
Bitcoin hits $200 - infinitivium
http://bitcoincharts.com/charts/mtgoxUSD#rg5ztgCzm1g10zm2g25zv
======
graeham
Does anyone have a link or justification in anyway for the rise in the
conversion rate? I like the idea of an independent (non-government), secure
currency - but I can't see this as anything other than a speculation driven
investment vehicle. Seems like tulip mania to me [1].

Also, is there any management of Bitcoin to prevent excessive currency
fluctuations? Not having this would seem to be a flaw to me - you can't have
an exchange-based economic system without some expected stability in the value
of the exchange.

[1] - <http://en.wikipedia.org/wiki/Tulip_mania>

~~~
aneth4
It's hard to say. There are many who justify prices far higher based on future
adoption. Adoption is picking up at a remarkable rate.

The USD money supply is around $3T or $10T, depending on whether you are
counting money multiplied by leverage. The US GDP is $15T. If we presume that
a currency then should be on the same order of magnitude of money supply as
the GDP or transaction volume, it's not hard to project a $100B+ supply of
bitcoin. With the supply currently at $2B, there is a lot of room to grow. I
have no idea if this analysis is reasonable, but I suspect it is close to the
"story" behind the bubble.

Of course all of this presumes that bitcoin will prevail as the leading
crypto-currency, regulatory hurdles will be surmounted, and the currency
remains secure. Those are not implausible ifs. In fact, I'm a big believer in
the future of bitcoin, even if it is getting a little ahead of itself.

I anticipate a significant collapse at some point, regardless of the success
of bitcoin. That crash may very well be from $1000 to $200 though.

~~~
dragontamer
<http://blockchain.info/charts/n-transactions>

The number of bitcoin transactions per day has remained roughly constant since
February. The price of Bitcoins however, has risen by 1000%.

Do you have any evidence to suggest that people are actually using Bitcoins?
Because the hard evidence I've got seems makes it seem like Bitcoins are
getting traded like crazy, but not necessarily used.

~~~
aneth4
For one example, BitPay is doing quite well:

[http://www.dailydot.com/news/bitcoin-legal-sales-higher-
ille...](http://www.dailydot.com/news/bitcoin-legal-sales-higher-illegal-
revenue/)

~~~
dragontamer
And my statistics include all of BitPay's transactions, since every bitcoin
transaction has already been included in my graph.

Bitpay may be growing, but Bitcoins in general are not.

------
mikecane
Is it safe for me to express my belief that Bitcoin value is being manipulated
by forces who intend to crash it? I've stayed away from it simply because of
that. I fear some people are in for a very rude awakening. Don't count your
money just yet -- and, for god's sake, don't try to use it as the basis for
any paper money loans! None of you knew about Stuxnet. The story of Bitcoin's
infiltration and manipulation is years away from being revealed.

~~~
Hermel
Who do you have in mind? I don't see anyone who wants Bitcoin to crash
desperately enough to spend millions on inflating a bubble and then pop it -
which is a very risky and costly plan. More likley would be a scenario in
which someone who holds a lot of Bitcoins pushes MtGox prices upwards in order
to be able to sell OTC at inflated prices. However, given that Bitcoin on
MtGox has a volume of USD 20 million daily, this takes a lot of resources. It
is much easier to manipulate a low-volume stock on the stock market.

~~~
davidw
Fun fact of the day: in Italy, this idea of "but who's REALLY behind it" is
called "dietrologia", or, very literally translated, "behindology".

My theory: it's the Mayflowers.

------
AndrewDucker
It's fascinating to watch this, largely because Bitcoin has no "natural"
value. The only utility it has is as a transfer of value from one place to
another, and it can do that equally well with a bitcoin being worth $1 or
$200.

But it's really interesting to watch the value ratchet up, and easy to see how
you can do this - if people will only ever sell a bitcoin for (say) 1% more
than they bought it for, and people buying things with bitcoins don't care if
the things they're buying with it are priced 1% higher than they might,
theoretically have been, then the price of bitcoins can keep increasing
indefinitely.

Until, that is, some people decide that they want to get rid of a lot of
bitcoins, and thus are willing to accept less than that, to shift them
quickly. Then the price drops. And then more people might also decide to sell,
so as to convert the bitcoins they have at the value they're now worth.

It's classic sentiment pricing - but without any of the value "stickiness"
that you get when there's some utility to be gained from the objects you're
trading.

(I'm not trying to talk Bitcoin down here, I find the whole thing fascinating.
Just thinking out loud.)

~~~
klipt
> The only utility it has is as a transfer of value from one place to another

Which is a lot of utility. Consider that in the US we still write physical
checks, and paying by credit card costs the vendor a few percent every time.

However that utility is not limited to bitcoin. You can set up a similar
algorithm using a slightly difference hash, and voila you have bitcoin2. Some
people are worried that bitcoin is deflationary; I'd be more worried about
alternatives popping up and inflating the whole supply. Especially since
current bitcoin favors those who started mining early (and are now
millionaires?) - why adopt a currency that makes other people rich when you
can just mine your own new currency?

In the end, it depends what the crowd decides to do with it. The value of fiat
money is always subjective (although at least USD is backed by the fact you
can use it to pay your taxes.)

~~~
guard-of-terra
There are a lot of alternative currencies: litecoin, ppcoin, terracoin and so
on. You can easily mine your own, but it trades at 1/100 of BTC usually.

"Mine your own new currency" -- pre-mining coins before releasing your coin to
general public is considered very improper act.

------
eduardordm
This last price fluctuation is doing more harm to bitcoin than a moratory does
to a country.

No one can even explain formally why this is happening. Lack of liquidity?
Penny stock behavior? Are there sharks driving the prices to make a
spectacular exit?

Why isn't mining regulating the prices? Is it too costly?

My personal and completely uninformed opinion is that bitcoin is doomed.

~~~
rms
It's happening because more and more people are buying Bitcoins are fewer are
selling. Supply and demand. This interview talks about the real-time increased
demand. <https://news.ycombinator.com/item?id=5517634>

~~~
mfringel
Every seller must have a buyer, and vice versa.

A better way to state it is: "More people are willing to buy at the seller's
asking price, than are willing to sell at the buyer's bid."

------
dancesdrunk
I have merely a passive interest in economics, but my two cents:

There was an (anonymous) article a while back from someone who ran an [I
believe a small] exchange, whereby he could manipulate the buy/sell prices to
his advantage (driving up BTC price) - and I can see that happening very
easily; I don't know what sort of algorithms Mt Gox (or any exchange) runs for
it's immediate buy/sell spot price, but a simple variation of the weighted
average over the past hour * 1.05 would easily provide a price that is always
rising, unless a user manually gives a lower buy / sell price - and even then
that would have to be beat the current price by 5% to make any impact on the
spot price. Hell, you could just inflate the prices you show to users by a
certain % to create that sort of meteoric rise, even if they do place
lower/higher bids - those bids are somewhat based on what the value they see
in that moment.

Is this a bubble? We just don't know. Currently there are people who are
willing to part quite a lot of money for a scarce virtual currency, so by all
accounts if there's a demand - the value will rise, especially if supply is
limited (not just now, but there will only ever be a finite amount of BTC).

Even with the hiccups (0.8 vs 0.7 double spending, Mt Gox crashes) - and a
price crash in it's history - surely anyone would think twice before putting
down $200 per BTC, especially when it was worth only $15 three months ago.

What's convincing these folks to invest, I just don't know. Maybe they see
something I don't, but at the moment I just see a very overvalued bubble just
waiting to pop. A part of me fears that it's being overrun by folks who don't
trust private financial institutions to hide their (illegitimate) wealth, as I
don't think the average Cypriot has the wealth, nor there are enough Cypriots
(or average / middle/working-class Europeans) altogether to create the demand
which would push the price where it is now. Maybe someone can run the numbers;
average salary, savings, investments, total # of folks who are tech savy
enough to buy BTC, compare that with the uptake in Mt Gox (or other exchanges)
signups, volume, traffic etc and put together a more substantial assessment.

BTC is something the world needs badly, and over the next decade I can see it
becoming incredibly prominent. But the sort of rise we've seen in the past 3
months should've taken at least 3 years; and even then it's an incredible run
for what's nothing more than a digital, limited commodity.

~~~
olalonde
As long as there are multiple bitcoin exchanges, it will be very hard for a
single exchange to influence the price of bitcoin thanks to arbitrage traders.

~~~
drcode
Therein lies the problem: MtGox is so huge so that even though it's not a
monopoly, I'm not sure it doesn't operate as a de-facto monopoly when it comes
to price determination.

------
shanelja
Wasn't it like $130 a few days ago? This kind of inflation is really cool for
the people invested in bitcoins but this is the point where I would panic
sell, but perhaps I'm a coward.

EDIT: Link's down, it was $203 at 12.06 GMT.

~~~
andyhmltn
Yes and a few days before that it was $100. I was watching it out of curiosity
yesterday and it went up about $20-$30 I believe just while I was at work.
Hopefully it crashes, stables out and then gains use as a currency rather than
an investment.

~~~
smosher
> Hopefully it crashes, stables out and then gains use as a currency rather
> than an investment.

That's impossible. The only low stable price is $0 which is useless as a
currency. Only when its user base is no longer growing and there is enough
value to satisfy the entire user base will it stabilize. My expectation is
that unless it dies entirely it will continue to grow until it has more or
less total global coverage. With the limited supply of BTC, it has to be worth
much more than $200 apiece.

A crash just causes problems but if you want to use it as a currency I think
what you really want to move the decimal, which is purely a representation
issue: it's ~$2/centiBTC.

------
oleganza
It still has just $2 bln "market cap". If it was a payment processing company,
you would call it a slow democratic IPO, not a bubble about to burst.

~~~
aneth4
Market capitalization of a company and the bitcoin money supply are not even
remotely similar.

------
DanBlake
The problem with bitcoin is 1 or 2 events that give the public a 'scare' have
the potential to nearly floor the usd value.

All it takes is one headline on CNN like "Joe Blow selling Anthrax and Cyanide
on Silkroad/Craigslist for Bitcoins" for the general public go to fucking
apeshit and cause some real 3 letter organizations to shutter most bitcoin
exchanges with secret subpoenas and such.

Realistically, there is so much dependency on mtgox, once it went down I
believe the price of bitcoins would likely be 10x less than it is currently.

~~~
oleganza
Almost everyone new to Bitcoin already has heard every scare story about
drugs, money laundering, tax evasion, viruses, hackers, conspiracy etc. The
news about DDoS or stolen money will not be a huge surprise (unless ALL money
is stolen at once :-)

~~~
DanBlake
What I am suggesting is a league above the things you mention. The US
generally does not fuck around when it comes to those sorts of things and has
much broader power to do crazy shit (seize domains, secret subpoenas, etc..)
when it involves national security vs generic anti-drug and weapon agenda.

~~~
ewoodrich
Drugs dealers typically use a large amount of cash, but that hasn't produced a
pervasive stigma about physical currency in the US. So I don't think users
will necessarily be dissuaded by reports of criminal use.

------
ewoodrich
I'm not a substantial bitcoin investor, but I follow bitcointalk.org fairly
actively, and there has been a fairly noticeable increase in posts about ASIC
(Application Specific Integrated Circuit) solutions being a profitible means
to mine Bitcoins. I don't know whether this is a driving factor, but it
certainly relates to the expanding market in general.

The wide perception of Butterfly Lab's ASIC solution as being a scam has
resulted in wide interest in alternatives, which are legitimized by seemingly
functional and deliverable ASIC solutions by companies like Avalon. At over
6,000 Mh/S per module, they exceed the best GPU/FPGA solutions for mining
almost by a almost a hundred fold (after factoring power consumption), which
has produced a tangible market of bitcoin hardware.

Regardless of whether specialized Bitcoin ASIC hardware is cost effective, the
production serves to legitimize the currency/producing market as a whole (as
well as reinforcing the hype/gold rush mentality for miners and speculators).

I'm still not sure how/whether the currency will eventually settle, but it is
very interesting to follow.

~~~
chii
having specialized hardware that is a commodity to mine, and later, when
mining is no longer profitable, to verify transactions, is a good thing! I m
quite glad that it is being looked into.

------
bobsy
What goes up...

The past couple of weeks has shown how easily the bitcoin market can be
manipulated. People used to do this with shares. Buy up all the shares to push
the price up. Then get out with a profit crashing the value of the share.

I don't think this is any different. I wouldn't be surprised if a handful of
parties were responsible for the explosion in bitcoin value.

You could point to the Cyprus banking crisis perhaps as a reason for an
increase in value but realistically Bitcoin is just one major hack away from
being worthless again... Its like keeping your gold on a wooden shelf above a
lava pit.. why anyone would put long term savings into Bitcoin right now is
beyond me.

~~~
xhrpost
The "price" is whatever the last trade went for. If there are market
manipulators buying up "all the shares", it would seem like a big risk as they
are relying on there being enough bids within their profit range to sell them
back at a profit. Right now for example, you could sell 100 BTC on Mt.Gox for
an average price of $203USD/BTC. Try to sell 10,000 BTC and the average drops
to about $195, and 100,000BTC would only average $111.

------
sfjailbird
BitCoin reminds me so much of the early days of the internet; the ingenius
technology, the promise, the hype, the misconceptions, the rampant ill-
informed speculation. And of course the few neat things it could actually do,
with a promise of so much more to come.

And perhaps, the dot-com style bust at the end that puts things back in
perspective and paves the way for real growth and adoption...

------
soapbeard
One thing I don't get about bitcoin is how the transition from paying for
mining to charging for transactions is going to be handled. This seems like a
big upcoming change now all this money is sloshing about.

I take it the plan for transaction fees is carefully worked out to make it
still be attractive to miners and merchants vs charges for visa etc or have I
got the wrong end of the stick?

~~~
aychedee
There is no transition required. When send an amount of bitcoins to another
address you specify how much of a transaction fee you are willing to pay to
the miner who solves the block of transactions your transaction will be
included in. Any given miner can prefer to solve transaction blocks with
higher fees. Eventually it will get to the point that if you don't include a
transaction fee your transaction will just be ignored and not included in the
block chain. At the moment it will probably be included anyway because of the
inherent reward for creating a valid transaction block.

------
ck2
So how much was that first pizza worth now?

~~~
ewoodrich
At the original price of 10,000 Bitcoins, it would be presently worth
1,880,000 USD.

~~~
samholmes
Looks like I should be selling pizza

------
Keyframe
I have something like 0.01BTC (tried mining it once, it wasn't worth it), by
this rate it will be worth $200 someday too.

~~~
StavrosK
Someone paid me 0.5 BTC for a $15 subscription a while ago, now it's worth
$100.

------
antr
I'd love to short Bitcoin.

Are their any platforms/startups that allow short selling this currency?

~~~
ghgr
Yes, there are. But consider that people have been saying this since BTC
reached $30. Most of them would have been / actually are out of the market.

Of course, I'm not saying that you are wrong, just that the market can stay
irrational longer than you solvent.

~~~
antr
> the market can stay irrational longer than you solvent

100% agree

------
duiker101
Can we expect an exceptional fall soon?

~~~
Yuioup
At some point people are gonna wanna cash in ...

------
mrjava
I can't believe this is catching up

------
madaxe
The funny thing is that it didn't hit $203, or $201.12, but $200.

Whoever is driving this big buys to drive up the price is doing it at very
predictable, very specific price points, across multiple currencies.

On mtgox GBP, for instance, it plateaus and peaks at very predictable values -
£125, £130.

Frankly, I think that what's going on is there are a few traders (actual
traders, not BTC speculators) who are driving the entire market. Hell, you can
push the GBP price around just by buying or selling a few dozen BTC, the
volumes are so low.

Guess what I'm getting at is that there's a hidden force behind this, and
they're not dumb - but most of the speculators apparently are.

~~~
tomp
What's more likely is that a lot of people set their limit sell orders to 200,
because the number is easy to come up with and easy to type.

~~~
madaxe
Yeah, but that still basically says "Rank Amateurs", because you should
_never_ pick the psychologically obvious point, as otherwise you'll end up in
the sell queue behind a gazillion others. Always best to go in a few points
below the obvious level for your sell, and a few points above the obvious for
your buy.

If you look at any "real" market, prices rarely adhere to nice round sticking
points, because people are at least trying to second guess what the other guys
are doing, rather than just acting as though they're the sole person in the
market.

~~~
xhrpost
This behavior has had me wondering about the experiences people are going to
get about how markets work. This one being largely unregulated could turn out
to be more cruel than the stock market and some people are going to face the
cold reality of that. I remember a few days ago when Mt.Gox. got hit by that
DDOS, someone on Twitter was asking how Mt.Gox was planning to compensate
customers if the value of BTC fell. Just enforces your point about the
experience level of people driving this market.

------
OGinparadise
Should I cash in my pizza money <http://motherboard.vice.com/blog/this-pizza-
is-worth-750000> or wait for BTC $400 ;) ?

~~~
Fuzzwah
Bitcoin Pizza Index = $2,091,789.81

Wow.

