
Bitcoin falls below $300, lowest in 11 months - sillysaurus3
https://bitcoinwisdom.com/markets/bitstamp/btcusd?below300
======
Animats
Bitcoin should have been the petty cash of the Internet. People should be
buying music tracks, in-game items, and junk food from vending machines with
Bitcoins. But, as discussed in a previous topic, it doesn't do small or quick
transactions very well.

That may not necessarily be a bad thing. Enthusiasm for micropayments, which
predates the Internet (look up Ted Nelson and Xanadu) comes from the people
who want to collect them. There's no vast consumer demand for the ability to
send $0.10 over the Internet. Even the big players couldn't make that happen.
Beenz, Microsoft Points, and Facebook Credits were all failures.

The big run-up from $100 to $1100 last year was because, for a while, it was
possible to easily and legally bypass China's exchange controls by buying
Bitcoins with yuan and selling them for dollars or euros. Then the People's
Bank of China cracked down, and that bubble popped. We're still in the
aftermath of that event.

As a speculation, Bitcoin is zero-sum. There's no productive activity, and no
profits. All gains by winners come from losses by losers. Much effort is spent
by the Bitcoin community recruiting more losers.

~~~
thom
Was part of the rise last year due to MtGox's increasingly desperate market
manipulation? I remember reading the theories, but don't know if a better
picture has developed since then.

~~~
sillysaurus3
Yes it was. There was an Mt. Gox bot which was consistently buying bitcoin
over a long period of time. The reason we know it was an Mt. Gox bot is
because when Gox's API went down, the bot was still able to execute trades on
Gox even though no one else could.

Of course, Karpeles will never stand for his crimes, because they weren't
crimes. This is just what happens in an unregulated market, and everyone who
buys into it is along for the ride.

Here's the rub: A price fluctuation at one exchange will always affect every
other exchange. If Bitstamp drops by $50, someone is going to buy at Bitstamp
and then sell at some other exchange in order to take advantage of that. That
means any exchange that manipulates the market will literally be manipulating
the entire Bitcoin market. There's no way for outsiders to know the difference
between an artificial, manipulated price spike and a true increase in value.
So if you see bitcoin rising sometime in the future, beware buying into it:
you may be buying into a manipulation.

I don't know whether this problem is solvable. Even if America enforces
regulations for American bitcoin exchanges, the rest of the world won't be
playing by the same rules, and it only takes one dishonest exchange to mess
with the global price. I'd like to know how the regular stock market deals
with this. Are all stock exchanges regulated worldwide? Is there such a thing
as a dishonest stock exchange? If so, how is that dealt with?

~~~
mikeyouse
> I'd like to know how the regular stock market deals with this. Are all stock
> exchanges regulated worldwide? Is there such a thing as a dishonest stock
> exchange? If so, how is that dealt with?

Holding a stock certificate entitles you to a percentage of the profits of
that company (via dividends / buybacks). So when Facebook lists on the NASDAQ,
only those who have shares recognized by NASDAQ & FB have any claim to the
profits of the company.

There are shitty foreign exchanges full of speculation and manipulation and
you can trade "Facebook" there, but if you own a share of "Facebook" on some
third-tier Armenian exchange, you have zero claim to Facebook's profits. Your
arrangement in that situation is with the exchange or the counterparties on
that exchange to swap the shares back and forth, not actually with the company
in question -- so they have no way of impacting the 'real' stock price.

~~~
Animats
The regular stock market deals with this by separation of functions. The NYSE
doesn't own stocks; it's just a matching service. Mt. Gox performed the
functions of an exchange, a broker, a custodian, a transfer agent, and a
depository institution. In the real world, those are usually separated.

------
bdcravens
The easier it gets to buy Bitcoin, and accept Bitcoin, the worse it will be.
Even if you wanted to spend Bitcoin, you had to think ahead. Now Circle lets
you buy within minutes (in most cases) of setting up your account. On the
other side of things, Bitpay and Coinbase let merchants convert back to USD
(or other currency) right away. So it's possible to do "just in time Bitcoin":
Bitcoin is merely the payment protocol.

When Bitcoin becomes a pure cash equivalent, no one will care about the price.
I believe that once the price becomes irrelevant, it'll trend downward. I
think it'll take something serious to move the price upward, like a serious
event creating major doubt in USD.

Most of the bulls are quick to conflate the advantages of the protocol, as if
that magically makes it more valuable as a traded commodity. Bitcoin is
simultaneously a currency and a protocol. I believe when it was hard to
obtain, the use of a store of value held the most potential, and early risk
takers had an opportunity for reward. It's entirely possible, as the protocol
becomes more or more utilized, those days of risk and reward are well behind
us.

~~~
Aqueous
That's not true at all. The need to convert to dollars is present only most
assets are denominated in dollars, taxes are paid in dollars, and our basic
needs are paid for in dollars. What happens when vendor adoption expands to
the point where you can buy enough from vendors - food, clothing, housing -
with BitCoin that it is no longer absolutely necessary to convert to dollars,
because you can subsist entirely on BitCoin?

~~~
forthefuture
You're still paid in dollars.

~~~
Aqueous
Some people already aren't paid in fiat. I'm not one of those people - because
I realize BitCoin still has a ways to go before I start to put more than the
money I can afford to lose into it.

~~~
tzs
> Some people already aren't paid in fiat

(This is not directed at you. You just provided a convenient place to fork
from)

I think the way many people in Bitcoin circles use the term "fiat" can be a
bit misleading. Most people outside of Bitcoin circles use "fiat" as part of a
dichotomy. In this dichotomy, a currency is either a fiat currency or a
commodity-backed currency.

With Bitcoin, we have a trichotomy: government-backed fiat currency,
commodity-backed currency, and non-government backed non-commodity-backed
currency.

If Bitcoin has to be placed in the fiat/commodity-backed dichotomy, it is a
lot closer to fiat than commodity-backed. Bitcoin is essentially a non-
government fiat currency.

By using "fiat" as part of a different dichotomy, fiat vs. Bitcoin, Bitcoin
people are risking inadvertently misleading people who use non-fiat to mean
not commodity-backed. I'm pretty sure I've seen "gold bug" types misunderstand
Bitcoin because of this. The "mining" terminology probably doesn't help here,
either...

~~~
nivertech
_and non-government backed non-commodity-backed currency_

I think hashing power is a commodity, just like electricity or bandwidth.

~~~
tzs
Hashing power may be a commodity, but does it back Bitcoin? Hashing is used to
create a new Bitcoin, but that seems more like a resource consumed as part of
production, not something that is backing the currency.

When a currency is backed by a commodity, such as a currency backed by gold,
you can exchange the currency for the commodity at a fixed rate. The currency
is a proxy for the commodity. When you hold a unit of a commodity backed
currency, the appropriate amount of that commodity is being held for you
somewhere.

When you hold a Bitcoin, there is not someone holding a fixed amount of
hashing power in reserve for you somewhere. The Bitcoin represents not hashing
power available but rather hashing power that has been expended. In terms of
gold coins, hashing power in Bitcoin is like the labor of mining the gold. I
don't think that there is anything in Bitcoin corresponding to the gold.

I suppose you could argue that Bitcoins themselves are the commodity, but that
seems to me like calling USD a commodity-based currency based on its physical
paper and ink. We don't count that because the commodity is essentially
worthless compared to the value of the currency. The currency doesn't derive
its value from the commodity.

~~~
Aqueous
I think the 'gold' would be the hash collisions that the mining process
discovers - this is like gold in the sense that these hash collisions are
mathematically scarce and of finite supply, and very difficult to
discover/extract. They are unlike gold in that they are not very useful by
themselves, whereas gold is used as a material in many things.

------
vijayboyapati
The thing I find interesting is how thin the order book is:
[https://www.bitstamp.net/market/order_book/](https://www.bitstamp.net/market/order_book/)

It shows that you don't need to sell a particularly large block of btc to
substantially move the price in either direction. If one big buyer jumped into
the market it could easily move the price $50+. This shows that bitcoin is
still immature and in its infancy. The more the liquidity of bitcoin grows,
the less this kind of volatility will plague the market.

~~~
paulgb
Couldn't there be automated traders waiting to jump in if the price changes,
rather than having orders on the books? (I know they exist, I just don't know
whether they would appear in the order book)

~~~
jcfrei
At the current levels of volatility it's probably not a good idea to keep a
lot of open orders - unless you can watch the markets 24/7\. Automated traders
would likely wait for a significant price change and then execute a market
order or just place an order on very short notice.

------
angrycoder8
Ok here is my 2 cents. The reason I feel Bitcoin has lost so much over the
last couple of months is because in some ways its a victim of its own success.
The more merchants that come online and support BitCoin payments the faster
its going to drop in value. The reason is simple, supply & demand and bitcoin
payment/exchange gateways. When merchants say they are accepting Bitcoin as
payment they aren't really, they are simply using Bitcoin as a conduit to
process the payment from you the customer with Bitcoin. When a merchant uses a
Bitcoin payment gateway, upon receiving Bitcoin payment, the gateway
immediately turns it into a fiat currency by hitting the buy side of an
exchange. They are putting more bitcoins back into circulation, in other words
increasing the SUPPLY of Bitcoin. Its Economics 101 increase the Supply of any
commodity, and the price goes down. On the other side of the equation, the
investors who are buying and holding Bitcoin, with the expectation of it going
higher, are seeing it plunge, so what they are doing is buying more goods and
services instead of holding, a way to get 'out' of their position if you will,
and that further drives the price down, its a vicious cycle. When will the
price of Bitcoin start going back up? Who knows, for me I feel the indicator
will be similar to observe the relative strengths of the fiat currencies, in
times of peace or economic uncertainty ( not now ) they tend to show weakness,
and traditionally speculators will find safe haven in gold, I think some may
try to weather the storm in Bitcoin as well. Unfortunately that is not the
case at the moment, both US and Canadian economies seem to be doing well,
partially because of the 'war' the US is currently waging. So for me I think
I'm going to sit on the sidelines and wait.

~~~
pron
> The more merchants that come online and support BitCoin payments the faster
> its going to drop in value

I don't know enough to say it definitively, but this may be pure fantasy.
Merchants "accepting Bitcoin" seems, to me at least, like a publicity stunt to
attract the young, techno-hipster crowd, which is valuable for marketing. I
wonder if "accepting Bitcoin" translates to actual high-volume transactions. I
think this drop is just business as usual for Bitcoin, which tends to rise and
fall according to the publicity it gets. Also, its trading volume is still
sparse enough for random noise (or deliberate manipulation) to change the
price significantly.

~~~
kleer001
From my light experience of watching this Bitcoin thing for the last year,
yes, you're right on target. Merchant "adoption" of Bitcoin for purchase is
mostly hype. If I recall correctly Overstock.com does about only 10% of their
sales in Bitcoin.

------
chatmasta
Last time Bitcoin fell significantly, BitPay announced three days later they
were partnering with PayPal. BitPay has a lot of Bitcoins floating in their
accounts (since they need to exchange USD <\--> BitCoin). They also could
predict that announcing a partnership with PayPal would spike the price of
BitCoin.

It makes me wonder if some of these price drops could be market manipulation
by insiders who have a big announcement on the way.

~~~
kiba
There's _always_ insider manipulation, but people cannot prove it either way.

It's like saying that there is insider manipulation behind every price dip and
price rise on wallstreet.

Maybe it's true. Maybe it's not. You cannot prove either way. So it's just
noise.

------
Nursie
Maybe as the last big wave of people flocking to BTC figured out there's not a
lot to do with it and lose interest?

Because we've got to have moved past the point where it's all currency
enthusiasts, and if you're not enthusiastic about alt. currency in general, is
there any reason yet to prefer it?

~~~
jaequery
bitcoin will be on your mind the next time you want to send/receive money
oversees, i guarantee you that.

~~~
danbruc
This is true for 0.02 % of the world's population, at best. (This is more than
the estimated number of people owning Bitcoins, like it or not.)

~~~
rglullis
25 years ago, the same could be said of international phone calls.

The world is getting smaller and smaller, there will be a point in the future
where getting goods/services from someone across the ocean is as common as
sending an email.

~~~
rmah
25 years ago, billions of people could place international phone calls.

~~~
rglullis
I know, and that is kind of my point. I am not saying that money remittance is
impossible without BTC. I _am_ saying that it makes it so much easier and
accessible that it's impossible to ignore.

Sending money overseas today is possible, but comparing Paypal/Western Union
with BTC is the same as comparing AT&T (the original one) with Skype.

------
forthefuture
So to even buy bitcoin you have to do with money what you would do on any site
to buy anything else. Why would you ever turn your money into bitcoins to do
that? It's easy to say now, "oh bitcoin will never work" because it's tanking,
but can anyone explain any practical use whatsoever for this monopoly money?
Do people really expect companies to start paying people in marbles and tops
cards or is this as straightforward as it seems?

~~~
shuska
I'm not an expert on it by any means, but from what I understand just the
technology behind the blockchain (essentially how the entire network works) is
what is really valuable with Bitcoin. Bitcoin does have some practical uses -
I've heard of people transferring money between countries/across the world
with little to no fees as an example. It's basically a way to get around banks
being difficult/charging ridiculous amounts of money for transfers. The point
is not to store all your cash in the form of bitcoin, but rather transfer it
to bitcoin when you need to buy something. There's some people who put their
savings into bitcoin which is really dumb.

------
gatsby
What are the major reasons to be bullish on bitcoin right now?

Not sarcasm, totally serious.

I've owned a small amount of bitcoin for a while and have followed the market
from a far. This observation is highly anecdotal, but I just haven't seen many
signs of serious traction over the last six or nine months (i.e. post a ton of
the initial retailers partnering to accept bitcoin, Coinbase raising their
monster round, etc.)

~~~
TillE
There are lots of reasons to be interested in and somewhat optimistic about
cryptocurrency in general. But I think there are enough arguable flaws in
Bitcoin's specific implementation that its first mover advantage ultimately
won't count for much.

~~~
pseudoscops
I agree that Bitcoin has some flaws. I posted about it on Reddit after the
last slide in price. Link here for anyone interested:

[http://www.reddit.com/r/BitcoinMarkets/comments/2fvknj/daily...](http://www.reddit.com/r/BitcoinMarkets/comments/2fvknj/daily_discussion_tuesday_september_09_2014/ckdb1bl?context=3)

------
TheEzEzz
My working hypothesis is that this is the market impact of the liquidation of
Hal Finney's bitcoin estate. If true, due to the thinness of the market and
the large size of Hal's holdings, the price has a long way to go.

(Full disclosure: this is pure rumor mongering.)

------
hawkice
The exchange rates of normal currencies are primarily interesting as tools to
look at trade deficits &c. I can't think of an analogy with Bitcoin.

I think the only reason this is interesting is because so many people treated
as an investment. Using it as a store of wealth is clearly silly -- much too
volatile. But Bitcoin as investment seems very common.

It's hard to emphasize how bizarre that choice is, but suffice it to say,
there are people who make a living speculating on currency, and (almost
certainly) you aren't one of them.

~~~
ericb
Why is it bizarre to use it as an investment choice? If you have a sense for
what makes a technology prevail and think that bitcoin will, it isn't a big
leap to look at the value that can be transferred through bitcoin and say "in
the success scenarios, it will have to grow to be many times larger." Like any
investment, you have to be prepared to be wrong, though.

~~~
hawkice
That's remarkably similar to saying: 'If you have a sense for what makes a
trade deficit occur and think that one will, it isn't a big leap to look at
the value that can be transferred through international trade and say 'in the
scenarios where I am right, it will have to grow many times larger''.

The analysis above is completely correct... and also available to precisely
everyone, and is how the price is set globally. You aren't buying at a nerds-
only price. So what you are really saying is that you are a more accurate
speculator on currencies than people who do it for a living and have large
trading and research apparatuses at their disposal. Could be true, but if you
haven't attempted to speculate on currency before, there's no way for you to
know that (and the prior probability is low).

~~~
ericb
Bitcoin is more than a currency, so reducing opinions about it solely to
"speculating on currency" is disingenuous.

Bitcoin is a technology. I've made my career by picking winning open source
technologies and betting my career on them. If you think some people who spend
their lives predicting day-to-day price movements are better at making
technology predictions than I am, I question your assumption. There's a reason
I don't speculate in international currency, but that I am willing to express
my fiscal-opinion on bitcoin.

I also question your assumption that these groups are anywhere near
representing the primary driving forces in the thinly traded bitcoin market at
this point.

There is no such thing as a nerds-only price for any investment in so much as
you believe a given market is efficient. Fundamentally, what I would argue
about investing in bitcoin is that small differences in the estimate of the
success scenario produce wide differences in fair value estimates of this
asset (because the outcomes possibilities are asymmetrical), so if you have a
strong opinion on the different weighting of the possibilities it is no more
unreasonable than buying an individual stock, and in fact may be the more
rational choice.

~~~
Nursie
You know what, I have a number of disagreements with BTC as it currently is
instantiated - the limited number, rewards skewed to a few early folks etc
etc.

But I agree, the tech is really interesting.

------
kolev
That's what happens to a market driven entirely by speculation and adding
tools like shorting in addition to the lack of interest from the general
population. Prof. Bitcorn might be right, just not right about the date, I
guess. We saw that outside of a short-live spike, even the PayPal announcement
couldn't help it. I won't be surprised if the Chinese oligarchs already moved
their funds outside of China via Bitcoin and now there's not enough demand to
fuel the increasing price like before.

------
marcosdumay
I've always dismissed people complaining about volatility, as it's not really
a huge problem for currencies... But I've never seen a real-time track of
Bitcoin!

There is volatility, and there are currencies that change each second the same
that the normal "volatile" currencies change a week. Bitcoin seems to be the
latter, and that's a qualitatively different problem from mere volatility.

------
parksy
As of right now there's a 28k sell wall on bitstamp which might be forcing
prices down a tad. Looks like someone's trying to buy some coins on the cheap,
but I'm no expert in these things.

[http://i.imgur.com/lmcu15f.png](http://i.imgur.com/lmcu15f.png)

------
adamtucker
What is preventing the Federal Reserve or any other central banks with endless
supplies of liquidity, from collapsing the value of bitcoins or any other
convertible currency, virtual or otherwise?

~~~
tim333
For the Fed to collapse the value of bitcoins they would have to sell lots of
bitcoins. They can't do that because they don't have bitcoins to sell. The can
print USD but not bitcoins.

~~~
adamtucker
If the Federal Reserve can print USD, and USD can buy Bitcoins... am I missing
something?

~~~
tim333
Yeah they can buy them but that won't make their price fall.

~~~
adamtucker
"For the Fed to collapse the value of bitcoins they would have to sell lots of
bitcoins." tim333

------
scotty79
Apparently the sole reason bitcoin goes for 300 now is that one guy is dumping
30k btc at 300$. Apparently he just needs 9mil $ in few days.

------
curiously
I fear that just as bitcoin arrived suddenly it will go just as quickly. It's
based on fundamentals that is not well understood, at least by people who buy
it (because its gonna go up!).

------
angrycoder8
Ok this is

