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The price has tanked today as a result of this. http://cryptowat.ch/btce/btcusd/1hr/ http://cryptowat.ch/btce/btcusd/1hr/ Market started going crazy earlier to

The price has tanked today as a result of this. http://cryptowat.ch/btce/btcusd/1hr/ http://cryptowat.ch/btce/btcusd/1hr/ Market started going crazy earlier today when DPR's seized coins started to move. https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN455paPH https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN4... The downtrend is only accelerating.

alex_duf 12y ago
time to buy.
- ryan_j_naughton 12y ago
  Damn, I was planning on waiting until it hit a local minimum and then buy a few, but while I was writing the above comment, the price already rebounded from $550 to $590.
  - artursapek 12y ago
    Just a dead cat bounce. Wait it out.
    - deleted 12y ago
      [deleted]
ryan_j_naughton 12y ago
The volatility in the bitcoin price just demonstrates how the majority of the people trading it have no conception of how to value the underlying asset (i.e. demand for a low cost transaction system) and thus it is speculators leading speculators a la the blind leading the blind. The current sharp price decrease is because people are worried that whoever wins this auction (and the subsequent auction of DPR's coins) will want to exit that position. Thus their will be an oversupply in the market and cause the price to decrease. Expecting this, people are taking that into account and trying to get out before the oversupply, causing a self fulfilling prophecy based on bad underlying analysis. Why would someone go long bitcoins (i.e. buy them and in such quantity) through such a difficult process as dealing with the US gov't to so quickly exit their position? My hypothesis is that it will be either rich institutional investors, hedge funds, or similar large investors who see this as an opportunity to acquire bitcoins at an undermarket price. I think many of those groups would sit on their position (and not sell them). Further, if they were to sell them, they would want to do so in a way that didn't dramatically affect the price (thus over many days, weeks, or months). Given that 30K bitcoins is far less than the total bought/sold on exchanges every day, it should be presumed that they can exit this position over a sufficient timeline in order to not cause negative pressure on the price (if the auction winners even want to sell -- which as I analyzed above, I don't think they would).
- polshaw 12y ago
  It has very limited use as a serious transaction system while there is so much volatility. Prices are therefore pegged to local currencies, and if you want to keep that then it's no longer low cost because conversion to/from local currency costs just as much. The speculation and (eventually) deflationary nature of BTC significantly hinders the chances of it ever stabilising, and therefore a true 'bitcoin economy' emerging (ie. where people do not need to peg to or convert to local currencies). Then there is the fact that it is not a limited good-- someone could quite easily come along with a BetterCoin making BTC almost useless-- there are various things that could be improved, eg privacy, or the slow confirmation times. E: also, there will be an 'oversupply'-- Whoever buys these bitcoins won't be buying other BTC because of it -- it's irrational to think that the auction is creating a significant new demand that wouldn't have existed otherwise! Selling over weeks/months would still affect the price, although more in the normal supply/demand manner than causing a crash/panic. But that could be happening before any of these BTC are sold anyway!
  - ryan_j_naughton 12y ago
    All very good points. The volatility is the greatest hindrance to it being a viable transaction system. I'm hopeful that well functioning derivatives (futures, options, etc) will help to stabilize the price (as is the purpose of a futures market); however, that would rely on the traders having effective forecasts on supply and demand which I view as unlikely. Related to that, I thought of an idea a while ago for a non-profit to create a new cryptocurrency that is by design pegged to the USD. Whenever anyone wants a unit of this currency, they can buy one from the non-profit for $1 and the non-profit will mint a new coin. Similarly, if you want to sell the currency, the non-profit will always buy it for $1. The non-profit must keep the appropriate reserves (ideally, they would keep 100% of the US dollars bought or have always sufficient credit lines). With this design, the proposed cryptocurrency will always maintain a $1 peg, removing the insane amounts of volatility. I know that is will be hated by all those in the btc community as it brings in a centralized monetary authority who controls minting coins; however, there is a huge value to an extremely low cost transaction system that is decentralized and pseudo-anonymous (which this would still be). The central authority would not be capable of destroying coins or changing blockchain history, only minting new coins (and as per their charter, only when they are provided $1USD for the coin). People would not have any obligation to use this monetary authority to exchange coins, and surely other exchanges which were more user friendly would appear. Simply, by an entity existing which will always buy at a given price or sell at a given price, it will cause the intended effect without having to have any central role in the decentralized transaction system.
Ologn 12y ago
Bitcoins are absolutely worthless. If there is any sign of a tech bubble, it is these worthless hashes that people pay hundreds of dollars for. One of the genius aspects of the Bitcoin scam is the limited output and increasing difficulty as it goes on. This keeps the scam going longer. If it were like tulip bulbs, or subprime real estate, or pets.com type stocks, the bubble would eventually burst. With the types of bubbles we've seen, and the big names in tech willing to associate their names with this scam, keeping a <$15 billion market cap going is feasible for a little while. Also keep in mind that the float is not all that high. Many bitcoins have never been traded, especially early ones. That 30k of Bitcoins are going on the market can tank the price so much shows how weak demand is for this worthless "currency". One aspect of the pied pipers of this scam is that their theories of its value are not falsifiable. My theory is falsifiable - Bitcoins are going to go from a current market cap of over $7 billion to well below $1 billion. There theory is not falsifiable "it's valuable because it's valuable". So if it goes up they're right, if it goes down they're right. Why are Bitcoins valuable? Anyone thinking of buying an ASIC or a Bitcoin should read from the Bitcoin boosters the answer to this question. There is no answer. Which is why Bitcoin is bound to crash. It's possible a real online currency might happen. The Bitcoin scam is certainly postponing that day. When Bitcoin crashes, possibly with much legal involvement afterward, VCs will be very hesitant to fund an online currency for years to come. To me the real currency would have to be something in the realm of Folding@home. I'm not sure how it would work of if its computationally feasible, but I do know people would pay for the results of useful computations such as that. I would short Bitcoins if I could find a reliable party to do it with, and it were easier to do. That doing that is so difficult is another sign how it's not a real currency. That this post and any post not buying into the Bitcoin hype is bound to be downvoted is yet another sign of the scam. I rarely have posts downvoted on HN, but any time I am slightly skeptical of Bitcoin's value, the Bitcoin hucksters pile on and downvote anyone questioning the scam into oblivion. It reminds me of how MLM people act on the Internet.
- ghshephard 12y ago
  Bitcoins have value because they let you buy things.
  - 12y ago
smrtinsert 12y ago
That interface is inspired. Bollinger bands, slick dark theme, nice font, real time, restful url (looking at 4 hour right now)... very cool.
- artursapek 12y ago
  Oy, thanks mate. I've had a lot of fun building it
dalore 12y ago
But if you read the link, they aren't selling DPR coins, but the ones seized from SR
mathattack 12y ago
Was this a deliberate attempt to tank the price and weaken the currency? Or just no different than the government selling the Ferraris that it confiscates from drug dealers?

alex_duf 12y ago

time to buy.

ryan_j_naughton 12y ago
Damn, I was planning on waiting until it hit a local minimum and then buy a few, but while I was writing the above comment, the price already rebounded from $550 to $590.
- artursapek 12y ago
  Just a dead cat bounce. Wait it out.
  - deleted 12y ago
    [deleted]

ryan_j_naughton 12y ago

The volatility in the bitcoin price just demonstrates how the majority of the people trading it have no conception of how to value the underlying asset (i.e. demand for a low cost transaction system) and thus it is speculators leading speculators a la the blind leading the blind. The current sharp price decrease is because people are worried that whoever wins this auction (and the subsequent auction of DPR's coins) will want to exit that position. Thus their will be an oversupply in the market and cause the price to decrease. Expecting this, people are taking that into account and trying to get out before the oversupply, causing a self fulfilling prophecy based on bad underlying analysis. Why would someone go long bitcoins (i.e. buy them and in such quantity) through such a difficult process as dealing with the US gov't to so quickly exit their position? My hypothesis is that it will be either rich institutional investors, hedge funds, or similar large investors who see this as an opportunity to acquire bitcoins at an undermarket price. I think many of those groups would sit on their position (and not sell them). Further, if they were to sell them, they would want to do so in a way that didn't dramatically affect the price (thus over many days, weeks, or months). Given that 30K bitcoins is far less than the total bought/sold on exchanges every day, it should be presumed that they can exit this position over a sufficient timeline in order to not cause negative pressure on the price (if the auction winners even want to sell -- which as I analyzed above, I don't think they would).

polshaw 12y ago
It has very limited use as a serious transaction system while there is so much volatility. Prices are therefore pegged to local currencies, and if you want to keep that then it's no longer low cost because conversion to/from local currency costs just as much. The speculation and (eventually) deflationary nature of BTC significantly hinders the chances of it ever stabilising, and therefore a true 'bitcoin economy' emerging (ie. where people do not need to peg to or convert to local currencies). Then there is the fact that it is not a limited good-- someone could quite easily come along with a BetterCoin making BTC almost useless-- there are various things that could be improved, eg privacy, or the slow confirmation times. E: also, there will be an 'oversupply'-- Whoever buys these bitcoins won't be buying other BTC because of it -- it's irrational to think that the auction is creating a significant new demand that wouldn't have existed otherwise! Selling over weeks/months would still affect the price, although more in the normal supply/demand manner than causing a crash/panic. But that could be happening before any of these BTC are sold anyway!
- ryan_j_naughton 12y ago
  All very good points. The volatility is the greatest hindrance to it being a viable transaction system. I'm hopeful that well functioning derivatives (futures, options, etc) will help to stabilize the price (as is the purpose of a futures market); however, that would rely on the traders having effective forecasts on supply and demand which I view as unlikely. Related to that, I thought of an idea a while ago for a non-profit to create a new cryptocurrency that is by design pegged to the USD. Whenever anyone wants a unit of this currency, they can buy one from the non-profit for $1 and the non-profit will mint a new coin. Similarly, if you want to sell the currency, the non-profit will always buy it for $1. The non-profit must keep the appropriate reserves (ideally, they would keep 100% of the US dollars bought or have always sufficient credit lines). With this design, the proposed cryptocurrency will always maintain a $1 peg, removing the insane amounts of volatility. I know that is will be hated by all those in the btc community as it brings in a centralized monetary authority who controls minting coins; however, there is a huge value to an extremely low cost transaction system that is decentralized and pseudo-anonymous (which this would still be). The central authority would not be capable of destroying coins or changing blockchain history, only minting new coins (and as per their charter, only when they are provided $1USD for the coin). People would not have any obligation to use this monetary authority to exchange coins, and surely other exchanges which were more user friendly would appear. Simply, by an entity existing which will always buy at a given price or sell at a given price, it will cause the intended effect without having to have any central role in the decentralized transaction system.

Ologn 12y ago

Bitcoins are absolutely worthless. If there is any sign of a tech bubble, it is these worthless hashes that people pay hundreds of dollars for. One of the genius aspects of the Bitcoin scam is the limited output and increasing difficulty as it goes on. This keeps the scam going longer. If it were like tulip bulbs, or subprime real estate, or pets.com type stocks, the bubble would eventually burst. With the types of bubbles we've seen, and the big names in tech willing to associate their names with this scam, keeping a <$15 billion market cap going is feasible for a little while. Also keep in mind that the float is not all that high. Many bitcoins have never been traded, especially early ones. That 30k of Bitcoins are going on the market can tank the price so much shows how weak demand is for this worthless "currency". One aspect of the pied pipers of this scam is that their theories of its value are not falsifiable. My theory is falsifiable - Bitcoins are going to go from a current market cap of over $7 billion to well below $1 billion. There theory is not falsifiable "it's valuable because it's valuable". So if it goes up they're right, if it goes down they're right. Why are Bitcoins valuable? Anyone thinking of buying an ASIC or a Bitcoin should read from the Bitcoin boosters the answer to this question. There is no answer. Which is why Bitcoin is bound to crash. It's possible a real online currency might happen. The Bitcoin scam is certainly postponing that day. When Bitcoin crashes, possibly with much legal involvement afterward, VCs will be very hesitant to fund an online currency for years to come. To me the real currency would have to be something in the realm of Folding@home. I'm not sure how it would work of if its computationally feasible, but I do know people would pay for the results of useful computations such as that. I would short Bitcoins if I could find a reliable party to do it with, and it were easier to do. That doing that is so difficult is another sign how it's not a real currency. That this post and any post not buying into the Bitcoin hype is bound to be downvoted is yet another sign of the scam. I rarely have posts downvoted on HN, but any time I am slightly skeptical of Bitcoin's value, the Bitcoin hucksters pile on and downvote anyone questioning the scam into oblivion. It reminds me of how MLM people act on the Internet.

ghshephard 12y ago
Bitcoins have value because they let you buy things.
- 12y ago

smrtinsert 12y ago

That interface is inspired. Bollinger bands, slick dark theme, nice font, real time, restful url (looking at 4 hour right now)... very cool.

artursapek 12y ago
Oy, thanks mate. I've had a lot of fun building it

dalore 12y ago

But if you read the link, they aren't selling DPR coins, but the ones seized from SR

mathattack 12y ago

Was this a deliberate attempt to tank the price and weaken the currency? Or just no different than the government selling the Ferraris that it confiscates from drug dealers?