
Bitcoin’s roller-coaster ride gets wilder as Wall Street, China climb on - hkimura
http://arstechnica.com/tech-policy/2013/12/bitcoins-roller-coaster-ride-gets-wilder-as-wall-street-china-climb-on/
======
SwellJoe
I find the coverage by Wall Street (well, one analyst on Wall Street) funny,
actually. While I agree with the method by which he's assessing the current
value, I think it's also amusingly conservative, which isn't surprising.

There's a long history of old business leaders viewing the technology that
destroys them through the lens they view all of their traditional competitors,
and vastly underestimating what it's impact will be. Innovator's Dilemma is
one way of looking at it, but in this case I think that's woefully inadequate
of an explanation (i.e. comparing a new tech company against an old tech
company).

Here's the thing about Bitcoin, and the reason I've become really excited
about it: If it succeeds, it means an end to banking and money as we know it.

You can't compare that to Western Union, or PayPal, or Visa, or MasterCard, or
even gold, or silver. It'd be like comparing the Internet to Time Warner Cable
or Clear Channel or book publishers or books, in general. It doesn't make
sense. They're wholly different levels of abstraction.

If Bitcoin really succeeds, it is nearly impossible to predict its value,
because it will change the entire financial world (and it will look like it
happens overnight, even though it'll be 10-20 years before we see all of its
effects). So, if this analyst is predicting what will happen to Bitcoin in
January, he's probably right. If he's predicting what will happen a year, five
years, and ten years down the road, he's gonna be in for a big surprise.

~~~
codexon
Bitcoin will not change the entire financial world, and I am saying this as
someone who owns some and tried using it as an actual currency.

\- Waiting 1-2 hours for a transaction is unacceptable. Don't tell me about
oddballs like Namecheap that sells products that are free to copy and can be
revoked at any time.

\- Getting money in and out is a hassle and doesn't seem to get better. Who is
to say next week the US doesn't ban exchanges from allowing you to cash in or
out? It already happened to Mtgox.

\- When I tried to get people to pay with Bitcoins, they were all turned off
by how slow it is to get money in and to perform a transaction.

Another crypto-currency might solve these problems, but it won't be Bitcoin. I
doubt many of the speculators today have ever tried buying and selling things
with it and use it only to get rich.

~~~
SwellJoe
_" \- Waiting 1-2 hours for a transaction is unacceptable. Don't tell me about
oddballs like Namecheap that sells products that are free to copy and can be
revoked at any time."_

First confirmation is plenty for _most_ transactions, and you're more likely
to actually see that money than a credit card transaction (which can be
charged back later). And, that usually takes a few seconds. If you're paying a
small fee, you're very likely to get confirmations even faster.

The only reason to wait for many confirmations is for something particularly
expensive. Food at a restaurant? No need to go overboard; one confirmation is
plenty. Even no confirmation is probably fine in most cases. Dine and dash is
more of a fear for most restaurants than someone paying with a bogus card (or
bogus Bitcoin payment), I suspect.

Anyway, I've never had a transaction where I included a fee (even a fee of
less than a penny) take more than a few minutes to receive ten confirmations.

 _" \- Getting money in and out is a hassle and doesn't seem to get better.
Who is to say next week the US doesn't ban exchanges from allowing you to cash
in or out? It already happened to Mtgox."_

Certainly a valid concern and fear. Coinbase works great for me. But, if
Bitcoin succeeds, why would you ever need to get "money" out? If Bitcoin
succeeds, Bitcoin _is_ the money you want. It's better money than the "money"
you're talking about. I want to be paid in Bitcoin, and I want to pay all of
my bills in Bitcoin. I never want to have to see another US dollar.

 _" \- When I tried to get people to pay with Bitcoins, they were all turned
off by how slow it is to get money in and to perform a transaction."_

If you were telling them it takes two hours to send someone Bitcoins, I don't
blame them.

~~~
codexon
_" First confirmation is plenty for most transactions, and you're more likely
to actually see that money than a credit card transaction (which can be
charged back later)."_

Plenty according to who? Like I said before, don't keep telling me about
oddballs like Namecheap. It really doesn't matter when the vast majority of
bitcoin vendors force you to wait 1-2 hours.

 _" Anyway, I've never had a transaction where I included a fee (even a fee of
less than a penny) take more than a few minutes to receive ten
confirmations."_

I have included fees of many multiples of a penny and every confirmation takes
on average 10 minutes as it is supposed to. I have no idea how you are getting
10 confirmations in a few minutes.

 _" Certainly a valid concern and fear. Coinbase works great for me. But, if
Bitcoin succeeds, why would you ever need to get "money" out? If Bitcoin
succeeds, Bitcoin is the money you want."_

Have you not heard all the people saying they ordered from Coinbase just to
have Coinbase tell them their order failed 4 days later when Bitcoin went up,
and only when it goes down does their order go through? Coinbase isn't even
large enough to be put under scrutiny by the US government.

I tell people bitcoin transactions take 1-2 hours because for 99% of the
vendors taking bitcoin that is how long it takes.

~~~
SwellJoe
_" Plenty according to who? Like I said before, don't keep telling me about
oddballs like Namecheap. It really doesn't matter when the vast majority of
bitcoin vendors force you to wait 1-2 hours."_

I consider payment made on one confirmation for both of my businesses that
accept Bitcoin payments. It takes a few minutes.

If by "majority of Bitcoin vendors" you mean exchanges, then sure...they make
you wait roughly an hour for 6 blocks to confirm, I guess. But, that's not a
normal thing; it takes me a lot longer than that to get USD into or out of my
stock account at TD Ameritrade. You seem to have a serious beef with
exchanges, and I understand that. That was a point of frustration for me, too.
But, it's not Bitcoin that's a problem there. It's that the Bitcoin industry
is _brand new_. It's such a tiny thing right now, and there's so much room for
growth and improvement.

 _" I have included fees of many multiples of a penny and every confirmation
takes on average 20 minutes as it is supposed to. I have no idea how you are
getting 10 confirmations in a few minutes."_

You're right, actually...I looked back at my transactions...only LTC was
confirmed that quickly (which makes sense as it has a 2.5 minute cycle instead
of a 10 minute cycle like Bitcoin). Bitcoins take about an hour to get 6
confirmations, but that's far more confirmation than one needs for any small
transaction. I don't call my customer's bank when they hand me a check, and I
don't have to wait around forever to find out if their Bitcoin transaction is
good. I've never thought about the time for confirmations as I've never been
in a situation where it was an issue.

 _" I tell people bitcoin transactions take 1-2 hours because for 99% of the
vendors taking bitcoin that is how long it takes."_

I believe you should re-think the necessity of waiting for 6 (or more)
confirmations for the average PoS use case. As a business owner, myself, I'm
fine trusting that my customer isn't going to go to great lengths to cheat me.
If I were a restaurant owner, I'd take payment, go make the food, and check
for confirmation before handing the customer the food. No big deal.

There's a number of business opportunities for solving the need for more speed
and more security with rapid PoS transaction (and if Visa and Mastercard were
smart, they'd already be working on it). Bitcoin is still a low-level
protocol. Better/faster than ACH, but still needs some buffer layers for some
use cases.

Not a big deal, just some software to be written and some infrastructure to be
built. Huge opportunities for those who want to build it.

~~~
codexon
If it isn't such a big deal then why isn't everyone doing it?

Most people aren't selling web apps or licenses that you can just revoke after
the transaction turns out to be fake.

The only way to make transactions faster is a fundamental change in the
bitcoin protocol.

------
bitcoinnoob
Question from one of the uninitiated: I heard that the Bitcoin block chain is
already many gigabytes. How is this expected to scale over time and are there
any challenges for the network if it becomes too large to quickly/easily
share? (Or not since only the tail is really needed?)

~~~
fragsworth
The block chain is designed to grow (roughly) linearly, while storage capacity
grows exponentially. Also, the protocol can be changed to accommodate any
technical limitations in the future.

~~~
lingben
I've often wondered how exactly the protocol would be changed. Who is in
charge? who would make the change? how would it be implemented and enforced in
a decentralized system?

~~~
base698
[https://bitcoinfoundation.org/about/](https://bitcoinfoundation.org/about/)
There have already been some interesting happenings with upgrades. The
blockchain forked and everyone had to roll back to a previous version.

~~~
kens
I've been wondering about that exact thing - if incompatible versions could
cause an accidental fork, and what would happen. If that has already happened,
I would love to know the details.

~~~
base698
[http://www.reddit.com/r/Bitcoin/comments/1a51xx/now_that_its...](http://www.reddit.com/r/Bitcoin/comments/1a51xx/now_that_its_over_the_blockchain_fork_explained/)

Good run down, it was this year.

------
kolev
I think the news about China is pretty bad as it cut off one of the arms of
Bitcoin - being used as currency. With very limited use in e-commerce so far,
I think it will stay as a speculation tool for a while. I personally think it
will drop below $1,000 as it ran out of steam trying to break $1,200 several
times without much success. The drop in transaction volume after it passed
$1,000 speaks for itself, too. Also, a lot of speculators are now looking into
altcoins, which hurts Bitcoin, too.

~~~
nazgulnarsil
bitcoin can't really stagnate, inflation is still over 10%. $4.3+ million USD
equivalent demand must enter the system each day to maintain a steady price.
Maybe after 2016 when inflation hits 4%. Right now it's either up or down.

~~~
kolev
Well, it can't completely - even if it drops back to $500, it still will be
better than USD or CNY. I just don't think there's much interest at the moment
for price above $1,000 and Merrill Lynch/BofA pretty muched capped the price
temporarily at $1,300. There's another dump happening right now - the
temporary increase was nothing, but the typical "dead cat bounce" we've seen
before. Too much bad news isn't always good news!

------
msgilligan
Greenspan calls Bitcoin a "bubble". He ought to know, he's inflated a few…

(p.s. This should be read with your best John Cleese accent)

------
pera
> Digital currency gets investment bank coverage, and the assessment is
> largely bullish.

So now Ars Technica is giving financial advices? ok...

------
sillysaurus2
I bought 0.4 BTC via Coinbase right when the price dipped to $900. Once the
price climbs back to $1200/BTC, that'll net me $115 after fees.

When the price suddenly dives, you may want to consider buying. It's always
paid off so far. It seems like a solid investment strategy, because Bitcoin is
still very young. Therefore it's probable that the infrastructure will
continue to grow, and it will continue to become more popular over time.

It's looking like the price is about to enter into a "slow'n'steady" phase of
growth... I predict it will rise from $1100 to $1500 over the next month or
so.

Consider this: If you have $10k lying around, you can set up a Coinbase
account and buy 9.5654BTC right now. Then you can set up an MtGox account and
sell those coins when the price climbs to $1500 (which seems pretty
inevitable). Therefore your $10k will become $14,262 after fees, which you can
then wire back to your bank account. $4k is a pretty nice chunk of change, so
you may want to seriously consider it.

But you must be willing to keep your money in BTC if the price tanks. It
requires a lot of discipline not to freak out and sell. The overall thing to
remember is that BTC will almost certainly hit $1500; it's just a matter of
when. So if you have a mutual fund, you may want to redeem it buy BTC instead.

Something else to consider: the price of BTC won't be able to double very many
more times. That means an opportunity exists right now; an opportunity that
won't exist very much longer. In a year or two, I predict you won't be able to
count on BTC steadily rising in value. Whereas you can pretty much count on it
between now and then. Anyone who's interested in growing their money on a
long-term basis should seriously consider investing now.

EDIT: My comment was written mainly for historical purposes. A year from now
I'm going to go back to this comment and see how wrong I am. This is the first
time I've been confident in an investment opportunity of any kind, so it'll be
interesting to see whether that confidence is misplaced.

EDIT2: Don't invest any money you aren't comfortable with losing, obviously.
But it's unlikely you'll lose more than half of it. I'd say there's a 95%
chance that putting up $10k now will net you $4k sometime in the future,
because BTC is only going to grow in popularity and capability, not diminish.
Therefore the question is how long you're comfortable with waiting.

EDIT3: Hm, I've hit a nerve. I wasn't trying to tell anyone what to do... but
it probably sounded that way. Sorry. I was just doing a quick writeup of my
own personal thoughts regarding Bitcoin's near future outlook. I'm nobody
special, so please don't take financial advice from me.

~~~
shredfvz
261 days ago, I stated:

Facebook's market cap is $63,000,000,000. If the market cap of Bitcoin were
just 10% of Facebook, each Bitcoin would be worth about $500. 1% and it's
about $50. Can a global financial system conceivably give the world just 10%
of the value of Facebook? Because just ten percent ... and one BTC is $500.

[https://news.ycombinator.com/item?id=5398140](https://news.ycombinator.com/item?id=5398140)

I couldn't have possibly imagined that Bitcoin would soar so quickly. In all
honesty, the infrastructure has NOT improved noticeably over the last 6
months. This runup in price was fueled by shameless speculation, or possibly
the Chinese seeking to evade capital controls. I've followed the Bitcoin
market closely since the time I made that post, and what you'll notice is the
price moves up considerable amounts based on miniscule volume. Liquidity is
dire.

I would advise very cautious optimism if not pessimism at this point. Is
Bitcoin worth really 20% of Facebook right now? That's a tough question,
especially considering the open regulatory question in America, which I
personally don't see doing so hot.

I think Bitcoin was a fantastic, visionary buy at $10-$50 back when nobody was
taking it seriously, and I enthusiastically stated as much to everyone who
would listen. However, at this point I'm telling people they've missed the
boat. There's still plenty of value in Bitcoin, don't get me wrong. It's just
that this run up was 100% speculative, and based on people hoarding coins
because the price was going up. Not the sign of a healthy foundation.

~~~
zimbatm
The only conclusion is that Bitcoin generates more value than Facebook for
it's users ;-)

To be honest I don't think you can compare a company and a market. I don't
even know how you can estimate what is a "reasonable" price for a bitcoin ;
since it's a finite resource it seems normal that the price would go up when
more participants enter the system but I don't know of how much.

