
Bitcoin approaching $1000 - daraosn
http://markets.blockchain.info/
======
analog31
If nothing else, watching the up's and down's of Bitcoin is a motivation to
think about what life would be like in an economy where currency is volatile.

~~~
cfontes
When I was young in Brazil we had an inflation rate that was crazy ( 1985+ )

I remember my parents getting their paychecks and running with me and my
brother to the supermarket which was CROWDED to get the whole month
supermarket done. If you waited 3 days or so you would not be able to buy all
the food you needed.

It is terrible I can assure you that.

Here is the kind of inflation I am talking about.

"It stayed in the 100% level until the mid-80's and then grew to more than
1000% a year, reaching a record 5000% in 1993." Wikipedia.

~~~
lingben
Bitcoin's deflationary inevitability is actually worse, I would argue, than
the kind of inflation you mention.

~~~
TomGullen
How so? That sounds pretty dire.

~~~
betterunix
Imagine if you had to pay off any kind of Bitcoin debts this week.

~~~
jamoes
Simple solution: don't go into debt. If you must go into debt, make the debt
in terms of hours worked or some other asset.

~~~
betterunix
That is a great way to establish an aristocracy, where only people who are
already wealthy can ever start or maintain a business. What do you think
venture capitalists are? They are creditors, whose loans enable people to
start businesses they could not otherwise afford. Your great idea for
disrupting some old entrenched industry will almost certainly need to be
funded, and if you are not already wealthy that will mean taking on debt.

Not only that, but there are plenty of people whose businesses need to take on
short-term loans to remain competitive. Maybe your business is profitable but
you do not have enough capital to fill a really big order -- which could be a
great opportunity for your business to grow. If you are not going to take on
any debt, then the really big order will be given to your competition, and
eventually your business will fail.

Debt is not universally bad; there are a lot of cases where debts make sense.
Debt is bad when you cannot repay it, _which is why deflation is bad_.

~~~
jamoes
I would argue that if the global economy operated on a fixed-supply currency,
there would be no aristocracy. Those with the largest stash of currency would
have to spend some of their wealth in order to realize its benefits. This
spending would naturally result on a more even distribution of wealth.

It also wouldn't be the end of debt - just the end of the ridiculous debt-for-
life system that most people live like today.

~~~
betterunix
"I would argue that if the global economy operated on a fixed-supply currency,
there would be no aristocracy. Those with the largest stash of currency would
have to spend some of their wealth in order to realize its benefits. This
spending would naturally result on a more even distribution of wealth."

You are assuming that the richest people in the market would not have any
income at all. I think that assumption is pretty dubious. Sure, they will
spend some money; but all they would need to do is balance their budget, and
they would remain rich perpetually since the currency has a fixed supply. In
fact, if their income was larger than their spending, they would actually
become _wealthier_ over time, as they removed more and more money from the
market and took advantage of deflationary effects.

------
andy_ppp
Big sell off end of the year, but I'm hedging by trying to buy some now. It's
a finite commodity of real utility and value. It's recognised as legal by the
US government (and it's not anonymous).

I will be laughed at but I'm going to suggest this time next year it'll be
worth $10000 per bitcoin :-D

~~~
dnautics
I think your analysis is correct, but I'm still downvoting you.

~~~
andy_ppp
Well, in this topsy-turvy world, I will up-vote you comrade.

------
MattyRad
A lot of people bearish on Bitcoin's future claim that it cannot last and the
fad will be extinguished because it isn't backed by something, like gold, or a
government. I would like somebody to explain why gold is inherently valuable,
or why government support is necessary. All I've really read on the subject is
that "gold is inherently valuable because it's always had value,
historically." Could someone elaborate?

~~~
cfinke
_I would like somebody to explain why gold is inherently valuable_

Basically, gold is valuable because it is useful. For example:

* Gold is the most maleable and ductile of all the metals.

* Gold is very efficient for transmitting heat and electricity.

* Gold has the highest corrosion resistance of all the metals.

* Gold does not oxidize.

* Gold can be used to make jewelry, which people find naturally attractive. It is the only "gold-colored" metal.

* Gold is used in electronic components: connectors, switch and relay contacts, soldered joints, connecting wires and connection strips.

* Gold alloys are used for fillings, crowns, bridges and orthodontic appliances.

* Gold is used as a drug to treat a small number of medical conditions.

* Small amounts of gold are used to remedy a condition known as Lagophthalmos, which is an inability of a person to close their eyes completely.

* Radioactive gold is used in diagnosis. It is injected in a colloidal solution that can be tracked as a beta emitter as it passes through the body.

* Gold is also used as a lubricant between mechanical parts on space vehicles.

* Gold is also used when making specialty glass for climate controlled buildings and cases.

* The visor on the helmet of an astronaut's space suit is coated with a very thin film of gold.

What can you _do_ with a Bitcoin?

~~~
MattyRad
The features you just described are equally applicable to different kinds of
metals/alloys. Arguably, other metals have even more practical applications.
Why shouldn't those be _more_ valuable than gold? In addition, the practical
applications of gold you've just listed are, I expect, not what gold is
normally used for. Economies, hopefully, aren't defined by whether their
currency can make space equipment or electronics (especially since those are
modern developments that predate the value in gold). So while what you've just
said is true, it still doesn't fully answer the question.

~~~
brownbat
> In addition, the practical applications of gold you've just listed are, I
> expect, not what gold is normally used for.

Exactly. Several countries have kept a reserve of gold for centuries, but
probably not out of a fear that they will suddenly need a bunch of ductile
metal.

------
mrb
It already surpassed $1000 last week, on BTCChina (world's largest Bitcoin
exchange): [http://blog.zorinaq.com/?e=75](http://blog.zorinaq.com/?e=75)

~~~
obilgic
You can't use USD on BTCChina!

~~~
mrb
Correct. But it peaked at 6989 yuan which is equivalent to $1147.

------
pnispel
Something I've been thinking about is if the entirety of currency in the US
was represented in bitcoin (bitcoins were the currency rather than dollars),
how much would each be worth?

So there is about $1.2 trillion in circulation [1] and the cap for bitcoins is
21,000,000

1.2 trillion / 21 million ~= $57,142 per bitcoin

Is this right, or am I missing something?

[1] -
[http://www.federalreserve.gov/faqs/currency_12773.htm](http://www.federalreserve.gov/faqs/currency_12773.htm)

~~~
conception
1.2 trillion in physical currency. You want the M2 number
([http://www.tradingeconomics.com/united-states/money-
supply-m...](http://www.tradingeconomics.com/united-states/money-supply-m2))
which is about 11 trillion.

So about another order of magnitude there.

------
sixQuarks
why are there all different prices? which one is correct?

~~~
lsc
This is actually... an interesting question, though badly put. The naive
answer is that a 'correct' price is what someone else will pay for your good,
and different people in different markets are willing to pay different prices.

The thing is, the prices at which trades are executed on different exchanges
vary by more than 10%, and as far as I can tell, there's nothing stopping a
single actor from participating on all exchanges at once.

Now, if the difference between the odds one bookie is offering on next week's
met's games and another bookie is greater than the vig, someone is going to
come in and arbitrage it.

at this moment

MT.GOX 954.00

BTC-E 858.21

Now, I'm pretty sure that none of the bitcoin exchanges take a 10% cut, so
what's going on here? how come nobody is buying on the lower priced exchange
and selling on the higher priced exchange? (or rather, how come that behavior
hasn't resulted in fairly even prices across exchanges?)

~~~
new299
Because it's hard to get cash out of Mtgox and the price reflects that fact
(few people cash out dollars on Mtgox, but I think more trading goes on).

That's also the reason you can't just buy low and sell high, the cash out time
is 2 weeks, and a lot can happen in 2 weeks.

------
captainarab
Looking at the volume/quantity of BTC trades, its pretty clear that this is a
demand driven price increase.

Given all of the new investors, how many of them will stay and how severely
will demand be impacted with the next seriously negative market event?

~~~
josu
I'm not sure that the volume is reflecting an increase in demand, at least not
a tenfold increase in demand in just a couple of months.

The increment in volume can be the consequence of increased daytrading
activity. Once the price started shooting a lot of volatility was introduced
in the system, which allowed daytrading. Many arbitrage opportunities also
opened up, which probably moved the volume up as well.

Yes, it seems like bitcoin is catching up some speed, but I don't think that
this sudden spike in price is demand driven.

~~~
wmf
Given that demand started from near zero in China, tenfold growth after
legalization of Bitcoin doesn't surprise me at all. The movement in the BTC-
USD market looks like arbitrage catching up to the Chinese activity.

~~~
yapcguy
The Chinese are gambling.

In Hong Kong, they gamble more money on horse racing in a single day, than the
UK does in a whole year.

In Macau, single card draw is popular, for an instant adrenaline rush, nobody
wants to sit around a poker table all day to win what you can win in a few
minutes.

Bitcoin is no different.

------
dustingetz
Pretty sure no human is buying BTC at $1k, this spike has got to be HFT bots
arbing across exchanges or making tiny trades, every human is thinking "cool
im smart so ill buy when it crashes"

~~~
bello
I don't think markets work like that.

------
beedogs
Litecoin is nearing $20 as well, and still relatively easy to mine. In fact,
_many_ of the altcoins are skyrocketing in value now that the Chinese
exchanges have opened.

~~~
minikomi
Watching the BTC-e chat during all this is.. nerve wracking. People shouting
about crashes, "LTC to the moon", "pump NMC now!" ... very very odd.

~~~
mithras
Tehy've been doign that since the beginning of time. It's their thing.

------
wyrmlet
Would someone please explain how to interpret this or link me to explanation?
The y axes are not labeled, and I am not familiar enough with exchanges to
infer. Thanks!

~~~
teraflop
The graphs are pulled from
[http://bitcoinity.org/markets](http://bitcoinity.org/markets) which, if you
click on the "wtf?" link in the top right, provides an explanation.

The line graph shows the current market price of 1 BTC, using the right y-axis
which is in US dollars. It's overlaid on a bar graph of trading volume in BTC,
which uses the left y-axis.

~~~
wyrmlet
Perfect!

------
mikecane
Digital Tulipmania.
[http://en.wikipedia.org/wiki/Tulipmania](http://en.wikipedia.org/wiki/Tulipmania)

~~~
jnbiche
That's all you got?

~~~
georgemcbay
At least a tulip is an actual thing that looks nice, bitcoin is some data in a
file that was created by pissing away energy, the perfect embodiment for the
ridiculousness of modern economics.

It is mindboggling to me that people take it seriously. It is a _perfect_
example of a tulipmania-like house of cards.

~~~
gfodor
I don't presume to know what is going to happen to bitcoin, but just
dismissing it as "meh tulips" is pretty closed-minded.

~~~
mikecane
Well the chorus of "Meh, tulips" is growing.

------
jjoe
The question is will it retreat into the sub $500 level like it did a week
ago. Nonetheless I'm seeing stronger support even at the $800 level.

~~~
yeukhon
It was 250 like two weeks ago.... how the hell can anyone get into the market
with this high value these days -_-

~~~
tagawa
Anyone can still get into the market - you can pay $10 and receive a certain
amount of Bitcoins in return. It's not like the housing market where high
prices mean you can potentially not make a purchase.

EDIT: To clarify my comment - I meant the housing market as in the ability to
buy a home outright.

~~~
aaron695
Anyone can get into the property market with $10, there's lots of managed
funds out there that deal with property.

But the reason people don't see the value in these is because you want to
gamble low and win high.

These managed funds more accurately show the real market, not the in your head
looking at the few people who bought really low and sold really high while
ignoring people who have lost money.

(Yes housing is a little different since in many places there are tax
advantages on property you'll only get if your name is on the dead.)

------
rms
I've been using [https://bitcoinaverage.com/](https://bitcoinaverage.com/)

------
grandalf
I think this is going to become known as the way the Winklevoss twins made
their mark (when they sell).

~~~
a3voices
The twins are expecting it to go to a $100 billion market cap, so I don't see
them selling any time soon.

~~~
hcal
What they claim to expect and what they actually expect are probably a bit
different. It wouldn't be surprising to see them sell much earlier than they
publicly indicate.

------
adamb_
If it reaches $1000, will mining bitcoins be considered a worthwhile endeavor
again?

~~~
brownbat
1\. As profitability goes up, more people join in, increasing the difficulty
factor, reducing the profitability. 2\. If deflation continues, you're
probably better off just investing in coins.

Here's a profitability calculator where you can play with values (it starts
with some reasonable defaults). (I can't tell if it accurately captures
earnings from transfer fees though...)

~~~
brownbat
EDIT: [http://www.bitcoinx.com/profit/](http://www.bitcoinx.com/profit/)

------
m1
Any estimates on when/if a crash will come and how much will it fall to?

~~~
TomGullen
How could anyone possibly know that! Crash is a fuzzy word as well.

~~~
m1
> estimates

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brosco45
Soon, a million

