
Bitcoin value falls from above $33 to below $3 - stickfigure
http://www.betabeat.com/2011/10/17/price-of-bitcoin-still-dropping-falls-below-the-price-of-mining/
======
powertower
> It now appears the $3 to $33 prices for Bitcoin were due to speculation.

Come on. Was it ever attributed to anything but speculation.

~~~
alexhaefner
yeah, I don't understand all the attention given to bitcoin. It's not like
it's a system that's immune to systematic manipulation. Anyone operating under
the assumption that bitcoin is a stable system is naive.

I'm open to being wrong about my assumptions.

~~~
jerguismi
> Anyone operating under the assumption that bitcoin is a stable system is
> naive.

"Stable" as in exchange rate, no. But the bitcoin technology in itself is
really solid, and will continue to work well.

------
joshontheweb
Is this really a bad thing? Now people can stop hoarding them and start really
using them as currency. It never really mattered what they were worth unless
you were holding onto them. If you use bitcoins to enable transactions only
and keep your money in real dollars then it can be pretty useful.

~~~
jerf
It is if the only reason that they have value in the first place was the
hoarding and speculating, which seems a reasonable interpretation of events to
date. A currency of no value is not useful for trade.

I mean that "if" as a true logical statement, not an implied assertion that it
must be true. (I do believe that, but I'm not asserting it right now, because
I'm not defending it.)

~~~
joshontheweb
Its apparent that people are finding value in them aside from their speculated
worth. They are using them to facilitate anonymous transaction and more easily
transact internationally. Whether those use cases are valuable enough to keep
people using bitcoins, I can't say.

------
runn1ng
Every bitcoin opposer repeats, that the money will artificially start going up
and that is why it will crash.

Right now, it is going down, for a long time. So that is not why it will fail.

It will fail because noone actually needs it. It has no real value over other
means of electronically exchanging money - paypal, for example, is much
faster, easier to use and, dwhile it is not free, thanks to the wild exchange
rate of bitcoin, one will probably still have more money from paypal than
bitcoin money exchange.

There is no place to spend bitcoin, because most of the people don't CARE that
it's centralized and someone can watch it, because it is infinitely easier to
use paypal to just PAY STUFF, instead of going through the pains to exchange
bitcoins through shady sites, wait DAYS to get it on your wallet, then wait
hours until the blockchain is downloaded, then wait another hours since the
block is 6 times confirmed.

Maybe it will work in the end, it's nicely designed and all. But I don't see
anyone using it right now. There is no real reason to do so.

~~~
dolphenstein
Value is arbitrary. None of the major world fiat currencies have any inherent
value. They are backed by nothing.

Reminds me of an episode of This American Life. Brazil's currency was down the
toilet, so they invented a new currency and tricked the populace into thinking
it had value.

[http://www.thisamericanlife.org/radio-
archives/episode/423/t...](http://www.thisamericanlife.org/radio-
archives/episode/423/the-invention-of-money)

~~~
nhaehnle
The price level is more or less arbitrary, but the value of fiat money is not
just a shared hallucination. It ultimately comes from taxes. MMTers say that
Taxes Drive Money: [http://neweconomicperspectives.blogspot.com/2011/07/mmp-
blog...](http://neweconomicperspectives.blogspot.com/2011/07/mmp-blog-8-taxes-
drive-money.html)

Some anthropologists say that this is how money got started in the first place
around the palaces in ancient Egypt. In more modern history, there are stark
examples of how "taxes drive money" really does work to monetize an economy;
search for "Hut taxes".

~~~
pessimizer
Even non-MMTers. If you are from the US, you have to pay your taxes in US
dollars, and judgments in court against you are payable in USD.

------
bdr
One of these things will happen: (1) A successful attack on Tor, (2) A
successful attack on Bitcoin, (3) The Silk Road's (or similar site's) share of
the black market will continue to grow rapidly.

~~~
jerguismi
It seems pretty inevitable in the longer term. If current technologies break
up, new technologies will be popping up. I guess law enforcement has already
lost this battle (in the long term), similarly as RIAA/MPAA has lost to
piracy.

It should also be noted that criminal use doesn't raise the price of bitcoins,
since criminals don't necessarily hold their bitcoins. For them bitcoin is
just an another money laundering system.

~~~
bdr
_It should also be noted that criminal use doesn't raise the price of
bitcoins, since criminals don't necessarily hold their bitcoins. For them
bitcoin is just an another money laundering system._

Disagree. There's a "float" period between when the order is placed and when
it's completed (service/goods verifiably delivered). The dollar-value volume
in this float period sets a floor on the market cap of Bitcoin.

I'm clearly fascinated by all this, and a little surprised that more people
aren't. The Bitcoin protocol is one of the great recent innovations in
distributed systems, and this particular application of it is the culmination
of a lot of crypto work into a cypherpunk fantasy.

~~~
VladRussian
>a cypherpunk fantasy

yep. All your transactions are recorded for posterity and law enforcement can
access them at anytime. The moment i first time heard about bitcoin i
immediately read their paper and this was the instant end between me and BT -
it is either a honeypot or an NSA's distributed "calculate these hashes@HOME"
project. Most probably it started as the latter and once NSA had gotten enough
results and withdrew the funding (which supported the currency valuations
stable growth before speculation rushed in), the BT now is only the former.

~~~
DiabloD3
Satoshi's white paper disproves everything you just said. Either your comment
is out of ignorance or out of malice. Go read the white paper.

~~~
VladRussian
our reading of the same paper seems different (i mean if you did really read
it). Well, don't believe me, check this out:

[http://gawker.com/5805928/the-underground-website-where-
you-...](http://gawker.com/5805928/the-underground-website-where-you-can-buy-
any-drug-imaginable)

"Jeff Garzik, a member of the Bitcoin core development team, says in an email
that bitcoin is not as anonymous as the denizens of Silk Road would like to
believe. He explains that because all Bitcoin transactions are recorded in a
public log, though the identities of all the parties are anonymous, law
enforcement could use sophisticated network analysis techniques to parse the
transaction flow and track down individual Bitcoin users."

~~~
icebraining
You don't even need "sophisticated techniques", you can follow the
transactions in <http://blockexplorer.com/>

ALL transactions, including the receiver and sender addresses are public. They
_have_ to be, since the global bitcoin network has to verify and add them to
the blockchain.

 _A full copy of a currency's block chain contains every transaction ever
executed in the currency. With this information, one can find out how much
value belonged to each address at any point in history._

<https://en.bitcoin.it/wiki/Block_chain>

------
Murkin
Can someone give a concrete example of themselves using Bitcoins for something
other than speculative trade ?

~~~
hippich
I sold my motorcycle for coins.

I was buying a lot of article writing service (0% payment fees is nice!)

I shipped several orders from international customers in my
<http://store.gifti.us> and accepted payments in bitcoins (0% foreign
transaction fees is nice too!).

I bough steam codes.

I built somewhat profitable for short period of time site - <http://betco.in>
and used some profit in bitcoins to pay for development work on open source
project.

EDIT:

Bought, just like few other visitors, articles in PDF at <http://ubitio.us>.
This is also project of mine and I am going to contribute it to open source
soon, so just another bit into bitconomy.

And I am working on two other projects involving products/services and bitcoin
:)

This is just what came in to my head right away...

~~~
wanderful
I'm curious, how have you found the currency value volatility for buying and
selling goods and services?

I envision a bitcoin meme: 0% fees, 1000% volatility :)

~~~
hippich
It is stable enough to be able to convert bitcoins to usd at predicted rate
(marked is liquid enough - and this is where speculators are good evil).

I am converting to usd only part needed to pay suppliers and rest leave in
coins for now. Agree, income is fluctuating. But I am ok with it since so far
I did not see technical issues with bitcoins itself.

But you are right - as I said below, huge fluctuation (although, what time
period you used for 1000% fluctuation claim?) is a problem. And I will welcome
stabilization at any level. Although market is too small to be stabilized
soon.

------
daimyoyo
Anyone know what the conversion rate between bitcoins and Dutch tulips is
right now?

~~~
raganwald
Today the joke-explainer duty falls upon me:

<http://en.wikipedia.org/wiki/Tulip_mania>

Even if you are familiar with the expression, the full article is well worth
reading.

~~~
gnu6
Indeed, those who deal with web 2.0 startups would be well advised to read
that article.

~~~
hippich
These who advise to read this article better read it in full themselves.
Especially part where it is explaining jumps from futures contract to options
and back. And how this affect price.

------
polshaw
It is essential to remember that there is massive inflation of the money
supply going on (by design), and that this is the key driver of the price
downwards. ~35% increase in the money supply over the next 12 months;
proportionately higher over the last 12 (as the same in absolute terms).

Its rise to $30 was driven by hype and speculation. The falling prices stop
any speculators jumping on board, and there is no significant 'economy' yet.
The rate of money supply increase will be halved in 2013, so don't expect any
recovery before then.

~~~
jerguismi
> The rate of money supply increase will be halved in 2013, so don't expect
> any recovery before then.

The value is mostly driven by mass psychology, the inflation caused by miners
is only one factor.

If some goverment-issued currency would start hyperinflating, bitcoin or
similar cryptocurrency would be pretty good choice for people to move to.

~~~
tomkarlo
So they should jump out of a highly liquid, government-backed security that's
proving untrustworthy to go into an experimental currency that's relatively
illiquid? I'd think they'd go towards gold, which seems like the opposite
direction.

If people are jumping out of a printed currency to avoid inflation, they're
going to want something where they know it's easy to convert back into
something you can buy things with. Jumping into a cryptocurrency for their
cash holdings would require they believe that they can easily jump back out.

~~~
jerguismi
Of course it would require more infrastructure around bitcoin. There is
already an impressive amount of exchanges, and it would be pretty easy to
exchange bitcoins with software like android bitcoin wallet. excellent app
btw: <https://market.android.com/details?id=de.schildbach.wallet>

Gold isn't really a good instrument of exchange. Gold-backed currencies are,
but the central issuer has proved problematic historically.

Of course cryptocurrency used widespreadly is just a nerd fantasy right now,
but I believe in it more than to a new gold standard :)

~~~
tomkarlo
It's not a matter of infrastructure. It's a matter of belief: people who are
looking for safety and refuge from inflation aren't going to move their money
into a less-liquid, less-tangible asset with no track record (relative to
alternatives.)

Moving cash into bitcoin would make sense if there were some inherent
advantages: better returns, more liquidity, better privacy, more stable
values, faster transactions. So far, I don't really see any of those being
offered; it's essentially an experiment, and folks who are using it are either
doing to speculatively or for curiosity value, not economic reasons.

~~~
vrotaru
> people who are looking for safety and refuge from inflation aren't going to
> move their money into a less-liquid, less-tangible asset with no track
> record (relative to alternatives.)

I will. The point is, _at the margin_ , some people will. All and at once?
Never! The more adventurous and tentatively? Yes.

Now it all depends on relative outcome of different strategies.

------
mikeryan
As much as bitcoin's gotten some bad press recently, this kind of market
volatility will severely hamper bitcoin's efficacy as a stable unit of
currency. It _needs_ a consistent and stable rate of growth (even if
negative).

~~~
pessimizer
I think more that it needs some utility over other currencies within some
context. That utility margin will bring stability.

------
lurch00
Bitcoin is essentially a giant pyramid scam. The early adopters have cashed
out long ago. As mining gets more and more difficult, less people will cling
to the liquid currency. Why trade with a deprecating currency, anonymous or
not? The fact that the exchange rate is below the cost of mining should be
alarming for many reasons.

I'd assume the creator/first adopters do not care, either way.

~~~
jerguismi
It's free market, everyone is free to buy and sell as they wish. It's not a
scam since there is the same information to everyone.

I'm pretty sure that the early adopters couldn't guess this year's rise in
value, and couldn't guess the price drop either.

While I believe in bitcoin or cryptocurrencies in the longterm, I'm still
pretty sure that bitcoin value will stay very volatile in the coming years.
The stability will take time, and widespread adoption for this kind of
innovation will take years if not tens of years.

~~~
polshaw
Your reply missed his point as bitcoin is 'mined' not just bought and sold.
The difficulty of that mining is set based upon the computing power of the
miners. Add to this the fact that the number of coins available to be mined
each day is designed to be reduced over time, and you end up with early
adopters (formost of which being the creators) controlling a massive
proportion of the total worth of bitcoins.

~~~
jerguismi
Well, I guess that most startups are pyramid scams, since the founders (early
adopters) end up controlling massive proportion of the total worth of the
company.

~~~
dpark
If the startup founders create the company specifically to sell a worthless
product to investors, then yeah, it's a scam.

Also Bitcoin is not a company, any more than US Dollar is.

~~~
icebraining
Only if they say they aren't worthless. Which in this case they don't.

------
hippich
Bitcoin is something completely new and different. It is like open source
software. Until people really understand it, it will be toy for geeks with
similar market coverage and price. (or someone find design bug and we can
forget about it)

Biggest hurdle when using bitcoins is not it's high/low price, but rather
fluctuation.

Fluctuation happens because too many speculate it and not trade with it
(well.. currency trading is also trading..) And I would say this is totally
expect-able and acceptable.

With time if this technology will prove itself, it become major online payment
method. And believe me - work on this project is very active right now. All
this investing mumbo-jumbo is just a random noise...

~~~
verroq
No I think it's because bitcoin's reputation had been thoroughly trashed due
how much the early adopters made off with. Any mention of bitcoin now just
leaves a sour aftertaste.

~~~
hippich
another one...

who cares? Do you care federal reserve guys can print as many dollars for
themselves? Does it prevent you from using dollars to buy stuff in walmart?

Difference from FED is that it happens to bitcoin only once - during initial
distribution. After all coins "printed" - no more coins will be thrown into
circulation.

Initial distribution have to be made somehow. And I believe people who
invested their time and money earlier have to be paid accordingly.

Read paper. This is not money question. This is technology question.

~~~
verroq
Well what I'm saying is that people will avoid bitcoin out of spite.

------
lukev
I like bitcoin.

It bought me an iPad 2 when I cashed out my 3 weeks worth of mining at the
height of the bubble.

------
ajones05
Here was Jason Calacanis's take on May 15: "Bitcoin P2P Currency: The Most
Dangerous Project We've Ever Seen" -- "We are 100% certain that governments
will start banning bitcoins in the next 12 to 18 months. Additionally, we’re
certain bitcoins will soar in value and a crush of folks will flood the system
and start using them." [http://www.launch.is/blog/l019-bitcoin-p2p-currency-
the-most...](http://www.launch.is/blog/l019-bitcoin-p2p-currency-the-most-
dangerous-project-weve-ev.html)

~~~
rorrr
Who gives a shit what some famous spammer says about crypto-currency?

Plus, how do you ban something like this?

~~~
esrauch
I'm not sure what you mean, you ban it exactly the same as you ban copyright
infringement or child porn or any of a dozen other crimes that are committed
on a computer that simply involve a transfer of information between a few
parties.

~~~
Zodiakos
So, in other news - governments everywhere ban bitcoin. Bitcoin use soars
wildly.

~~~
mikeryan
Not sure where you make that assumption from. If bitcoin never gets adopted as
legal tender for real world goods its value gets severely limited. If
Government's explicitly state that bitcoin is not legal tender, and I can't
buy a latte at Starbucks with it then its not very useful.

~~~
rorrr
But if you can buy things privately or online with bitcoins, bitcoins will be
used without government permission, and will have value.

SilkRoad works.

<http://www.wired.com/threatlevel/2011/06/silkroad/>

[http://gawker.com/5805928/the-underground-website-where-
you-...](http://gawker.com/5805928/the-underground-website-where-you-can-buy-
any-drug-imaginable)

~~~
mikeryan
I'm not saying that Bitcoin won't have value, my response is to the
grandparent that makes the argument that bitcoin usage would explode if it
were made illegal. It seems to me bitcoin would be further marginalized in
that case, hardly a catalyst for growth.

------
vrdb2
To everyone mentioning the great Dutch tulip debacle: Tulips are a commodity,
the coin is a currency. Bubbles can be analogous, but they aren't
tautological. Just a thought.

------
kellyreid
good thing I made a bunch of money by trading BC intra-day when it hit
mainstream.

seriously, did anyone expect this to be a "new paradigm"? it was a fun toy for
financially-minded engineers and traders, but I can't say I'm surprised to
hear that it's in free-fall.

i wonder where the bottom is? Once it drops well below USD1.00, I think I'll
buy a bunch on a cheap bet :)

~~~
adrianwaj
I thought it'd be the new paradigm, but closed my bitcoin blog when I saw how
terrible the client was and couldn't see it improving that much. Just waiting
on bitcoin 2.0 from lessons learned.

------
dudurocha
this reminds me about the quora post about bitcoin. In a world of where there
is no regulation in currency, you dont have a FED, this money will crash. We
dont have liquidity in this currency, as so, nobody can 'inject' money in the
market.

~~~
aero142
Gold also has no fed to 'inject' money. It does have miners though. It has not
crashed and appears to be more stable that fiat currencies, not less. (not a
bit coin or gold standard fan here, just confused.)

~~~
william42
[http://upload.wikimedia.org/wikipedia/commons/2/20/US_Histor...](http://upload.wikimedia.org/wikipedia/commons/2/20/US_Historical_Inflation_Ancient.svg)

If you look at this, you can see that gold is _more_ volatile and spiky.

------
jmvoodoo
Bittulips?

------
drivebyacct2
All I have to say is "wow". The commenters here are atrocious. If you're going
to rage against BitCoin, (and I'm no huge fan), at least bother yourself to
have half a clue what they are instead of spouting lies here in some vicious
attack on them.

------
AndyKelley
Porn is to the Internet as selling drugs is to Bitcoin.

