
Bitcoin exchange rate reached $100 USD per BTC - vitalique
http://bitcoincharts.com/charts/mtgoxUSD
======
lolcraft
Some people here seem to think that this is temporary, that sometime in the
future Bitcoin will stabilize into a glorious future global currency -- never
mind the new class of cryptobarons it will have created from its inner circle,
through shameless hoarding.

My question is, what then will happen when Bitcoin stabilizes, that is, when
the time to new coin mined approaches practically infinity? Let's assume the
global economy grows at 4% per year. Do Bitcoin's proponents believe a
constant 4% deflation rate will be somehow compatible with capitalism? Why
lend, why build new companies, when simply storing it is more than enough?
Take shocks such as bubbles and demand-side crises. Could a economy based on
Bitcoin survive them, and not crash inevitably into a deflationary spiral? I
claim it won't.

The party line usually argues for the evils of inflation. What they don't
understand, I think, is that capitalism, in its revolutionary (in the sense of
production) facet, _needs_ inflation, _feeds_ from it. Inflation might screw
lenders, and favor debtors, sure. But deflation is just the inverse: a gift
for the leecherous rentier class, and a massive "fuck you" to entrepreneurs.

~~~
deelowe
There are a few replies here that seem to be reacting negatively to the OP due
to the tone of the submission instead of the content. To be clear, deflation
is categorically _bad_ for a currency. It's terrible, like great depression
terrible. The reason it's bad is that deflation makes it _more profitable_ to
do nothing than to invest. When this happens, people react by not spending
money. The market dies. While inflation can be bad, it's at least manageable.
In fact, some inflation is actually heathly as it encourages investing.

If that doesn't make sense, think of it like this. Inflation is similar to
nuclear fusion and deflation is like nuclear fission. When the former goes
critical, you can just shut off the spigots and things more or less fix
themselves(albeit with some collateral damage) without the whole system
crashing. However, with the latter, there may be no fixing without dismantling
everything and starting over.

~~~
randallsquared
> The reason it's bad is that deflation makes it more profitable to do nothing
> than to invest.

This makes no sense to me. If keeping 100 units makes one richer because they
are worth more in a year, then any investment which has a positive return
(that is, you end up with more than 100 units in a year) must be that much
better... What am I missing?

~~~
rmc
Let's pretend the deflation is at 3% (i.e. there's a inflation rate of -3%).
Then your 100 units will be worth 103 units (in today's money) in 1 years
time. This is a guaranteed rate of deflation (bitcoin has a guaranteed rate of
deflation, I don't know if it's 3%)

So someone comes along and wants a loan, but they can't pay back 3% interest
rate, only 2%. Why would you give that person your 100 units if you'll only
get 102 units (in today's money) back in a year? Much better to hold on to it.

So someone comes along and can pay you 5% interest rate. Sounds better, right?
_However_ it's for a business. So you don't know if their business will
survive, it might go backrupt. Let's pretend it's an early start up, so
there's a 50/50 chance they go bust and your 100 units are a write off and
gone. So that's only a 2.5% interest rate. Again, why loan it out if you can
get a guaranteed 3% by doing nothing?

etc.

~~~
jasonlingx
> bitcoin has a guaranteed rate of deflation.

This is not true. There is no guaranteed rate of deflation.

The rate at which you can 'mine' bitcoin is limited and there is a hard limit
to the total amount of bitcoin that can be mined.

~~~
moultano
Assuming the economy grows, a fixed amount of currency causes deflation.

------
acabal
I added a Bitcoin purchase option to Scribophile to test the waters. But I'm
interested in a Bitcoin economy, not a USD cash alternative--the situation
where a Bitcoin has its own value, not a value dependent on a different
currency. For that reason, I decided to fix the price of an upgrade to 2 BTC,
not peg it to the dollar like most other sites do.

Unfortunately it seems like that's just not going to work at this point. I set
the price at 2 BTC when the exchange rate was $35--like two weeks ago or so.
That meant the BTC membership price was about in line with the USD price. But
in a few weeks, the value of a Bitcoin has tripled. Since most people using
BTC ultimately want to convert it to dollars, this insane instability makes
BTC impossible to use for anyone interested in a pure BTC economy. Too bad.

~~~
Eliezer
As ever: Bitcoin is a lovely medium of exchange, a horrible medium of account
and hence a purely bubbled store of value.

~~~
jamoes
How low do you think it will crash when the bubble bursts? Do you think it
will recover again, like it did last time, or do you this time it will stay
low?

~~~
sodafountan
I believe if/when it does crash there will be an immediate resurgence in the
price per BTC, driven by the people who wanted to invest but thought the price
was too high. This is why i'm not all that scared investing rather large sums
of money into the Bitcoin economy.

------
faet
This feels kinda like a pump and dump to me. I don't mind
articles/projects/sites that make use of bitcoins. But the frequency of posts
on how much each bitcoin is worth feels like pennystocks/etc on an investing
forum. People trying to get more people to buy in. To drive it up. So they can
get out while it's high.

~~~
Atropos
The whole "Cyprus people are getting into Bitcoin" narrative is a total lie as
well. But I guess Bitcoin is a great learning opportunity for spotting Scams
etc., as long as people don't lose too much money, it might even be
beneficial.

~~~
PassTheAmmo
Actually for me bitcoin proves just how few people can ACTUALLY spot a pyramid
scheme or a pump and dump - instead resorting to calling everything that seems
too good to be true a scam. It may work 99.9% of the time, but BTC is the
false positive IMO. I totally agree that the Cyprus thing is totally bogus
though, journalists are uninformed and lazy as usual. The real reason is that
it seems more and more likely that bitcoin will be the currency of the
Internet in the future. And nothing else.

~~~
niggler
<https://www.youtube.com/watch?v=0UKC7iaBKvs#t=768s>

A pretty brilliant scam if you ask me

~~~
imsofuture
That's not a terribly good point though -- fiat currency also has no intrinsic
value.

~~~
niggler
That's a misunderstanding of history. USD used to be backed by silver and all
bills said "in silver payable to the bearer on demand". It was only relatively
recently that the practice ended.

[https://upload.wikimedia.org/wikipedia/commons/7/70/US-%245-...](https://upload.wikimedia.org/wikipedia/commons/7/70/US-%245-SC-1953-Fr.1655.jpg)

~~~
Karunamon
It doesn't really invalidate his statement though. The USD is not backed by
anything (whether it was in the past or not is irrelevant), and aside from the
fact that it's commonly accepted, has no more intrinsic value than Bitcoin.

~~~
prodigal_erik
As long as 300 million people are required to convert a fraction of their
income to USD for taxes, its value can't go to zero. Bitcoin's value is purely
an article of faith so far.

------
spartango
I worry that as Bitcoin's value rises, people are buying in not to use it as
payment for services or goods, but simply as an investment vehicle. In
principle, there's nothing wrong with this; currency trading is common and
well-explored. The problem is that the value of a currency is supposed to also
be somehow related to its utility in acquiring goods and services. When it is
rarely used to that effect, people may reconsider their investment in the
currency.

It'd also be interesting to look at the effects of deflation in the fledgling
bitcoin economy, although the actual exchange of currency for goods and
services is a bit small to judge this effectively.

~~~
grovulent
I'm not a bitcoin fanboy - but I see this sentiment around a lot and I'm not
sure I agree with it. The claim is that the value of a currency is supposed to
also be somehow related to its utility in acquiring goods and services. And if
this isn't the case - then people will go off it.

When was the last time someone acquired a good or service with an ounce of
gold? Perhaps we shouldn't consider gold a currency? Well I'm fine with that.
Bitcoin probably isn't a proper currency yet either (in the sense that people
aren't exchanging much with it yet). But not being directly relatable to
utility in exchange certainly hasn't hurt gold in recent history. So I don't
see why necessarily it will be a problem for bitcoins.

~~~
calinet6
If I see a currency rising in value faster than Gold itself, I'm going to want
to get in on the value.

Fact is, if I had "invested" in 100 BTC only 5 months ago when it was hovering
around USD$10, that would have cost me about $1000. And now it would be worth
$10000. There are not that many investments that have that kind of return in
such a short time. You'd have to be dumb to believe that people aren't doing
exactly this. You don't see 1000% returns and just ignore it and wonder about
its utility. Right now, it's a volatile and risky currency exchange being
intentionally used to ride the rising popularity into a cash la-la land.

At some point people are going to convert this toy back to a real-world
currency and take their winnings home with them. I don't know what's going to
happen then, but I don't believe it will be good. Perhaps 'stabilizing' would
be a good optimistic name for it.

~~~
jaibot
What's a good way to short bitcoin?

~~~
pixelcort
There are derivative markets where you could purchase an option to sell
bitcoin at a set price in the future. If the price falls below your target by
then, buy up cheaper Bitcoins and sell them at profit.

~~~
phyalow
take some forwards @ mpex.co

------
tvladeck
Currencies have existed in a huge variety of forms over time. Basically
anything can work as a medium of exchange as long as everyone has a high
degree of confidence that if they are paid in the currency, that they too can
pay someone else in that currency. But that's not to say all currency regimes
are created equally -- we've learned a number of lessons, painfully, about how
to manage currencies.

For a small-scale, but very instructive example that shows there are cases
where simply increasing the money supply can sometimes create more value in
the economy (or how deflation can destroy value), see the story of the Capitol
Hill Babysitter Co-Op [0].

At a more serious scale, many prominent economists believe that an artificial
restriction of the monetary supply led to, or exacerbated the Great Depression
[1].

So, like Krugman [2], I think that BTC proponents really have to explain how
the artificial restriction of the size of the BTC money supply is not a
serious design flaw in the currency. Are BTC just crypotographic gold? If so,
then is a successful BTC economy just a different gold standard (and all its
associated problems)?

[0] <http://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op>

[1]
[http://en.wikipedia.org/wiki/Gold_standard#Prolongation_of_t...](http://en.wikipedia.org/wiki/Gold_standard#Prolongation_of_the_Great_Depression)

[2] [http://krugman.blogs.nytimes.com/2011/09/07/golden-
cyberfett...](http://krugman.blogs.nytimes.com/2011/09/07/golden-
cyberfetters/)

~~~
polarix
It's close to a new gold standard.

The one problem associated with gold that it does solve is being as good a
medium of exchange as visa/paypal (or better).

~~~
chii
The one thing BTC cannot yet replicate is the trust that gold standard has.

Anyone in the world would immediately accept gold standard, but this BTC,
despite being a digital gold, will be difficult to overcome the initial
fear/mist-trust. It doesn't matter what mathematical proof you provide - the
laymen doesn't really understand it. May be one day, it becomes accepted, and
BTC will then really be a new gold standard. But i don't see that day coming,
because there are people who don't like the gold standard (as it prevents them
from leeching money from society - i.e., various parties/entities who hold
controlling interests in major central banks etc).

------
vijayboyapati
As Moldbug wrote: "In any economy, there exists no less than one commodity or
security of inelastic volume which is overvalued due to reservation demand.
Ie: one scarce good which is money." Bitcoin's increasing price is a sign that
it's further along in its passage to monetization. Gold, too, experiences the
same phenomena of being "overvalued". I.e., being far above the price
warranted by its use value. In the same way gold is also partially monetized
(in particular it has large reservation demand from central banks)

Buying bitcoin is essentially a bet on the probability it will be monetized.
This probability will wax and wane in the minds of the population
participating in the bitcoin market, who in turn will be influenced by media
perceptions, the actions of the state etc. So the price will no doubt be quite
volatile. But the increase in price, based on an increase in reservation
demand, is self-reinforcing. It increases the desire of merchants to accept
bitcoin in payment (since there are now a greater pool of holders who have
greater savings looking for an outlet to spend those savings). And as new
merchants begin accepting bitcoin in payment, the reservation demand
increases. These two causalities are linked together and reinforce each other.
At some point they become entrenched enough that the whole thing "lifts off",
so to speak, and the commodity becomes money. Interestingly, the same thing
happens with gold, except that one of the two causalities is short-circuited
by the state: the reservation demand for gold does not spur merchants to
accept gold in payment, because that is made illegal by the state. Thankfully
bitcoin is so well engineered that the problem of the state banning use in
transactions is essentially moot (no offense "Chuck" Schumer).﻿

------
JumpCrisscross
Monetary economists have a measure called _velocity_ , which is "the average
frequency with which a unit of money is spent on new goods and services
produced domestically in a specific period of time. Velocity has to do with
the amount of economic activity associated with a given money supply." [1] It
can be thought of as the "rate of turnover in the money supply" [2]. It is a
good indicator of the "health" of a currency.

The annualised velocity of the M2 Money Stock for Q4 2012 2 was 6.152 [2].
That is, the average dollar in the form of notes and coins in circulation
(M0), traveller's cheques, checking account/demand deposits, savings deposits,
time deposits/CDs under $100 000, and individuals' money market deposits was
spent 1.538 times on economically useful activities in the fourth quarter of
last year.

The annualised velocity of the Bitcoin Money Stock for Q4 2012 was 1.27. That
is, the average Bitcoin in existence was transacted 0.32 times in the last 90
days of 2012. This includes economically useless transfer payments, i.e.
transactions not involving the exchange of real goods or services, as well as
economically useless hoarded or lost coins, i.e. Bitcoins not in circulation
and so less a unit of "money" than a speculative asset (in the case of
hoarding). Since this is a ratio, the two balance out, though it is still
biased to the downside. For the 30 days ending on 29 March 2013, it was 1.86.
Here is what it has been doing since February 2009 [3].

More encouragingly, Bitcoin Velocity has quadrupled YoY. M2 Velocity declined
4% over the same time. I would thus offer, very tentatively, that there is a
substantial portion of the Bitcoin economy involved in real transactions
(versus financial ones, e.g. trading on an exchange).

Curiously, yet to emerge (to my knowledge [EDIT: which was wrong]) is a majour
vendor of Bitcoin mining equipment that accepts Bitcoin as a mode of payment.
If that were to happen, the Bitcoin economy would have an endogenous "risk-
free rate" in the form of mining yields, with power companies serving as the
most salient factor. If it were not for the ceiling on the number of Bitcoins
which can come into existence, it could very well have been the first currency
pseudo-denominated in energy.

[1] <https://en.wikipedia.org/wiki/Velocity_of_money>

[2] <http://research.stlouisfed.org/fred2/series/M2V?cid=32242>

[3] <http://imgur.com/f7oFZKb> _Annualised Bitcoin Velocity, Feb 2009 - March
2013_

~~~
eric_bullington
Actually, all of the vendors of the state-of-the-art ASIC mining equipment are
accepting Bitcoins as payment.

But interesting analysis. What do you think about the Bitcoin Days Destroyed
metric [0] as a way to measure the health of the Bitcoin economy?

[0] <https://en.bitcoin.it/wiki/Bitcoin_Days_Destroyed>

------
smsm42
It looks like a classic bubble now - while slow gains programmed in could be
justifiable, this seems to be driven purely by expectations of future price
rises - which is a classic bubble sign. So far, all bubbles popped sooner or
later. Maybe this would be the only one in history that doesn't - I wouldn't
bet on that, but maybe someone would and become a millionaire. Or lose all his
money.

~~~
jamoes
From 2003 to 2013, the price of AAPL rose from $11/share to over $400/share.

Rapid price increase doesn't always mean "bubble". Sometimes innovative things
are created.

~~~
vannevar
Apple is a company that created a lot of real value during that period.
Bitcoin is a currency that claims to offer some marginal advantages over other
currency, but certainly not enough to justify the rocket ride. The biggest
advantage that Bitcoin is offering these days is that it will be worth 50%
more next month than it is today. That's a hard advantage for speculators to
ignore, but it is ultimately an unsustainable pyramid scheme.

~~~
etherael
Yeah, apple is obviously so much more valuable than bitcoin because having
computers in prettier cases or phones with prettier user interfaces is
incalculably more valuable than access to a provably fair and reliable
financial system not captive to the global banking cartels or their crony
governments.

This place is really starting to depress me.

~~~
andyhmltn
Are you seriously trying to say Bitcoin has more value than a multi-billion
dollar consumer company? Lol.

~~~
etherael
Not just any multi billion dollar consumer company, a descending and
overvalued one that never really contributed anything I see as particularly
worthwhile at any rate.

~~~
andyhmltn
That's your opinion. Many people disagree. Bitcoin hasn't contributed more to
society than Apple. The wide adoption of the mouse, GUI and multitouch screens
are just a few.

------
niggler
I hope that people who got in last year or earlier this year are starting to
sell some of their bitcoins, at least enough to cover the cost basis. I
wouldn't be surprised to see a very sharp fall soon.

~~~
oleganza
Unless these people have invested extra money they can afford to lose for the
reasons to save them from inflation and confiscation. Then they still have
enough cash to pay the bills, so why should they get back to fiat?

E.g. I myself and many of people I know are not going to sell a single Bitcoin
unless any sort of personal or global disaster. And many of them are going to
spend their BTC over time to avoid interaction with banking system as much as
possible.

~~~
bonzoesc
Fiat you can spend is more useful than fiat you can't.

> I myself and many of people I know are not going to sell a single Bitcoin
> unless any sort of personal or global disaster.

In the case of global disaster, who's going to be buying a fringe currency?

~~~
oleganza
If no one, then it's a total disaster. If it's recoverable, some will buy it.

------
xhrpost
Everyone keeps saying that a crash is around the corner and the current price
is unsustainable, been hearing it since $40/BTC, maybe earlier. I don't
completely disagree, the question I keep pondering though is, if there is a
big sustained crash coming, is it from $100 to $30, or $900 to $300?

~~~
MacsHeadroom
MtGox verification cue for people who want to buy more than $50k USD in a
month is almost 10,000 long right now. You do the math.

I'm going to go with something closer to $300 to $150 at least. If there's a
pop coming, it is a long ways off.

~~~
sturmeh
I got verified so I could fund my account without paying ridiculous fees, not
so I could buy more than $50k USD in a month.

------
nkohari
Is it possible to sell short, or buy put options? I think bitcoin has
potential long-term but this seems like a ridiculous speculation-fueled
bubble.

~~~
nawitus
Yeah, it's apparently possible to short bitcoins. If the recent rise in price
is a bubble, and it crashes back to about $30, it will still come back to
about $100 in a year, if bitcoin adoption continues.

~~~
knowaveragejoe
Has there been adoption for essential goods & services? All I've seen so far
are Internet services.

~~~
raamdev
[https://en.bitcoin.it/wiki/Trade#Material_.2F_Physical_Produ...](https://en.bitcoin.it/wiki/Trade#Material_.2F_Physical_Products)

~~~
knowaveragejoe
An impressive list in quantity, but upon closer inspection I don't see any
essential goods & services. Under "consumables" there are literally no general
groceries, just specialty foods. Under clothing, a bunch of niche items. It's
also worth noting that nearly all of these look like to be pretty low-quality
vendors.

~~~
nawitus
There's lack of payment options with "essential goods & services", like
groceries, but what's your point? _Any_ new currency, especially digital,
doesn't start with supermarkets, because supermarkets tend to be owned by
large corporations that are not first adopters.

If bitcoin will become a major currency, it will have to have a phase where it
cannot be used in general and only with a small number of companies. That's
not evidence that bitcoin will not become a major currency, it's evidence that
it hasn't yet, and nobody claims it has.

~~~
knowaveragejoe
What you say is true, but I don't see mass adoption anytime soon because it
seems there are no essential goods and services(and perhaps more importantly
complex B2B services) being bought and sold with bitcoins alone. I think it's
safe to say that the majority of these vendors accepting bitcoins are turning
around and converting them to USD to pay for operational costs and only a
small(if any) portion of their bitcoin revenue is traded as bitcoins. It will
always be that way until the large corporations that we are all beholden to,
especially as businesses, accept bitcoins.

So at this point it's really an investment vehicle and a convenient method of
exchange, not a replacement for fiat currencies.

------
jneal
That pizza laszlo bought [1] nearly 3 years ago would now be worth over a
million dollars.

[1] <https://en.bitcoin.it/wiki/History>

------
adrianwaj
I am going out on a limb and calling this price peanuts. The rise is due to
Cyprus, and if bankers keep stealing people's money (and printing it) ...
which they sure will because they compete amongst themselves about who has the
most multi-millions (regardless of how they got it)... a portion will move
their wealth into bitcoin. Also, as fiat currencies lose value, bitcoin will
rise. Bitcoin is a hedge against fiat.

add: in fact the ideology of bitcoin is steeped in disempowering central
banks. So you are buying into an ideology, and so long as the tech can keep up
with the ideology, and there's nothing with better tech, and central banks
keep ripping people off, then bitcoin will rise. It's far from perfect, but I
think the web itself was about unlocking information to empower people (as
created by hippies), something like the advent of literacy to empower people
to read the bible when it was limited to priestly classes. Bitcoin is like
grade 1 spelling and grammar, or the first web browsers: sure is better than
not having either.

~~~
mactitan
Yes, I would think the CB's to be obtuse not to be wary of digital currencies.
You can be sure the CB's are watching bitcoin and could easily manipulate it's
price. I.e. create a bubble and burst it.

------
balakk
What would it take for somebody like Amazon or eBay to (even partially)
support bitcoins? How much of a risk could it be?

~~~
ynniv
If you hold the bitcoin for a very short amount of time, it's not especially
risky. There's a company that facilitates payments in bitcoin:
[http://www.marketwatch.com/story/bitpay-integrates-
bitcoin-w...](http://www.marketwatch.com/story/bitpay-integrates-bitcoin-with-
fulfillment-by-amazoncom-2013-03-06)

------
cheeze
That's insane. Only a few months ago 1BTC was going for about $30 USD. There
were threads discussing $30/BTC where people were saying that it was too late
to get on the wagon...

~~~
Permit
What's insane is that people here were trying to find out ways to short
Bitcoin when it was at here at price.

~~~
drivebyacct2
Oh, there are a _number_ of users that have been nay-saying for months, or
longer. I hope they did manage to get a short in. That sounds vindictive, but
even in this thread are people that clearly don't understand BTC firing off
calling it a "scam". Poor people, should've bought two weeks ago.

------
grovulent
People like Max Keiser are calling 100k to 1mill per bitcoin. Hard to imagine.
I left my gpu running for a few weeks a year or so ago and mined myself 1
bitcoin. I figure that should Keiser's prediction comes true - it will be a
nice easy pay day - if not, I didn't waste much time, energy on it.

I've been looking at it lately though and thinking that it surely must drop
back soon. I'm thinking a drop back down to 15 us is reasonable.

~~~
waterlesscloud
Bitcoin is like a startup. If it works, it's worth a tremendous amount. If it
doesn't, it's worth nearly nothing.

Right now its proponents are valuing it like a tech startup stock- what's its
potential future value?

Its opponents have already decided it will fail.

Either side may be right at this point, though bitcoin has more going for it
than it did six months ago.

To me, the trend is currently towards "it's going to work", so I think it's
worth a gamble. But it's definitely a gamble.

I think cryptocurrency is without question a force for the future. It makes
exchanging money too easy and too fast for it not to eventually dominate
economic systems. Economies/companies that don't use it will be at a
disadvantage.

What's in doubt for me is whether bitcoin will be the winner of the
cryptocurrency market.

~~~
kjackson2012
The only way it "works" is if people start using it to pay for goods and
services.

Right now it is an investment vehicle for speculation. And the crazy
volatility suggests to me that most people won't feel comfortable using this
as a currency for transactions, until the volatility decreases immensely.

------
tquai
Earlier today this had 135 comments. Checked later, 200. Now 350! OMG BUY!
BUY! BUY!

------
rommelvr
This crash is becoming really worrisome. Will it ever stop?
<http://i.imgur.com/c2ZpwrS.png>.

~~~
oleganza
No.

------
vannevar
Bitcoins are in a speculative bubble. This bubble is attracting fringe
merchants, which provides a veneer of legitimacy to the dramatic speculative
rise. Note that there is no way to effectively short bitcoins at this point,
so there's no counterbalance to the speculation. When the bitcoin market turns
south, it will fall hard as the shallow liquidity evaporates quickly.

------
thetwiceler
Proof that Bitcoin is worthless:

I set up camp over the Golden Gate Bridge. I ask people if they'd be willing
to throw their lunch into the water (use their computer's time/energy/money to
mine Bitcoin), with no possibility of retrieving it, and in return I offer to
give them a certificate stating that they've thrown their lunch away (a
Bitcoin).

Now, I see no reason why anyone would expect why these certificates would have
any value. But let's suppose they do have value, and people can trade their
certificates, say, for a lunch (or perhaps half a lunch). NOW, suppose I have
been secretly stashing away those lunches (really it doesn't need to be in
secret - you don't care what happens to your lunch after you throw it away).
Then there is now objectively more value in the world than there was before I
set up shop - there are the same amount of lunches in the world, but there are
also now certificates that have some positive value. We've made a free lunch!

This is a contradiction. If we could create value by this silly game, we could
easily make as much value as we want, and we would have solved all the world's
problem.

But this should be obvious in the first place! Why on earth would you expect
to be rewarded with something of value (a Bitcoin) for doing something
fundamentally useless to society (mining Bitcoin). Even though mining Bitcoin
comes at a cost to you, this doesn't matter - it just means you're throwing
your lunch away.

Now why does the US Dollar have value? Instead of throwing away our lunches
for a certificate, we basically asked the government to store our lunches in
Fort Knox. Today, lots of gold and other items of value are held there. Why
are they held there? There is an implicit assumption that these items of value
support the US Dollar. The government knows it could not start "eating those
lunches" that it's got in its reserve! It would not yield society a free lunch
- it would crash the US Dollar.

~~~
polarix
"doing something fundamentally useless to society (mining Bitcoin)"

Does Visa provide value to society? "mining bitcoin" translates to "certifying
the current outstanding global transaction registry". FYI.

------
SODaniel
I think a lot of people here would benefit from reading some William Gibson
novels.

I don't think the BTC will ever be a 'currency' as the USD or the GBP. It is
also not necessary for the BTC to be at a 'fixed value' at any time. As a
virtual currency it's ok for the BTC to fluctuate heavily as the only thing
needed for it to still succeed is that payment systems are 'always on' and can
determine a spot price for goods and services.

I would rather see the BTC tied to 'Pizza index' than USD. This would make it
easy for people to use an in-app value determinator when making purchases.

Say you just tap your phone with a BTC wallet against a cash register. The
register answers, well your burger will be 0.00065 BTC at spot price as of
12.24.44.32 PM. Accept/decline.

That's it. I see the BTC/LTC (Litecoin) as alternative currencies but still
worthy of a HUGE market share for micro/everyday transactions.

~~~
millstone
Why would I want to maintain a bitcoin wallet if its value fluctuates heavily
every day? Would you want your checking account to do the same?

~~~
sliverstorm
This is why I wonder whether a company will come along and offer point-of-sale
BTC to USD (or other). They could perhaps issue plastic cards to their users
for making payments, and charge businesses 2.5% of the transaction for their
services.

------
mikemoka
How could the bitcoin exchange rate reverse its trend and start falling? Do
you have any scenarios in mind?

~~~
cadetzero
US government declares it an illegal currency, and if you accept bitcoins at
your business you will be investigated. Game over.

~~~
tomsthumb
Some numbers are illegal, but that's because they have particular uses (Crypto
etc). How in the world would the US be able to declare possession and exchange
of data illegal?

~~~
omni
Child pornography stored on a computer is data. The possession and exchange of
child pornography is illegal.

------
DanBC
Some people lack the knowledge and skills needed to be able to buy something
from Amazon. Compare buying something from Amazon with buying anything using
Bitcoins - Amazon is ridiculously easy.

Bitcoin will never reach that level of ease of use. But when it has something
like a 5 step LiveCD[1] it might start to get wider use.

[1] Something like insert CD, prepare anonymising stuff; load encrypted file
from USB stick; load key from hardware token and enter short password; and
have the distro wallpaper give idiot proof flowchart diagram instructions.

~~~
cadetzero
I'm not really sure why you say it's so hard.

You install the bitcoin wallet.

You sell something for bitcoins, and you give them your private key address in
your wallet.

You receive bitcoins.

You buy something with bitcoins else where, and you just hit send and specify
an address.

Simple as an account # + routing number.

Now funding your wallet with fiat currency is a little harder, but Coinbase
has mostly taken care of that. It's as hard as paying a credit card off - link
your current bank account, press buy or sell.

~~~
knowaveragejoe
Er, wouldn't you give out your _public_ key to receive bitcoins?

~~~
cadetzero
Yes, correct. Typo.

------
supervillain
Banks is still necessary to migrate analog currencies to digital currencies in
todays financial economy. People trust banks and they would also be offering
support on how to use the new currency, and with their investments on the
highest security to guard their assets, it's much secure for them to generate
the wallets and safeguard the information and incorporate them into the main
currency. Banks are absolute necessity for propagating the new system, and
merging the old currencies into bitcoin.

------
supervillain
If any big companies today would be the first to utilize Bitcoin and use them,
they would really glad that they did, with the prices of bitcoin soaring, the
more people invest in it the more the price gets higher and people trusts the
currency, it would be really wise to invest in them. Imagine if any of
Facebook, Google, Amazon, Paypal would use them first, it would be faster to
propagate bitcoins into the main financial system, and I think they will make
a really good and wise decision.

------
Hermel
I.e. the USD has fallen below 10 mBTC.

~~~
james4k
That's like saying the USD has fallen 80% in the last 30 days.

~~~
jwallaceparker
Currencies rise or fall relative to other currencies or commodities or goods.

So when you say "USD has fallen 80%" it always has to be qualified with
something like "against BTC."

But yeah, it sounds ridiculous.

------
roguas
Bitcoins were designed to do that. If the price for 1 BTC rises to the level
it becomes profitable to offer them computing power for the network people
will generate new money. Until then its value gonna rise. This will loop until
infinity.

Its hard to compare against dollar. As bitcoin is newborn with freedom written
all over it. If it gets adapted more chances are its gonna be rising in value
and will become first a currency for savings later on a day to day activity
currency.

------
dubcanada
Excuse my lack of knowledge, but seeing as how one BTC is now worth $100. Is
it possible to send someone half a bitcoin or 1/10th?

Or is it a single unit or nothing?

~~~
fsckin
<https://en.bitcoin.it/wiki/Units>

BTC can be sent in any amount, all the way down to Satoshis at 0.00000001 BTC.

------
supervillain
Imagine, if banks are using a bitcoin wallet, issues a bitcoin card (in a form
of debit, savings card or credit card) with private keys on back and public
keys on front, the bank then deposits money into the wallet then the end user
withdraw money with the same bank or supporting banks.

This is one of the scenarios I think that would incorporate bitoin into the
current financial system.

------
adrianwaj
Gold and silver for day-to-day local transactions.

Bitcoin for larger sums, international or less timely.

------
machilin
It's difficult to say how much can this rise indefinitely. The higher the
rise, if the bitcoin bubble does collapse, expect a even bigger fall when
speculators start dumping their bitcoins on the market.

------
onlyup
So.. how do I mine bitcoins again?

~~~
VMG
ASICs

~~~
sliverstorm
At $100/BTC, GPU mining might be profitable again. Slow, but profitable.

~~~
josephagoss
Unfortunately not, I have been watching GPU mining returns vs the BTC price
for a while, all the time the hash rate of the network is always increasing a
little quicker than the income from mining.

The ASIC's will continue to dominate. Per watt of electricity they are far
more efficient and we will see thousands of ASIC coming into existence this
year. GPU mining Litecoin and converting over the USD or Bitcoin is actually
more profitable.

~~~
corysama
I fired up a miner again recently just for fun. Took 5 days to dig out $15.
That's comparable to the $3/day the same GPU could mine back when the exchange
rate was $5/coin. But yes, the ASICs are coming. There are only a few in the
wild right now. Pretty soon there won't be much point to GPU mining.

~~~
josephagoss
Nice, that's not a bad return! I can't even get $2 a day out of mine.

I wonder how difficult it would be to build a ASIC yourself?

~~~
sliverstorm
The difficulty is not going to be your problem; the problem is the initial
mask costs.

PCBs can be made for hobby projects. ASICs cannot, unless you have money
literally coming out of your ears.

[http://electronics.stackexchange.com/questions/7042/how-
much...](http://electronics.stackexchange.com/questions/7042/how-much-does-it-
cost-to-have-a-custom-asic-made)

------
al1x
...and what happens when a competing cryptocurrency is released?

~~~
wmf
There are a bunch of forks of Bitcoin that have received approximately zero
attention (relatively speaking). Standards tend to be natural monopolies.

~~~
sturmeh
LTC has seen 200% growth over the last week, people are adopting it hoping it
will be an equal competitor.

Other people are adopting it just in-case they're right.

~~~
al1x
This seems a natural consequence of bitcoin's adoption and growth. I see
virtually no barriers to entry here, no limit to the number of competing
currencies that could be introduced, and as a result no real value to
bitcoins. How long can one cryptocurrency expect to be allowed to grow before
another comes along and dilutes the market? What factors prevent the average
consumer from considering them substitutes? Bitcoins and competing currency
are fundamentally similar. They vary only in retail and consumer adoption. I
can't make sense of this bitcoin hype.

~~~
cjg
The barrier to entry is in gaining the adoption.

~~~
al1x
then spread awareness -- <https://bitcointalk.org/index.php?topic=134179.0>

~~~
cjg
Awareness doesn't imply adoption.

What is the incentive for merchants to start accepting litecoin? Why not just
bitcoin? Litecoin won't give them lower transaction fees (over bitcoin), it
won't give them more customers (anyone who can pay in bitcoin can pay in
litecoin).

------
btbuildem
It gapped up on no volume whatsoever.. April Fools prank?

~~~
polarix
I believe there was some illiquidity early this morning, but I might be
hallucinating.

------
drivingsouth
reminds me of the icelandic krona

~~~
drcode
A currency rapidly increasing in value reminds you of one that was rapidly
decreasing in value?

