
Bitcoin $645? Yeah, That’s Totally Reasonable - vyrotek
http://techcrunch.com/2013/11/18/bitcoin-645-yeah-thats-totally-reasonable
======
mrb
If you compare Tulip Mania to the world's first decentralized, censorship-
resistant, inflation-resistant, digital currency, then you don't understand
Bitcoin. At all.

Combine this with absolutely zero efforts to estimate the worth of the Bitcoin
system, how Bitcoin is used today, etc. That's the difference between being
published at Techcrunch and more prestigious publications like
[http://www.nytimes.com/2013/10/31/technology/bitcoin-
pursues...](http://www.nytimes.com/2013/10/31/technology/bitcoin-pursues-the-
mainstream.html) or [http://www.washingtonpost.com/blogs/the-
switch/wp/2013/11/08...](http://www.washingtonpost.com/blogs/the-
switch/wp/2013/11/08/everything-you-need-to-know-about-the-bitcoin-bubble/)

~~~
maxerickson
If in, say, 5 years, you turn out to be hilariously wrong, will you eat your
bitcoins?

~~~
mrb
Let me clarify my position: the utility of decentralized digital currencies on
society is so enormous that it is _inevitable_ that they will succeed.
Decentralized digital financial transactions are an invention as big as the
Internet.

Is it Bitcoin that will succeed, or some other cryptocurrency? I don't know,
but it has a good shot at it because it has the first-mover advantage and
benefits from network effect.

~~~
rafcavallaro
By the same utility argument there should be no nuclear weapons, an all out
push for zero emissions energy, and world peace, but don't hold your breath.
There are existing, very powerful stakeholders such as the governments and
militaries of numerous world powers who would far prefer that financial
transactions not be anonymous. Tech folk sometimes forget that their bodies
live in meat space, not cyberspace, and whoever controls the guys with weapons
(i.e., controls police and armies) controls meat space.

~~~
mrb
The difference being of course: nobody has a clue on how to achieve no nuclear
weapons, 100% zero emmission energy, world peace, etc. So you might wish it,
but it just not going to happen right now.

But Bitcoin is a known solution demonstrating how to implement a decentralized
digital currency. It is working. Today. So the utility it has, and the impact
it is about to make on society is enormous.

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vijayboyapati
This is what the real-time monetization of a good looks like. In the early
stages you have massive price increases until there is enough liquidity and
volatility declines. Bitcoin looks like a bubble, but money is inherently a
bubble phenomena: [http://unqualified-
reservations.blogspot.com/2013/04/bitcoin...](http://unqualified-
reservations.blogspot.com/2013/04/bitcoin-is-money-bitcoin-is-bubble.html)

~~~
exit
the author of the article you link to set up a donation address and received
1.159 btc on the same day, currently worth 678.52 usd.

~~~
vijayboyapati
He actually received a total of a little more than 19 bitcoins. He's a very
popular and respected blogger among libertarian circles. One of the most well
read (of history and economics) authors I've come across.

------
baddox
Unsurprisingly, the author makes no attempt to show why _any_ BTC to USD
exchange rate should be considered reasonable or unreasonable.

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corysama
Viewed on a log scale, it's clear that $650 is too high. But, it's not quite
as outlandish as the linear plot implies.
[http://i.imgur.com/GOYWUMo.png](http://i.imgur.com/GOYWUMo.png) According to
that armchair-financier line fitting, the trend is for the price to still be
below $300. What's more interesting is the long term trend of 10X price
increase every 12.5 months for the past 3+ years running. Disclaimer: past
performance is not an indicator of anything.

~~~
ISL
It's clear that such a slope is unsustainable in the long term. If bitcoin
continues its growth, with a $5B market cap now, and a ~$100T world GDP, it's
clear that there's, at most, another four orders of magnitude to go.

And, given that perhaps a few thousand collectors are each willing to pay a
few dollars to own most of the world's BTC, there's perhaps six orders of
magnitude of room for the price to fall.

~~~
corysama
Agreed. Even if it doesn't die, it's going to S-curve at some point. The range
between $1000-$10,000 is going to be interesting times. At that point, a lot
of the early hobbyists are going to be holding minor life-changing amounts of
potential money ($10Ks-$100Ks). Even with the forecast of continued
exponential growth, it's will be the smart move for a lot of people to "take
some off the table" and cash out a significant portion of whatever they've
been hoarding.

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Everlag
I think it is telling that in the time from when this was posted to this
reply, bitcoin is up to 668.5.

This is a bubble, anyone who thinks otherwise doesn't understand that people
make an effectively stupid amount of money by using bitcoin as a pump and dump
scheme.

If you think this bubble is helping bitcoin as a currency, then you are
terrifically incorrect. For all the good that bitcoin is capable of, how the
hell do you base a payment system around something that has no price
stability?

~~~
wellboy
You need to understand what a bubble is and what isn't. It's a bubble when
bets are made on things that have nothing backing up their immense valuation.

Now, you need some smartness to understand that the value in currencies is not
in it´s physical value ($100 are worth maybe $0.02 in physical value), but how
many people use it.

Millions of people now use bitcoin, thousands of businesses have started
accepting bitcoin over the past 6 months. In a year these numbers will be
50-fold.

Things that people use a lot, are not bubbles. Also, this doesn't take into
consideration the potential, which is a major factor determining a valuation.
And that is that Bitcoin or something similar has the potential to replace all
banks and all currencies entirely.

EDIT: Changed "don't have an underlying value" to have nothing backing up
their immense valuation". And sorry I was a bit angry, but I've read it now a
hundred times on hackernews over the past 2 years, we're in a bubble here,
we're in a bubble there. It is not a bubble, when millions and millions of
people are using it.

The 2000 bubble was a bubble because there were 300M internet users at the
time. Now we have 2B, that's the difference.

~~~
Everlag
So the value of bitcoin going from just around 350 to just around 700 dollars
in a week is not a bubble?

Have businesses using bitcoins doubled? Have users of bitcoin doubled? While
possible, I must say that the chance of people investing in the currency not
as a currency to be used but as a money multiplier would be a bubble.

What underlying value has bitcoin shown to necessitate a 2x increase of value
in a week? I'm honestly curious.

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ISL
Logarithmic plots!

A better way to look at a quantity which has changed so much is to use a
logarithm.

[http://bitcoincharts.com/charts/mtgoxUSD#tgSzm1g10zm2g25zvzl](http://bitcoincharts.com/charts/mtgoxUSD#tgSzm1g10zm2g25zvzl)

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johnrob
Bitcoin is a currency. Shouldn't we be more interested in the number purchases
made with it instead of the current exchange value?

~~~
craigyk
Yup, despite what it's advocates say, it sure isn't behaving like a currency.
Major requirement of currency: very-low volatility.

~~~
applecore
There are a number of currencies that experienced ridiculous levels of
hyperinflation over the years.

When is a currency a currency? Until it isn't?

~~~
Jtsummers
Many currencies lack stability (meaning some low % inflation/deflation(?)). I
think it would be reasonable to contend that almost anything could be a
currency or used as one, but stability makes for more effective currencies.
While the value of BTC vs USD (or other established currencies) continues to
explode, it makes it more difficult to use as a currency proper (rather than
as a commodity/investment). If you have 10 BTC, it'd be difficult to spend
0.05 BTC (over 30 USD now) on a good (not a necessity) when it seems like in a
week you could spend 0.03 BTC for the same thing.

~~~
craigyk
yes, I left out the 'effective' adjective. Or I should have put currency in
sarcastic quotes.

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IanChiles
Now I'm just a little bit disappointed I didn't buy any when I first heard of
them... But this feels like the same bubble Bitcoin has had twice before - it
spikes then plummets, but it plummets to a point higher than the last drop

------
tlrobinson
So how exactly does one come up with a "reasonable" price for Bitcoin? Why is
$100 any more "reasonable" than $645?

~~~
VikingCoder
So how exactly does one come up with a "reasonable" price for anything? Why is
$10 for a chicken any more "reasonable" than $10,000?

Things have value because we (collectively) believe they do. Currency is a
numbering system. In practical terms, what matters is how easy are the numbers
to use, and what's the relative value of one thing versus another.

And if you think we can rationally decide how many chickens a hip placement is
worth, you're still nuts.

~~~
junto
Surely price is comparative? If you only earn $10 a week then $10 for a
chicken is expensive, but if you earn $1000 a week then that chicken is pretty
cheap.

~~~
VikingCoder
Why does one guy earn $10 a week, and the other guy earns $1000 a week?

No, seriously.

Nothing is stable in an economy. Everything is dynamic. Everything is
relative. Everything is a shared delusion. Luckily, most people buy into it,
most of the time. When that fails, you get massive inflation.

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massarog
Looks like half the sites are down/have issues. Can't even login to my
coinbase account without getting errors.

~~~
aestra
They aren't sending me out SMS verification codes.

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MarkPNeyer
i'm not sure whether this current bitcoin price run is a bubble or just the
currency becoming more valuable as it gains more attention and recognition
from world governments. my guess is that a downward correction is coming soon.
either way, though, i'm certain that in the long run, the currency is worth
much more than the $600 it trades at now.

the model i'm using is BTC as a new form of gold. the current value of all the
gold in the world, by my primitive calculation, is around 4 trillion. if all
the bitcoins in circulation eventually reach a quarter of that value - which i
think is totally realistic, most likely an underestimate, that puts the price
per bitcoin at over $100k, a number that already seemed reasonable to me.

my guess is it'll be there in less than 10 years. anybody want over / under?

~~~
jjsz
Me neither but I gambled .XX BTC into it before it exploded in reddit than
mainstream online articles.

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conductr
That article fails to mention what is going on in China right now which,
whatever it is, is driving the price

~~~
conductr
Saw this gem on the front page, it goes in more detail about China and BTC

[http://www.coindesk.com/china-leading-global-rise-
bitcoin/](http://www.coindesk.com/china-leading-global-rise-bitcoin/)

------
cft
Coinbase: Note! We've exceeded our normal buy limits for today. If you would
still like to purchase you will receive the market price of bitcoin on Friday
Nov 22, 2013 at 11:01AM PST after your funds have arrived.

The price is rapidly dropping, lost nearly 10% now from today's peak.

~~~
ISL
Good for Coinbase. It's in their interests to remain solvent, and to encourage
moderation. I really liked having my desire to buy tempered by their ~week-
timescale delays in the past.

(That said, if you really want to buy, keep trying, Coinbase's buy limit opens
and shuts sometimes.)

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robius
This is just the beginning of the tides turning. This huge jump is just a few
thousand Chinese investors coming online. More will come. Next think about
when another country gets its own exchange, say India. Expect more large jumps
before things settle down.

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JanezStupar
How does one short bitcoin? Any proxies?

~~~
Moral_
Shorting bitcoin doesn't really make any sense. You can't loan someone
bitcoins and if you could, how would you get them back? So no.

~~~
CamperBob2
_You can 't loan someone bitcoins_

Someone should probably start working on that.

~~~
simlevesque
You can do it using Ripple with trust lines.

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VMG
other things that are completely unreasonable and yet seem to exist: the
internet

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a3voices
It's not a bubble. It's very fast growth.

[http://i.imgur.com/qgT9vxx.png](http://i.imgur.com/qgT9vxx.png)

