
1 Bitcoin Worth 10 USD - mrb
http://bitcoincharts.com/charts/mtgoxUSD#rg2ztgSzm1g10zm2g25zv
======
cs702
In the view of many HN members, Bitcoin is a Ponzi scheme. In the view of
other HN members, Bitcoin is an experimental crypto currency, the use of which
is unlikely ever to expand beyond idealistic hackers, online gamblers, and
underground characters.

In my view, Bitcoin is likely to gain wide adoption worldwide over the long
haul -- that is, over a period of many years or even decades. Its price is
therefore bound to rise far above current levels over time.

I've laid out my reasoning here: [http://cs702.wordpress.com/2011/05/29/on-
the-potential-adopt...](http://cs702.wordpress.com/2011/05/29/on-the-
potential-adoption-and-price-appreciation-of-bitcoin-in-the-long-run/)

~~~
moonchrome
Many people don't realize how small Bitcoin is. It's trading in the $1M range.
That's like few hundred people playing with their savings - low liquidity =
high volatility - talking about this as something significant/newsworthy is
silly.

~~~
ewillbefull
Bitcoin trading volume over a 30 day period is more than $20 million dollars,
which is incredibly notable for an open-source currency which isn't managed or
operated by anybody. The technology involved and the implications of its
growth are very significant/newsworthy.

The fact that it's trading at $10 again is also very significant to the
Bitcoin community, it hasn't done that in more than a year. And it'll probably
reach 12 by the end of the year before it stabilizes again.

~~~
moonchrome
>trading volume over a 30 day period is more than $20 million dollars

Again - as a currency this is insignificant. I agree that bitcoin is a great
technical accomplishment but talking about it's price as it has any meaning
outside of a few hackers playing traders is not realistic.

~~~
Unoeufisenough
@moonchrome is right.

One of the world's large credit card networks processes on the order half a
trillion dollars in a typical 30 day period. So bitcoin has a way to go yet
before it's volume is significant compared to other ubiquitous electronic
payment methods.

Consider that they need to grow by a great many orders of magnitude to become
globally economically significant, yet consider that the supply of bitcoins is
relatively fixed.

How smoothly do you think that is going to work?

If you believe in the future bitcoins, you also have to believe that their
value will have to eventually sky rocket by several orders of magnitude. If
you believe this you should hoard every bitcoin.

So if you actually believe in bitcoins, why would you ever spend one?

If you don't believe in bitcoins, why would you ever accept one?

do you see the problem yet?

~~~
ewillbefull
If you don't think we should be discussing bitcoin -- which is very different
from any other currency out there -- simply because it hasn't reached the
trading volume of Visa... I don't know what to tell you. Demonstrates pretty
clearly the narrow window of information you're willing to consider.

(This on a website for hackers and startups. Pfft.)

~~~
385668
I'll agree with you on that, but I think a good point was raised. As an
inherently deflationary currency, particularly once the maximum number of
bitcoins are created, wouldn't the natural thing for people believe it will
eventually be incredibly valuable be to hoard them? I'm not saying that a
deflationary currency cannot ever work, but with an inflationary currency,
there is greater worth in spending one's money on goods or investments that
will accrue worth at a greater rate than the inflation, no?

~~~
Unoeufisenough
Exactly. This is the point I am trying to make.

------
davidklemke
This is exactly the last thing BitCoin needs to be successful as a currency.
After the speculative bubble last year it started to make some headway as the
price remained relatively stable. Now in the past 2 weeks we've seen its value
appreciate by 50%, something that just doesn't happen with traditional
currencies. It's dangerously reminiscent of what happened last year and shows
that the BitCoin economy is still very susceptible to manipulation.

If it was just organic growth in the currency I wouldn't say there was an
issue but if you look at the transaction volume it's clear that the surge in
trading that occurred both a week ago and just recently is what is responsible
for the latest increases in value. I don't have enough evidence to say that
the price has been deliberately manipulated upwards, and indeed the increase
could just be a reflection of the higher demand, but it does call into
question how stable BitCoin can be.

I'm not an advocate against BitCoin, far from it, but I honestly believe that
a highly valued BitCoin is the worst thing it can have as a fluctuating value
doesn't benefit users of the currency. The only people who benefit from a high
price are the speculators and investors, those who are at odds with BitCoin
being a proper currency.

~~~
hollerith
>in the past 2 weeks we've seen its value appreciate by 50%, something that
just doesn't happen with traditional currencies

It happens with gold, which could be viewed as a traditional currency.

~~~
jimktrains2
To be pedantic, and to note I'm not an economist, I thought the value of gold
or silver was always constant, it was the currencies based on them that
inflate or deflate.

~~~
sp332
Nope. As more gold was mined during gold rushes, the value of gold decreased.
As people found more uses for gold and demand outstripped supply, the value
increased. And of course the relative value of gold and silver changes over
time.

~~~
Symmetry
Particularly, the discovery of the New World with all the gold there caused
some huge disruptions in the Old World economy.

~~~
jimktrains2
Makes sense.

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technotony
If you look at this data over the max range
(<http://bitcoincharts.com/charts/mtgoxUSD#tgSzm1g10zm2g25zv>) then it looks a
lot like the Gartner Hype cycle (<http://bit.ly/N1XCnb>). I wonder if Bitcoin
is past the trough of disillusionment and ready for a serious explosion?

~~~
gwillen
I'm a strong supporter of bitcoin, and I have a bunch of it, so don't get me
wrong. But I suspect we may well be seeing a second big bubble here. Only time
will tell.

~~~
ewillbefull
This isn't necessarily a bubble, but market reaction to the block reward
halving later this year. The decreased inflation will double the value of
bitcoins, and this trend was anticipated well in advance.

------
sylvinus
Am I the only one to think Bitcoin is just a big Ponzi scheme benefiting the
first users/creators who got all the first ones?

~~~
Animus7
This argument never made sense to me.

If I were designing a Ponzi scheme intending to defraud people, I wouldn't
base it on a 100% transparent network of open source software using public
domain crypto functions, where the wealth creation is by design not only
randomly allocated, but mathematically capped to a static trickle rate.

It's like the most badly designed Ponzi scheme ever.

~~~
Steko
It doesn't have to be intended or designed as a Ponzi scheme to end up as one.
E.g a legitimate investment manager could cover up a bad month/quarter/year
hoping to fix it down the road then wind up being flumoxed by compounding
losses or seduced by the increased business they get by beating the rest of
the market during a downturn.

------
greyerzer
One problem that I have with Bitcoin is its complete dependence on the
strength of its crypto. While breaking it may seem impossible at the moment,
advances in computation speed and cryptanalysis may one day lead to it being
broken. This would basically make Bitcoins worthless overnight.

Of course traditional currencies can be forged as well, but printing huge
amounts of forged bills and bringing them into circulation involves all sorts
of logistical challenges that don't apply in a digital world. Moreover, forged
bills are typically not absolutely perfect and can be distinguished from
genuine money, this is not possible with a purely digital currency. The fact
that paper currencies can be forged is incorporated into the design of the
system, whereas the Bitcoin system is based on Bitcoin's crypto being
unbreakable.

~~~
jimktrains2
It's not just speed, but number of nodes. If someone could, lets say in 10
years, build a block-chain of equal length to then-current one, they would
still need to control > 50% of the nodes a significant portion of the network
sees.

------
csomar
I'm still convinced that the reason for that is the death of Bitcoinica which
offered shorting.

Without shorting, the only way to make money on Bitcoin is to go long. That
is, the price will keep going up until investors thinks it's too much
overvalued and BitCoin will crash again to 4 or 5 USD; the value that shorting
stabilized it at.

------
xSwag
Damnit I remember when they were less than $1 and thinking to myself "this
will never take off". If I had invested $100, I could have sold today for $1K.

~~~
Symmetry
And I wish I had invested $10K instead of $1K in ARMH back when it was $5.
It's easy to see missed financial opportunities in retrospect.

------
bsphil
The difficulty in mining a block of 50 BTC is _far_ higher than it was the
last time 1 BTC was worth $10.

------
pizza
This won't last; is a bitcoin at least as valuable as 10 USD for people who
_use_ BTC?

~~~
mrb
As long as its crypto primitives remain secure (SHA-256, Elliptic Curve
crypto, RIPEMD), if the Bitcoin economy continues to grow 5x, 10x, 20x, etc,
then its value should increase 5x, 10x, 20x, etc, because there is a fixed
number of coins available.

Both of these assumptions are likely. So I would say, yes, this exchange rate
should last (of course there will be some bumps on the road, bubbles, crashes,
etc).

~~~
btilly
_there is a fixed number of coins available._

Not necessarily true!

There is slow growth in coins. But if it takes off then we know all of the
primitives to make a second bitcoin. Establish one with a price peg to
existing bitcoin. If you maintain it long and well enough, it will become
accepted as equivalent. Once that happens you've done a big one-time increase
in the supply.

In fact I would recommend doing this at some point. Because otherwise bitcoin
has built-in deflation. That is bad economically because it discourages
investment in anything else, like building businesses.

~~~
jimktrains2
It's asymptotic growth of coins. There will never be more than x number of
bitcoins. (I forget the value x is exactly, but it is a finite, pre-definded
number).

~~~
mrb
Correct. The fixed number of coins I referred to is 21 million.

<https://en.bitcoin.it/wiki/Controlled_Currency_Supply>

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taligent
I really don't get Bitcoin.

What is the point in a currency that ranges from $2 USD to $12 USD in a year ?

~~~
ghshephard
The value of the currency doesn't really matter to those of us who use it - It
could be 1 bitcoin to 1 USD, or 1 bitcoin to 10 USD - as long as the downwards
volatility is kept to a minimum.

What's problematic is when you buy something worth $50 USD with 5 Bitcoins,
and the Bitcoin to USD drops before the seller can get their USD from MtGOX
(or whoever their Currency Exchange house is).

The upwards volatility isn't a problem in that buyer/seller scenario. If I
want to buy something worth $50 USD, and I go purchase 5 bitcoins for $50USD,
and then, those bitcoins are worth $55USD by the time the purchase clears,
then I only paid $50USD and the Vendor received $55 USD. Everyone comes out a
winner.

~~~
bunderbunder
Upwards volatility creates a similar problem on the other side of the
transaction, though.

If BTC is rapidly rising against the dollar, then I'd rather spend dollars
because I'll want to keep the BTC in my account in anticipation of further
appreciation.

And, for that matter, the fact that the entire conversation is framed this way
doesn't bode well for BTC as a currency. People who use a currency as a
currency measure its rises and drops in value by comparing what you can buy
with a given amount of the currency in the present versus what you could buy
with the same amount of that currency in the past. When people measure
something's value in terms of some other currency, as is the universal
practice for BTC, that indicates they're thinking of it as a commodity for
investment or speculation rather than a currency.

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drivebyacct2
Much better than the $3 a while back, but still not close enough to the $14 I
paid for mine. (Not very many, just for fun).

~~~
throwaway54-762
Thanks, I placed a sell order at $13.99

