill it. I'm not saying that a flood of sellers won't lower the price dramatically. But to say a rumour is "all it will take" is to ignore recent history.
  - lhgaghl 13y ago
    > 51% attack publication didn't kill it. Are you talking about some new attack? The "51% attack" is a security property that fell out from the design of bitcoin: A cooperating group of people needs "51%" of the computing power to break bitcoin.
    - user24 13y ago
      No, I'm saying that when people realised that there is a hypothetical attack that undermines bitcoin, if you have 51% of the power, that realisation didn't kill bitcoin.
- fat0wl 13y ago
  Hah a big rumor or simpler: sound economic logic/truth... either one should do the trick, but right now greed is leading
sogen 13y ago
+1 Thanks for being a voice of reason and speak of this pyramid scheme.
anopows 13y ago
> But the fact that early adopters are psychotically rich for doing nothing is... one of the many signs of a flawed system. No they risked their money with a speculation that had almost 0% chance of getting any return in the future. They took a huge risk, without this, bitcoin would not exist. And that's why they are rewarded: Taking a risk that almost no one would have taken to create something big. > Basically if everyone started selling the market would destabilize because supply/demand curve would change & I'm pretty sure the value of what they're selling would plummet before they can unload most of their stack. Bitcoin had already 2 big crashes (one time from $30 to $1-2 and one time from 200+$ to under 100$) and still recovered afterwards because there's people like me who see the potential in bitcoin. And please tell me what your "real value" exactly is, because in my opinion their is only a perceived value for everything in the world.
- ajuc 13y ago
  Isn't bitcoin easily manipulated? Let's say I have 1% of all bitcoins. I sell half of them, wait for the price to fall, and buy back to have 1.1% of all bitcoins. Repeat each few weeks, and let's say there's 20 people that realized this and have enough bitcoins for this to be feasible. End result = currency that's mostly owned by a few people. And when everybody realize this - bubble collapses. At least that was my train of thought when I first learnt about bitcoin and now I hate myself for being too risk averse :)
  - anopows 13y ago
    I'm no expert in these fields. But I guess it wouldn't work because if you sell a lot of bitcoins you couldn't sell all at the same price. Eg. you want to sell 10k Bitcoins. The price is 750$ and the first 50 Bitcoins you can sell for 750$. Now after that there are not enough limit orders anymore available for that price category. So you would sell a lot of bitcoins for much less than the price was originally when you started selling. And vice versa if you buy them. So I would doubt that you make a profit (because you can't sell/buy at price x and then afterwards the market price reacts. The market price reacts already while buying/selling in large quantities). As I see it it's the same principle as if you own a large part of a stock, there you could argue the same.
bjnortier_hn 13y ago
> The whole price of Bitcoin is an illusion that they use to get people to keep buying. It's the result of a bidding war. The price of everything is an illusion according to the Subjective Theory of Value [1]. [1] http://en.wikipedia.org/wiki/Subjective_theory_of_value http://en.wikipedia.org/wiki/Subjective_theory_of_value
im3w1l 13y ago
Falkvinge thinks they will be worth 100k-1000k in the future. If we accept that (which I don't btw) is it so weird that people want to spend 700 today for something that might be worth 100k in a few years?
- fat0wl 13y ago
  I think it's naive because NO investment offers that kind of return. People looked like absolute fools for trusting Madoff to give 5 or 10% or whatever it was, now theyre expecting 1000% just because this is "computers.... the future!!!"
- nilkn 13y ago
  It's not weird. The problem is that at some point bitcoins must acquire an unambiguous intrinsic value which is not related so much to their possible future value. If they don't, that's the definition of a bubble--prices that are considerably higher than intrinsic value. Consider tulip mania from the 1600s. Speculation drove up prices of tulip bulbs to the point where the only people buying tulips were other speculators who were willing to pay the high prices because they thought they could sell it for more later on--the exact reasoning you just posted. Speculators were just trading tulips--or worse, tulip futures--amongst themselves. When the time came to sell the tulips to people who wanted them for decoration, it was discovered that none of them actually valued tulips that much, and the bubble popped. There are arguments for a bitcoin having an intrinsic value of $100k. If bitcoin were ever used for, say, something as large as the real estate market, it would be hard to imagine the price being any lower than that. But bitcoin is extremely far from being used as the dominant currency in any market that large.

by fat0wl 13y ago

hahainternet 13y ago

> But the fact that early adopters are psychotically rich for doing nothing is... one of the many signs of a flawed system This is also the case with rich families. It doesn't make the system unusable.

fat0wl 13y ago
Hah rich families are usually rich because they spear-headed a manufacturing industry or rose to political power. Yes, their CHILDREN may not deserve the wealth, but they earned it. Bitcoiners are getting rich for designing a pump-and-dump scam & passing it along. It's called a pyramid scheme. You make a pitch that sounds convincing and then shop it out through "Multi-Level Marketing" strategies. Why do Bitcoiners believe so much in a currency that allowed the originator to pull so much wealth out of thin air? Say we estimate conservatively and say the Bitcoin ecosystem is only worth what was put into it. Well, now the founders own like 1/4 of all that money, for doing nothing but coming up with a convincing sounding scheme ("ummm... call it deflationary people will think that sounds intellectual"). A currency is not a currency if it is so distorted that it is radically reorganizing the wealth of those who convert to it.
- pyre 13y ago
  What about old old money? I'm talking about people that have money because their ancestors were royalty of some sort. Can you really say that they earned it? How much of that could be being in the right place at the right time? E.g. You helped out the king and he granted you a lot of land. Several generations later, your descendents are ridiculously wealthy because you got in on the 'ground floor' of what would later become the world economy we have today.
  - fat0wl 13y ago
    Heh I agree with your concept a bit, I was thinking about that myself. But here's the counter -- WHO REALLY WANTS TO RELIVE THE DARK AGES?!! Great headline: "Crypto-Currency of the Future Promises a Return to Medieval Economics via Anonymous Self-Proclaimed King" Even in those systems, people had to WORK to get that $$. We're kindof seeing that now with those setting up the Bitcoin infrastructure, but early adopters are richer than they at this point -- just by trading for a couple magic beans before the masses decided they HAVE TO HAVE THEM!!! I think the coolest thing would be if cryptocurrency folks set up the Bitcoin ecosystem decided there was a BETTER digital currency, and just utilized that same tech stack with the better product. F--k Bitcoin it was an experiment and it can rot
    - grinnbearit 13y ago
      I don't understand, they made a very risky bet and it paid off. Would you have considered compensating them if the value went to 0?
      - tedunangst 13y ago
        Was leaving your computer (or your work computer) on over night a few years ago really such a huge risk?
        fat0wl 13y ago
        eXACTLY! ughhhhhhh 100x yes. i'm always given this "risk" argument and I think "what's the risk in investing pocketchange & leaving on your pc.... it's not like you founded a start-up out-of-pocket". It's just a more ingenious version of Amway, because rather than pushing products around & trying to have to prod people into trying their hand at sales, they are being sold THE IDEA OF MONEY! And if people decide to buy that money, the value of the originator's money increases. And to make them feel as if they are equals he says "Oh well if you want you can work on these hash equations and free money will appear" but as long as it's propelling the greed for this "money" it will never hurt the value of his stash. Sad stuff. and the greatest beneficiaries are probably the criminal organizations who use it. Half the reason i wanna see it crash is because it will wipe a lot of bank accounts used by gambling organizations etc. who prey on misery to begin with.

knodi 13y ago

This!! A rumor is all its going to take to tank the price.

user24 13y ago
I think you're wrong about that. 51% attack publication didn't kill it. Silk road bust didn't kill it. Selfish miner attack publication didn't kill it. I'm not saying that a flood of sellers won't lower the price dramatically. But to say a rumour is "all it will take" is to ignore recent history.
- lhgaghl 13y ago
  > 51% attack publication didn't kill it. Are you talking about some new attack? The "51% attack" is a security property that fell out from the design of bitcoin: A cooperating group of people needs "51%" of the computing power to break bitcoin.
  - user24 13y ago
    No, I'm saying that when people realised that there is a hypothetical attack that undermines bitcoin, if you have 51% of the power, that realisation didn't kill bitcoin.
fat0wl 13y ago
Hah a big rumor or simpler: sound economic logic/truth... either one should do the trick, but right now greed is leading

sogen 13y ago

+1 Thanks for being a voice of reason and speak of this pyramid scheme.

anopows 13y ago

> But the fact that early adopters are psychotically rich for doing nothing is... one of the many signs of a flawed system. No they risked their money with a speculation that had almost 0% chance of getting any return in the future. They took a huge risk, without this, bitcoin would not exist. And that's why they are rewarded: Taking a risk that almost no one would have taken to create something big. > Basically if everyone started selling the market would destabilize because supply/demand curve would change & I'm pretty sure the value of what they're selling would plummet before they can unload most of their stack. Bitcoin had already 2 big crashes (one time from $30 to $1-2 and one time from 200+$ to under 100$) and still recovered afterwards because there's people like me who see the potential in bitcoin. And please tell me what your "real value" exactly is, because in my opinion their is only a perceived value for everything in the world.

ajuc 13y ago
Isn't bitcoin easily manipulated? Let's say I have 1% of all bitcoins. I sell half of them, wait for the price to fall, and buy back to have 1.1% of all bitcoins. Repeat each few weeks, and let's say there's 20 people that realized this and have enough bitcoins for this to be feasible. End result = currency that's mostly owned by a few people. And when everybody realize this - bubble collapses. At least that was my train of thought when I first learnt about bitcoin and now I hate myself for being too risk averse :)
- anopows 13y ago
  I'm no expert in these fields. But I guess it wouldn't work because if you sell a lot of bitcoins you couldn't sell all at the same price. Eg. you want to sell 10k Bitcoins. The price is 750$ and the first 50 Bitcoins you can sell for 750$. Now after that there are not enough limit orders anymore available for that price category. So you would sell a lot of bitcoins for much less than the price was originally when you started selling. And vice versa if you buy them. So I would doubt that you make a profit (because you can't sell/buy at price x and then afterwards the market price reacts. The market price reacts already while buying/selling in large quantities). As I see it it's the same principle as if you own a large part of a stock, there you could argue the same.

bjnortier_hn 13y ago

> The whole price of Bitcoin is an illusion that they use to get people to keep buying. It's the result of a bidding war. The price of everything is an illusion according to the Subjective Theory of Value [1]. [1] http://en.wikipedia.org/wiki/Subjective_theory_of_value http://en.wikipedia.org/wiki/Subjective_theory_of_value

im3w1l 13y ago

Falkvinge thinks they will be worth 100k-1000k in the future. If we accept that (which I don't btw) is it so weird that people want to spend 700 today for something that might be worth 100k in a few years?

fat0wl 13y ago
I think it's naive because NO investment offers that kind of return. People looked like absolute fools for trusting Madoff to give 5 or 10% or whatever it was, now theyre expecting 1000% just because this is "computers.... the future!!!"
nilkn 13y ago
It's not weird. The problem is that at some point bitcoins must acquire an unambiguous intrinsic value which is not related so much to their possible future value. If they don't, that's the definition of a bubble--prices that are considerably higher than intrinsic value. Consider tulip mania from the 1600s. Speculation drove up prices of tulip bulbs to the point where the only people buying tulips were other speculators who were willing to pay the high prices because they thought they could sell it for more later on--the exact reasoning you just posted. Speculators were just trading tulips--or worse, tulip futures--amongst themselves. When the time came to sell the tulips to people who wanted them for decoration, it was discovered that none of them actually valued tulips that much, and the bubble popped. There are arguments for a bitcoin having an intrinsic value of $100k. If bitcoin were ever used for, say, something as large as the real estate market, it would be hard to imagine the price being any lower than that. But bitcoin is extremely far from being used as the dominant currency in any market that large.