
Bitcoin reaches an all-time trading high of over $33 - Steveism
http://arstechnica.com/business/2013/02/bitcoin-reaches-an-all-time-trading-high-of-over-33/
======
downandout
The fact that Bitcoin has flourished despite numerous high profile incidents
of theft and fraud, the relative difficulty associated with buying and selling
them, and the rather unsavory nature of many of its most popular uses today,
is a testament to its long-term viability as a currency. The Bitcoin ecosystem
has a long way to go before it is considered mainstream, but I believe its
long-term success is almost inevitable at this point.

The price would likely be even higher right now if Bitinstant, once one of the
most popular and easy ways to obtain Bitcoins, hadn't had serious financial
and technical issues over the last two weeks. Here's hoping they get their
issues sorted.

~~~
glesica
It says to me that there is a large amount of speculation. As a currency,
Bitcoin is basically useless except for illicit transactions (which are
usually pretty inefficient anyway). Would you use dollars if the value of a
dollar could change by hundreds of percentage points in a few months? No one
would.

~~~
eof
Well your logic is obviously flawed, because people _do_ use bitcoins for
transactions and they have changed by hundreds of percentage points. "No one"
is patently false.

Besides, illicit transactions are still transactions.

And.. you are just plain wrong. Bitcoin is also useful for buying many
completely legal things. Including a VPN that can't be linked to your
identity. (Illicit you say? What about a journalist in a repressive regime).

~~~
glesica
Illicit plus grey market and a few special cases. Fine, you win the Pedant's
Prize for nitpicking. The point is that they don't make a good general-purpose
currency. Just because they're awesome for buying drugs and secret VPNs
doesn't mean very much in the grand scheme of things (most transactions, at
least in the developed world, do not take place in the grey market).

Also, just because some people do something doesn't mean that there aren't
strong incentives against doing that thing, and doesn't make a statement such
as "people don't do that" false. It just means that there are exceptions, but
when the exceptions don't affect the point it is common to ignore the
exceptions in general conversation.

~~~
shredfvz
Money is ultimately just a standardized indicator of wealth with no intrinsic
value on its own, a definition shared by both USD and BTC. The downside of USD
being that it can be counterfeited, illegally by unscrupulous individuals or
legally by the Federal Reserve (see: QE Infinity).

Regrettably, it's still super common for people to turn up their noses in
disgust, claiming "Bitcoin Boogey Man, oh noezzz"!

I'm sorry, does the USD somehow _not_ come with a Boogey Man? Because last I
checked HSBC was caught with their pants down directly funding terrorism
through shady business practices, Bernie Madoff is still in prison for running
a giant Ponzi, the illegal narcotics trade is done mostly in USD, plus you
have money laundering, and just about every crime conceivable being carried
out in USD.

But wait, the Bitcoin Boogeyman!!!

Everyone come to look!

The USD is dirtier than Bitcoin by several orders of magnitude. It's been
taking a full out mudbath every day of its life for the past several decades.
It's just that the USD is all people know, so they assume it's squeaky clean,
because how could it not be squeaky clean??

~~~
bayesianhorse
For one thing, currency instability for BTC is bigger, and secondly the
primary use of BTC right now is making illegal income look legal.

~~~
shredfvz
* citation needed

------
vetleen
Looking at the history of Bitcoin and saying “Wow, the price of Bitcoins will
never drop because it hasn’t dropped so far” is like looking in the back
mirror of your car saying “Wow, there will always be a freeway ahead of me
because I have been driving on the freeway for so long now”. The fact that is
has flourished can have a million explanations, where one is that it does
actually have a long term viability as a currency. We do, however, not have
enough information to say with any certainty that that is indeed the case.

What we do know, is that so long as new users flock to the currency there is
an increasing demand, and this will drive the price up – until the recruitment
halts. Then what will happen? We don’t know. It might disappear, it might drop
slightly, and it might stay the same. That will be the true experiment. Right
now we don’t have enough data to say whether it is sustainable over the long
term.

~~~
lukehorvat
One word: deflationary.

------
adambom
Bitcoin is a deflationary currency since it's supply is limited.

Doesn't that mean that it's expected to rise in price? This also ends up being
the currency's downfall, since there's an incentive to hoard it rather than
spend it.

~~~
justinmk
> deflationary ... there's an incentive to hoard it rather than spend it.

By that logic, everyone would put their dollars into investments that beat
inflation (this is a form of saving). Yet they do not. You can hold (hoard?)
securities (VBLTX, HTS, JNJ) that beat inflation, yet people spend dollars on
depreciating assets (cars, computers). There are other less-risky financial
instruments [1] that beat nominal CPI, yet people spend dollars.

> Doesn't that mean that it's expected to rise in price?

Sure, relative to an inflationary currency. But bitcoin fluctuates quite a
bit.

By they way, currency is just a good, like anything else. One trades currency
for some other good that one values more than the currency [2].

[1] [http://www.mint.com/blog/investing/beat-inflation-with-i-
bon...](http://www.mint.com/blog/investing/beat-inflation-with-i-
bonds-102011/)

[2] <http://en.wikipedia.org/wiki/Time_preference>

~~~
lmm
>You can hold (hoard?) securities (VBLTX, HTS, JNJ) that beat inflation, yet
people spend dollars on depreciating assets (cars, computers).

No-one buys a dozen computers and puts them in their basement as savings for
retirement. People buy cars and computers to use, not as investments. People
with nontrivial quantities of "spare" dollars generally do put them into
inflation-beating investments.

------
fourstar
Can someone tell me if I should invest in this right now or not or did I miss
the boat and I should just move on?

~~~
ChuckMcM
Sure, you should not invest.

I say that because investing has different skill levels and different
risk/reward profiles. The lowest level is perhaps savings accounts and CDs and
at the most extreme end are derivative financial instruments. Long before you
get to currency speculation you go through equity value investing, bond
investing, and equity option investing. After going through those things you
get to commodities, precious metals (a form of commodity) and then currencies.

So to ask the question "should I invest in this right now?" doesn't make a lot
of sense to an investor who is always looking at what they have invested, the
risks of those investments, and the forces that move things. If you are
wondering what the outlook is for price expansion of bitcoin relative to the
Yen or Yuan, or what geo-political events are most likely to move the value of
bitcoin and in which way, then you are looking at the investment in context
and really the only answer is one with your other context which isn't part of
your question. If you portfolio was a million dollars and you wanted to put
$10K into bitcoin as a 'kicker' (something that would potentially kick up a
big return but if you lost it in its entirety it would only represent 1% of
the return. That's an interesting question. It has far more downside than
upside at this point.

~~~
eliasmacpherson
A voice of reason in a world gone mad! He would have to clarify the amount of
risk he wants to take and how much time he wants to spend on it. A friend has
very successfully invested in bitcoin (1000%+ return), but I am very sure he
has the price up on his smartphone 24/7 and can sell very quickly.

I don't know how much downside it has, as a long term gamble, because there's
an upper limit on the amount of currency. If it does take off with the general
public, the longer you can hold the more it will be worth.

"Hard limit of about 21 million Bitcoins" say you bought 1 million bitcoin at
$1 and bitcoin becomes a replacement for paypal?

~~~
ChuckMcM
Well the downside is that that loses all value. That can occur for a number of
reasons but the two most widely speculated on are a global response (something
like the G8 deciding that they won't allow trading it) or a technical defect
(which invalidates some part of either the transaction train or the currency
itself).

But that said, its also very volatile as a currency and that makes for a lot
of speculation and rapid market changes. Not for the faint of heart and
certainly not a place for any money you might actually need a year from now.

------
eksith
Anyone join any mining pools lately now that prices are increasing? I figured
there would be a pretty serious drop after the 50 to 25 drop, but there seems
to be some dedicated miners still out there. Looks like brand new FPGA boxes
are coming out for it as well.

~~~
nwh
Not FPGA, but ASIC. Mining with a GPU is fairly useless now unless you've a
warehouse of them and free power.

~~~
eksith
Good point. I imagine those up North may get some use as they can double as
heating (if the area's small), but besides that, it does seem like a waste of
time and electricity at this point.

------
bakerchan
The value of BTC is not just based on speculation. It has a use and thats
transferring wealth from one to another in the same way paypal/western union
does but much cheaper. Consider that paypal alone transacted $451million per
day in the 4th Qtr 2012 and another $20 Billion via western union in the same
financial qtr. Now just imagine whats going to happen to the value of BTC when
just 1% of the people using Paypal/WU start using Bitcoin to transfer or store
their wealth. Now add in the people turning to BTC from other money transfer
systems too. I think this is what is pushing up the value of BTC along with
the speculators that are jumping on the gravy train too

------
bayesianhorse
Trading bitcoins, even in an otherwise legal fashion, is essentially money
laundering at this point.

Yes, there are legal bitcoin traders or bussinesses. And No, you can't pretend
these are the majority.

And it's not really a problem that I am thinking this. The big problem is that
the European Central Bank is saying this too. The legal status of Bitcoin
businesses remains unsolved, even if the proponents don't run out of reasons
why trading Bitcoins is purportedly legal.

------
npguy
Currency = Truat + Wide Acceptance. The wide acceptance angle for bitcoin is
going to take some time, so till then this is all just speculation.

------
tocomment
So if there is ever a bug discovered in the protocol or say the crytography
methods get broken, or say we need more than 8 decimal places in the coins.

How do you get all members of a distributed system to upgrade? Would holders
of bitcoins have to upgrade as well?

~~~
EliRivers
If we need more than 8 decimal places, we have a new currency of very similar
nature with a more convenient base unit. By that point, the principle will
have been proven.

------
tocomment
Question I've been wondering. What happens to lost bitcoins? Say your hard
drive dies and you didn't have a backup.

Are those coins out of circulation forever? Will this gradually decrease the
supply of bitcoins?

~~~
nacker
Yes. Gone forever.

<https://bitcointalk.org/index.php?topic=109117.0>

~~~
wglb
Or, in technical terms, Clementine.

------
jasonkolb
This sucks. I was just about to pick up a bunch last week at $29.
Unfortunately it's not very straightforward to obtain.

~~~
dhughes
What sucks is not knowing where your wallet is.

I have .9 of a bitcoin somewhere transferred between a Linux PC and three
different phones over two or three years.

I have about $28 US somewhere.

~~~
rcamera
I had this sort of issue. Back in 2010 I had mined a hundred coins (CPU mined,
back in those days, lol). A month ago I decided to find the wallet file, took
me 2 hours to search 5 HDDs with multiple partitions each from my old
computers...

I fixed this problem now by printing the keys out, storing them securely in a
safe and deleting the wallet files.

~~~
nwh
Better luck than me. I've 500BTC that I mined and gave up on. They'd be worth
$26k if I hadn't decided to clean out my backup RAID.

------
geoffc
At some point Dominos Pizza or the like is going to take bitcoins for web
orders and it will go mainstream. Zero transactions fees and no charge backs
make it a no brainer for a big class of normal, nonillict online transactions.

------
hackerpolicy
Is there any research on the bitcoin generation algorithm?

