
Bitcoin value dives after China banks ban - molecule
http://www.aljazeera.com/news/asia-pacific/2013/12/bitcoin-value-dives-after-china-banks-ban-2013125141919464366.html
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ChrisClark
"the virtual currency that has soared in recent months and made fortunes for
some, plunged"

Yes, the virtual currency that soared from $100 to $1200 has plunged down to
$1000.

~~~
_ak
If there's one thing we learned in the last few months is how volatile BTC is.
Reports of such "crashes" are really non-news.

~~~
MichaelApproved
For financial assets, the term "crash" has typically meant a drop of 20%. This
would apply to the recent bitcoin decline from $1,200+ to sub $1,000.

Edit: 10% drop is considered a "correction". 20% drop is usually a bear
market.

~~~
sentenza
These fluctuations, however, show that Bitcoin cannot fulfill one of the
central functions of currency: Exchange for goods.

How many of these multi-dozen-percent downward fluctuations will it take
before those storeowners and shops that take bitcoin stop doing so or start
maintaining an insane markup on Bitcoin prices?

~~~
ok_craig
I just bought a $1000 plane ticket a few days ago for bitcoin. Seems like
that's fulfilling the role of a currency.

You should know that you don't actually have to hold bitcoin to accept it as a
payment method. Services like Coinbase let you instantly exchange it to cash
if you use their merchant tools, so the merchant is actually exposed to zero
risk.

~~~
sentenza
Ah, that explains it. It would be interesting to know what mechanisms Coinbase
et al use to avoid balance sheet fallout by sudden downward fluctuations.

~~~
YourCupOTea
They would have to employ some sort of currency risk hedge.
[http://en.wikipedia.org/wiki/Foreign_exchange_hedge](http://en.wikipedia.org/wiki/Foreign_exchange_hedge)

~~~
jonknee
Easier said than done when you don't have an actual currency to hedge against
and the complete lack of a functioning options market.

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javindo
Quite poor financial reporting from AJ to be honest. BTC is highly volatile
but it has generally stuck around $1,000 for the past couple of weeks, the
upward spike to $1,200 was just one of many fluctuations which has once again
levelled off at $1,000.

China telling large banks they can't handle BTC will not have any impact on
the currency because everyone buying/selling BTC in China weren't using the
banks anyway. The "dive" was potentially a slight overreaction to the news
from China but it's also a fairly uninteresting fluctuation in a highly
volatile resource.

~~~
bilbo0s
If you don't mind me asking...

how are average people in China buying bitcoins without the use of a bank???
How do they get the cash to the seller of the bitcoin I guess is my question?

Do they walk into a brick and mortar "bitcoin store" and make a deposit (with
cash)... and then they can trade from that "bitcoin store"? (Provided they
accept all the risk).

Is there some other user friendly way this happens that doesn't require the
use of cards that flow through financial institutions?

Or is the trade really complex currently and relegated to just "people in the
know" so to speak?

Just trying to get an idea of how these new rules would affect the average
Chinese.

~~~
waterlesscloud
They move their money from their bank to an exchange and then buy bitcoins.
The announcement says nothing about not allowing banks to deal with bitcoin
exchanges, only that banks can't deal in bitcoin directly.

This "news" (which is really just the official announcement of something
announced unofficially a couple weeks ago) changes nothing whatsoever about
the status quo.

~~~
bilbo0s
Wait...

can't they just tell the banks that they can't deal with bitcoin businesses in
the future???

~~~
gokhan
In that case, they would tell it today rather than telling that the public
should deal with the Bitcoin's risks themselves, wouldn't they?

~~~
bilbo0s
Just playing Devil's Advocate...

but I wouldn't.

Those transfers to the exchanges from the banks are currently one of the few
reliable monitors of this activity.

So I would first put the tech in place to monitor the bitcoin network... then
I would say that you can't use banks to get to the exchanges anymore.
(Monitoring blockchain changes on that scale is non trivial).

Anyway, if I was serious about impeding bitcoin usage... that would be the
order I'd do things in.

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booop
Premature reporting by aljazeera. There was an even bigger dive a few days ago
but it shot back up after hitting 840.

~~~
theboywho
There was an even bigger dive a few weeks ago to 300, news channels just
didn't have a story, and I'm sure if Snoop Dogg said bitcoin was useless back
then, they would have used that... "Bitcoin dive after Snoop Dogg loses faith
in the currency..."

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Pxtl
Bitcoins are seriously worth a thousand dollars now? Now I feel stupid for
spending my coin on Humble Bundles.

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leeoniya
leeoniya's law of bitcoin headlines:

"Any statement about bitcoin's value is outdated by the time it's published."

~~~
orthecreedence
This is true of any market. By the time it hits newsstands, the change has
happened. That's why you read charts, not headlines, when trading (if you want
to make money, that is).

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iluvuspartacus
What most reporting is missing is that the early adopters are cashing out
because it is now worthwhile to do so. And the prices keep jumping right back
up, due to the late adopters.

Whenever you see a huge crash in a short period of time and a quick gain,
expect it to recover. If you see a prolonged slow decline, it's time to
abandon ship...

Oh to buy a bunch at 2009 prices...

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Fuxy
Lol I wouldn't call a £100 drop a dive for bitcoin.

Honestly i expected more but it's already recovering it was more like a minor
bump in the road.

~~~
bradleyland
Working in amounts doesn't tell the whole story. Volatility is easier to
understand when expressed in percentages. Have a look at the charts on
bitcoinwisdom.com:

[http://bitcoinwisdom.com/markets/bitstamp/btcusd](http://bitcoinwisdom.com/markets/bitstamp/btcusd)

Explore various intervals (time period). Even at the 1d interval, there are
15% swings. Is this bad, given the qualifier that "it is Bitcoin" after all?
That depends on what you expect Bitcoin to be. If you expect to use it as a
currency, then yes, it's very bad. If you earned your Bitcoins yesterday, and
you have to pay a bill today, then that kind of swing is a big problem. You
could end up taking a 15% haircut. If you expect to use it as a speculative
investment, then you've got a lot of opportunities for trading.

Both of these are fine, but they're opposing goals. Most economists agree that
you want stability in a currency; that is the currency should act as an
accounting measure only. It is a means of storing value at as close to NET
zero gain/loss as possible, with it's real value being the ability to transact
goods indirectly.

I'm not sure what values Bitcoin endeavors to hold, but if we're using duck
typing, it looks a lot more like a speculative investment than a currency.

~~~
undoware
...except you can't buy heroin with penny stocks.

'Platypus typing', maybe?

~~~
makomk
I'm not sure you can buy heroin with Bitcoin anymore either, all the online
markets have shut down one way or another last I heard.

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pionar
Are BTC "values" not just hypothetical right now? Does anyone really do heavy
trading in BTC-USD?

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ye
And it bounced right back.

