

Bitcoin HITS $400 - imd23
https://cloudup.com/c9Qo3BKsajd

======
lelf
Hello, is it HN? What's problem with just
"[http://bitcoinity.org/markets/mtgox/USD"](http://bitcoinity.org/markets/mtgox/USD")?

Or even better
[http://bitcoincharts.com/charts/mtgoxUSD#rg2zig15-minztgOzm1...](http://bitcoincharts.com/charts/mtgoxUSD#rg2zig15-minztgOzm1g10zm2g25zv)

~~~
olalonde
Or even better, we stop quoting the MtGox price since it is artificially
inflated due to delays with cash withdrawals. This is the graph I personally
use:
[http://bitcoinwisdom.com/markets/bitstamp/btcusd](http://bitcoinwisdom.com/markets/bitstamp/btcusd)

~~~
waterlesscloud
The idea that Gox is artificially high is outdated, not that it made sense
anyway.

In any case, why not quote the highest volume exchange, BTCChina? It's usually
Gox price or slightly higher.

------
onion2k
The first mention of bitcoin on HN was 4 and a half years ago. You could have
bought them at about $0.05 back then. I wish I'd been paying more attention.

~~~
3pt14159
Everyone that says this doesn't know how hard it was to get back then. I
started looking for a way to buy it when it was at a buck fifty, and it took
me until it was at four dollars before I finally was able to do the
transaction (in cash in person at a cafe in Toronto with a off-grid
cryptoanarchist).

The easiest way back then was to try to figure out how to install the GPU
miner and then just hope that the block difficulty did spike because everyone
else was doing the same thing. When I wen't back to start selling bitcoins
when it started going north of 50 bucks a coin, it was too easy, Mtgox did a
direct wire to my bank account and I was limited to a certain amount per day
or month (can't remember).

As for buying it now: Right now the bet is whether or not you think that
bitcoin will survive governments worldwide trying to clamp down on it and
whether or not you think it will scale to billions of transactions a day. I
put the first one on about 10% chance of happening and the second one on about
30% chance of happening, so about 3% chance total. If it hits that 3% the
maximum I think bitcoin could be worth is about ten million dollars a coin
($10k average purchasing power for a couple billion people). So I made my
profit already (on my original bet that it would gain momentum, which it has)
and now I'm riding a decently likely (given the payout) lottery ticket.

~~~
jafaku
> If it hits that 3% the maximum I think bitcoin could be worth is about ten
> million dollars a coin

$10,000,000 x 21,000,000 = $210,000,000,000,000

Does the world even have that kind of wealth?

~~~
3pt14159
Oh, it seems like I made a grave error doing my mental math... I don't see how
I got it so wrong, but I guess I'm not used to dividing millions and trillions
together. I meant to say about $1 million dollars per coin. With the updated
numbers, it would be $21 trillion worth of purchasing power, which is a
quarter of todays Gross World Product (the economic activity of the world for
one year). So yes, it does seem that the world has that kind of wealth.

------
skrause
As someone not invested in Bitcoin I'm just curiously waiting for the day when
someone discovers a serious cryptographical weakness which makes all Bitcoins
suddenly worthless. Has there been any advance in finding flaws in Bitcoin
already?

~~~
jafaku
> As someone not invested in Bitcoin I'm just curiously waiting for the day
> when someone discovers a serious cryptographical weakness which makes all
> Bitcoins suddenly worthless.

Typical hater...

> Has there been any advance in finding flaws in Bitcoin already?

No. So far we just have people who only understand Cryptography, or only
understand Game Theory, or only understand Economics, or even none of those,
creating inflammatory blog posts on why Bitcoin is doomed and should die any
minute. But the reality is... Bitcoin users not affected!

------
saalweachter
This is not a surprise.

The bitcoin mining difficulty has ~doubled since October, when the price was
~$200. The price is currently pegged to the minimum profitable price for
mining.

~~~
sundaymorning
I don't see a mechanism for mining difficulty to affect bitcoin price.

~~~
bradleysmith
The price of bitcoin affects bitcoin miners. People will turn off / sell
miners when the price plummets, or go out and buy a miner/hardware when the
price is on the rise.

Bitcoin miners affect the difficulty level directly, by mining or not.

Furthermore, there are a finite number of bitcoins to be mined. The higher the
difficulty, the faster they are being mined. Therefore, the scarcity of each
individual coin is going UP as they are mined. Let me say that another way:
before a coin is mined, it is still available for anyone to get by mining.
After it is mined, it is in a private wallet number, worth whatever the market
says the owner should reasonably receive for it. As coins are mined, the
supply of total available coins goes DOWN. As long as demand continues, price
will go UP. BTC become more scarce with each coin mined, because there is one
fewer to mine in the future, and every one to be mined after it will need to
be done so at the new (assumedly higher) mining cost.

The difficulty level might be thought of as a direct index of the COST of
mining a new coin. As that cost increases, supply for coins goes DOWN. Ceterus
paribus, supply DECREASES, price INCREASES.

~~~
olalonde
> The higher the difficulty, the faster they are being mined. Therefore, the
> scarcity of each individual coin is going UP as they are mined.

You are wrong. Coins are mined at a _mostly_ fixed rate regardless of
difficulty.

> BTC become more scarce with each coin mined

They are actually becoming _less_ scarce since the total amount of coins in
circulation increases every ~10 minutes (until there are ~21M coins in
circulation). Believe it or not, supply is increasing but demand is increasing
at a much faster rate, hence the price going up.

Mining difficulty on the other hand has pretty much no influence on price
(although price does have an effect on mining difficulty).

~~~
bradleysmith
I concede to your point, that makes sense. The rise in difficulty is to
regulate that fixed rate of producing new coins, I'm certainly wrong there.

Scarcity of coins to the market goes down w/ each new coin mined, you're
right. BUT, because we know exactly how many coins there are available to
mine, doesn't this make the total number of coins available to you via mining
go DOWN? If all the world's gold was in a single, perfectly measurable and
publically accessible vein, would someone moving it from that publically
minable place to a private reserve make its scarcity go UP or DOWN? There is
the risk of the blockchain failing drastically, but past that it can be
assumed that you have THAT MANY FEWER COINS available to mine, in total,
right?

I may be thinking about this in the wrong way entirely, appreciate the
comment.

------
Luc
Anyone have recommendations for books about financial bubbles?

I have a few bitcoin and I believe it is a legitimate currency, but I'm
feeling uneasy with the 'this time it's different' reasoning which is supposed
to justify its current runup.

Amazon reviews aren't being particularly helpful; there isn't a book that
stands out in my searches so far. I'll probably order 'Manias, Panics and
Crashes' by Kindleberger & Aliber ( [http://www.amazon.com/Manias-Panics-
Crashes-History-Financia...](http://www.amazon.com/Manias-Panics-Crashes-
History-Financial-ebook/dp/B007OSIOWM/) )

EDIT: Thank you all for your excellent suggestions!

~~~
jafaku
[http://unqualified-
reservations.blogspot.com/2013/04/bitcoin...](http://unqualified-
reservations.blogspot.com/2013/04/bitcoin-is-money-bitcoin-is-bubble.html)

[https://www.youtube.com/watch?v=qHUPPYzzZrI](https://www.youtube.com/watch?v=qHUPPYzzZrI)

~~~
Luc
Thanks. I didn't watch the video yet, but I've read the article before. What
I'm wondering is whether the bubble is stable, or inflating above the eventual
equilibrium (and more importantly, deflating by the time I want to convert to
another currency). I have a feeling the current lawlessness has a lot to do
with the value attached to bitcoin, and that probably won't last.

~~~
jafaku
It's not really a bubble (other than in the sense given to it in the article)
and it's definitely not above the eventual equilibrium. The video explains it
very well.

~~~
Luc
I'll watch the video, but I'd rather make up my own mind and look at source
material, scholarly research and history as much as possible.

------
QuasiAlon
I've read a handful of reports here in the past week about several site that
got hacked and millions of dollars in bitcoins stolen. For the life of me I
can't understand why someone would pay so much for something that can be taken
away from him/her. Perhaps someone here can explain and enlighten me. Please.

~~~
M4v3R
Those reports that you've read are basically the same as you would read that
some small, obscure bank with anonymous owners was robbed and people lost
their money. That doesn't tell you anything about the currency that was stored
in this bank, but it tells you something about people that decided to put
currency into it.

Bitcoin as a protocol and technology proved itself to be rock-solid. People
are already using it all around the worlds for many different purposes, from
storing their wealth to buying subs in Subway. On the other hand, there are
some Bitcoin services that are can be used to store your Bitcoin that are not
exactly very secure or trustworthy. Most people advise against storing your
Bitcoins in such services, as it has risks of either service operator or
hackers to take your coins from their servers. Still, some people decide
against these advices and still use these online wallets. You can't blame
Bitcoin itself for that.

There are more secure ways to store your Bitcoins, from printing your private
keys on as a paper wallet and store it in a safe place where no one can reach
it, to storing it on your computer, protected with a long, unique pass phase,
to storing it in a web wallet like blockchain.info which doesn't store your
coins directly, but encrypts the private key with your password before storing
it on their servers.

~~~
bashcoder
> Those reports that you've read are basically the same as you would read that
> some small, obscure bank with anonymous owners was robbed and people lost
> their money.

Except there's no such thing, so there are no such reports.

~~~
QuasiAlon
news reports...

------
taspeotis
Bitcoin layperson here.

What's the deal with the volatility?

~~~
imd23
While it is really volatile, it is always going up and up. At least that seems
to be the trend.

This is a revolution. This is total free market. The rules are new and might
not be near similar to any other trading.

~~~
grey-area
It's different this time?

~~~
jafaku
I don't know why people keep asking this question, other than to try to sound
smart or experienced without much effort. Yes, it's pretty damn different this
time. Else tell me: when was the last time you saw a decentralized distributed
crypto-currency be born and take over the world?

~~~
grey-area
Markets, particularly unregulated or opaque ones, are often subject to
volatility, exponential network effects, irrational exuberance, etc, and the
most common excuse for that is 'this time it's different', which is your
argument and that of the OP. Often, the explanation is just that crowds follow
each other and/or those with a stake attempt manipulation.

As a store of value, gaining value exponentially is a sign of danger, because
it is clearly unsustainable, even in the short term. While it gains though it
seems a one way bet and lots of people will take it, as they did during the
south sea bubble, the railway bubble, the dotcom bubble, housing bubbles,
tulips etc. Each time it was different, and we'd achieved a new paradigm where
old rules no longer applied (and in some sense in each case this was true, but
people got carried away).

As a currency, volatility over hours, days and months is deadly - who wants to
transact in a currency when you can't tell what the value of what you hold
will be tomorrow or later today?

As a currency, gaining value rapidly all the time is also difficult - who
wants to transact in such a currency instead of just holding on to it and
spending other currencies or bartering? It becomes more an investment than a
currency (see gold when paper money is available).

Still it's an interesting currency and I certainly wouldn't discount it
(though it has not taken over the world just yet!) - just wary of irrational
explanations for its huge rise in value over the last few months.

~~~
jafaku
It's not a sign of danger in this case though, it's a sign of exponential
adoption, which is exactly what's happening and is perfectly understandable
for such a technological feat like Bitcoin. The same happened with many
startups like Facebook: A lot of volatility in the beginning, exponential
growth, IPO, stabilization.

> As a currency, gaining value rapidly all the time is also difficult - who
> wants to transact in such a currency instead of just holding on to it and
> spending other currencies or bartering?

That's another argument that keeps popping up and doesn't make sense, it's
basically a myth. Economists and opinionologists dread this imaginary
situation where people will starve before spending their deflationary coins.
Hint: The world did just fine for thousands of years using gold. And no one
starved to death with Bitcoin either yet.

If you have other currencies to spend or stuff to sell, you could have used
them to buy more Bitcoin, and use Bitcoin to buy whatever you need at whatever
price it is at the moment, so not spending Bitcoin and spending other things
instead doesn't make any sense either.

------
imd23
More screenshots
[https://cloudup.com/icq8MzUMUGU](https://cloudup.com/icq8MzUMUGU)

------
pyalot2
I like bitcoin, I do, but, please stop posting prices.

------
tostitos1979
Tulips, anyone?

