
Bitcoin Price Touches $1,000 Again as Overstock Sales Hit $130,000 - dcawrey
http://www.coindesk.com/bitcoin-price-1000-again-overstock-sales-130000/
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jval
This is just ridiculous. If Overstock is the biggest retailer in the world
accepting Bitcoin, and on their opening day they only manage $130,000 in sales
(130 BTC), what does that tell you about the volume of Bitcoin actually being
used in trade and commerce rather than speculation?

There are 12.5 Million BTC in circulation. I don't doubt that Bitcoin will
become a revolutionary system of payments and money storage down the track,
but the price of coins is outrageously inflated at the moment.

~~~
CamperBob2
Why would I want to spend Bitcoins that are increasing in value? I'll spend
them on the way down, not up.

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ok_craig
1\. They are not guaranteed to increase in value

2\. Spending bitcoin helps the ecosystem, thereby increasing the value of your
other coins in the long run.

3\. Having things now is often more desirable than slightly more later.

(You can't eat bitcoin. If bitcoin is all you have to spend, you will spend it
on food, because food now is worth more than more valuable bitcoin later. If
you also have dollars, then you'd just spend the dollars. If you have dollars
and bitcoin, you can spend the bitcoin to help support the system, and
replenish it immediately with your dollars.)

~~~
nofi3939
I would describe #3 more generally by saying that holding BTC creates an
_opportunity cost_ , unique to each person's circumstances.

Some more reasons:

4\. Lower transaction cost (especially for international transactions)

5\. If you want to help out the merchant, he may get a lower transaction cost
out of it too (if the alternative is credit card, for instance).

Edit: Oh, and let's not forget the spend-and-replenish BTC strategy to keep
your BTC holdings fixed.

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kolev
I feel sorry for those buying bitcoins at prices $900+, seriously! China has
two more weeks until the shut down - so far Huobi and a couple of other
exchanges still allow bank transfers into the exchanges and the Chinese are
making their last profits. When Yuan stops flowing into the exchanges (or
becomes much harder), the only Yuans you can get to buy is when you sell. I'm
sure people will figure out to buy via friends from outside the country, but
you can't really do the current level of speculation not having quick
transfers in and out. Keep in mind most of the trade volume is in China!
Mt.Gox has ridiculously low volume, yet, both Bitstamp and BTC-e follow it
although they have much more volume now. Remember on the 14th the Taobao
restriction also kicks in. Also, hearings won't be very positive this time as
it looks. Anyway, November was a great month, but not every month in November!
Also, the initial excitement about Overstock will quickly subside. It just
can't get any better than this.

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uniclaude
Don't feel sorry for those people, exchanges exist for a reason. If people
feel like they do not want to hold on their cryptocurrencies anymore, they can
still sell them. Moreover, as long as there are enough people willing to buy
those coins at a higher price, it can only keep rising.

I'm not a bitcoin booster or super believer or whatever the term is (even
though I have some), but even if we are to follow your arguments, and assume
that Chinese traders got the price that high, we can say that with a market
cap as low as $10B, China hadn't likely injected as much money as Wall Street
would if they entered the market. My point is that even if the price crashes
because of some bad news in China, it still has a chance to rise again when
Wall Street comes (if we are to believe that those companies still want to
enter).

It really looks like speculation is what keeps the btc/usd pair rising, but
with such good news coming, I can't think of a lot of reasons why people would
stop speculating. Keep in mind that there is no short supply of people who
want to get rich with little work.

~~~
kolev
You cannot deny that the current high price is due to the extremely high
demand in China. Get China out of the picture, add a bit more due to Zynga and
Overstock, the price should be less than $300.

~~~
uniclaude
I'm not denying it, just pointing that some other factors could have the same
effect.

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jds375
I think this really helps justify Bitcoin as a viable currency to the public.
Seeing relatively large sales being done with Bitcoin at a well-known retailer
is a big confidence booster.

~~~
rgbrenner
_Seeing relatively large sales_

For comparison, overstock sold 1.1B in 2012.. which is 2.6M in 21 hours vs
124K in 21 hours

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w1ntermute
So what you're saying is that on the first day of availability, Bitcoin made
up 5% of their sales by volume. I'd consider that a pretty big success.

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eridius
Check back in a few days. It's almost certainly going to go down, not up.

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XorNot
Has anyone been following what BTC price Overstock is allowing?

Because I seriously doubt you get market top or even average price in BTC for
something.

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steveklabnik
Coinbase aggregates a few different markets to determine the price in real-
time.

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t0
The press must know by now Mtgox is an inflated price, but they still continue
to reference it as _the price of bitcoin_.

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lukeqsee
Perhaps it's moderately inflated, but it is still the most well-known exchange
among the populace; therefore, they're going to go with it. It's sort of like
real currencies. Yes, on the spot market they're worth X, but when you're on
the street trying to exchange it, it'll be worth X * 0.9.

~~~
dmm
It's inflated because USD withdrawals are severely delayed, often taking
months to clear. There are people waiting since June 2013 for withdrawals.

Domestic JPY withdrawals seem to happen smoothly so some people use that route
to get fiat out.

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kudu
> The price of bitcoin reached $1,000 again today on Japan-based bitcoin
> exchange Mt. Gox

The headline is misleading. I would expect CoinDesk to use their _own_ Bitcoin
Price Index or at least a regular exchange like Bitstamp as a reference rather
than an exchange from which no one can withdraw money in a reasonable time.

------
coin
MtGox is a poor indicator for going rate of Bitcoin. Because it's so difficult
to withdrawal USD from MtGox, their exchange rate is always higher than the
going rate. Example, MtGox is currently $992/btc, where as both bitpay and
bitstamp are $887/btc.

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AngrySkillzz
I wonder if anyone will ever write an article about Bitcoin that doesn't quote
some crackpot who thinks the Federal Reserve is destroying our money.

~~~
azernik
Well, in this case the crackpot in question is the CEO of Overstock, so it's
kind of relevant.

I think the real issue is that in a disproportionate number of the big cases
of Bitcoin being used in actual transactions, one or the other of the
participants _is_ a crackpot who thinks the Federal Reserve is destroying our
money, despite the dollar's impressive record of price stability.

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minimax
How is adoption of bitcoin as a payment technology a bullish indicator for
bitcoin as an investment? The prices on Overstock are still in dollars and
bitcoin as a payment technology works equally well whether bitcoin is priced
at $1,000,000 or $0.01.

~~~
nofi3939
If you believe that overstock will lead to increased demand for BTC (perhaps
not due solely to overstock but a wave of merchants who follow suit) and that
the demand outpaces BTC's inflation (i.e. the ~3600BTC mined into existence
each day), then BTC's value will rise as a consequence.

~~~
minimax
The Overstock case doesn't increase net demand for bitcoins. This is how
Overstock works. I have dollars and I want to buy something on Overstock. I
buy some bitcoins with my dollars. I send bitcoins to Overstock and Overstock
sends me the product. Overstock then sells the bitcoins to convert back to
dollars.

So there is a buy and a sell for each transaction which creates no net demand
for bitcoins. And if you consider the alternative where I already have
bitcoins because I mined them, then I have bitcoins and I send them to
Overstock who sells them for dollars. In that case you actually create
downward pressure on the bitcoin price (against the dollar) since there is no
buy on my part to net against Overstock's sale of bitcoins.

~~~
nofi3939
It's true that the Overstock transaction itself doesn't create new demand.

But it may bring new users who buy/hold BTC, if they see it as a useful store
of value or just for convenience sake to make future purchases. Overstock's
CEO said they may start holding it for longer if they can pay their vendors in
BTC or have derivatives that allow them to hedge against decline in value.

Also, because the exchanges charge a fee to convert to/from fiat (e.g. 1% in
coinbase's case), that creates some incentive to stay as BTC.

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barkingcat
I sure hope Overstock's opsec people are securing their bitcoin wallets. Worst
news to hear would be that someone took their bitcoins out of their wallets
the next day.

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tadfisher
Overstock isn't accepting BTC, they are accepting USD from Coinbase, who in
turn accept BTC. Coinbase bears the security risk.

~~~
chii
so swap the reference to the opsec of Overstock with coinbase's.

as soon as there's enough money, well funded organizations will start
attacking, and robbing a bitcoin wallet is probably less risky than a bank...

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thelsdj
I believe Coinbase holds the majority of their BTC in offline wallets
distributed in multiple bank vault around the world.

They are probably one of the groups with the best BTC storage security (while
maintaining usability). So yes, if they WERE to be robbed, then that would
basically mean that no one is able to properly secure BTC.

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kaa2102
There was a lot of volatility in a short span of time from the China
announcement to Overstock adoption.

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kolev
Yes, lots of trading bots at play, too!

~~~
kolev
BTW, I wondered, will actually having a higher transaction fee on the API
transaction, in fact, reduce volatility? Let's say, at Bitstamp with volume,
you can get down to 0.02% fee (no so hard with even a few bitcoins and a few
trades). If API trading fee is always at 0.05% or higher, then bots will slow
down a bit.

