
Coinbase Is Now Selling Over $1M USD Of Bitcoin Per Month - barmstrong
http://blog.coinbase.com/post/42587245753/coinbase-is-now-selling-over-1m-usd-of-bitcoin-per
======
unix-dude
I think bitcoin is an extremely interesting concept, and the economics around
it are equally interesting. I bought a tiny amount when the prices were around
the $11 mark, and its insane to think of the price-shift. I made a couple
bucks off the price shift, but now I'm honestly thinking that the price will
fall back down. Despite serving the needs of many SR/SatoshiDice people, I
dont think they're quite at the point of being honestly valued at $21 each.

I think the fact that the price jump happened in (basically) a 12 hour period,
coupled with the fact that bitcoin is traded as an investment very often makes
me believe this is an artificial price jump. I'm no economics guru, but it
just seems like common sense to me. Tons of people see a short burst and panic
buy, this allows the sellers to ask consistently higher prices as many people
panic buy (Lets face it, many, maybe the majority, including myself, in the
bitcoin game, are amateurs when it comes to currency trading).

Anyway, it'll be interesting to see where this goes, and I'll almost definetly
be buying when/if the price falls to ~$12/$15, which really seems much more
appropriate in my opinion.

~~~
Jd
The problem with all fiat currencies is they have no inherent value; it is all
in the eye of the beholder. So what is an "appropriate" price is quite
difficult to determine. Most currencies are driven by being effective
monopolies wherever they are issued, so the market price remains somewhat
stable. Even so, many professional economists have opined that the exchange
rates even between major currencies are way too volatile.

This is, among other things, because there is a whole lot of loose money
floating around that can easily jump between currencies. We are probably going
to see a lot more of this in the Bitcoin world, which I expect has a lot more
volatility ahead of it -- somewhat ironically in this case, as the increased
liquidity promotes volatility, since it becomes an instrument of pure
speculation that was previously too difficult for professional traders to deal
in.

In any case, I also had the intuition around the $11-12 mark that bitcoin was
a good investment, since the major hurdles around the security issues were
probably ironed out, but didn't invest anything -- probably because deep down
I'm a value investor and don't see a lot of value in driving speculation in
something that doesn't have inherent value (despite the many interesting
technical aspects to Bitcoin).

~~~
thefreeman
To say Bitcoin has no inherent value is not quite accurate. The inherent value
of the Bitcoin comes from the electricity required to power the computational
cycles to "create" it.

~~~
Dylan16807
Cost does not equal value.

And it goes the other way around anyway. Higher prices lead to more people
mining.

~~~
jswinghammer
Correct. The problem being the use of the word inherent to describe value.
There is no such thing as inherent value unless you are describing a use and
not the price someone would be willing to pay for something. For example, wood
can be used to fuel a fire but that doesn't tell us anything about its'
inherent value in exchange. That it has inherent value on these terms is
obvious enough. For me it has almost none because I don't have a stove to
safely burn it. Others feel differently.

~~~
Dylan16807
You have to take a more general sort of view to things. To the median person
making use of the value, how much are they getting out? How many people would
find value?

For example not everyone likes shiny things but gold is also compact,
protective, conducting, nonreacting, testable, etc.

Wood has a thousand and one uses but it's a bad currency because in addition
to being bulky it's easy to make more wood. But in certain circumstances it
would work fine.

There is barely any use people can get out of bags of sand, so it wouldn't
work as a currency. Salt looks similar but used to be hard to get and is
important to food and living, made a great currency.

Bitcoins by themselves don't have value. You could make a hundred knockoff
block chains and they wouldn't do you any good. The bitcoin network as an
entity that you can trust is where anything useful is actually derived from.

~~~
conroe64
Just because some things have intrinsic value and have been used as a currency
doesn't imply that something that doesn't have intrinsic value and is a
currency can't be trusted.

You have to take a look at society's motivations, situation and psychological
makeup, and from there you can make a prediction as to whether a currency can
be trusted or not.

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eitland
For everyone out there who wants to pay bitcoins using PayPal I found a hack
that worked (be aware: this might take sevwral hours the first time.)

Buy Linden Dollars - Take them out in bitcoins. Simple but takes hours of
waiting the first time to get verified etc the first time.

~~~
nym
Paypal is always super expensive... I really recommend using cash at an ATM
with Bitme:

<http://howdoyoubuybitcoins.com/from/bitme/>

~~~
eitland
Available in Scandinavia? Europe?

~~~
nym
There are other options available for people in Europe:

<http://howdoyoubuybitcoins.com/in/europe/>

Hope it helps!

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artificialidiot
I think it would be better to call bitcoin for what it is: entertainment for
grown ups.

Whether you use it get drugs, gamble, bet or speculate on some other place
doesn't matter. It has become a game on its own right just like UO, WoW or EVE
... You can view it as game of a currency instead of currency of a game. It
has intrinsic entertainment value, thus a commodity that can be priced in real
currency.

Nobody bats an eye when a mmorpg makes millions in revenues, nobody bats an
eye when a gamer builds a four grands rig. Why should we care about bitcoin
replacing real money now or ever? It is not like governments will readily hand
over monetary control to its citizens anyway.

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tocomment
So I just bought 2 bitcoins on Coinbase (my first purchase congrats to me!)
but it's been pending for 5 days and says it will clear today.

My question, is how can they lock in the price 5 days ago for me. Are they
selling me the coins 5 days ago and buying it on the market today? It seems
like there would be a lot of risk in doing that.

~~~
nbashaw
They buy your bitcoins immediately with their own funds, then when your money
clears 5 days later they get reimbursed by you.

~~~
omh
That means they have a net exposure to the bitcoin price (possibly quite a
large one). From their point of view that's not all that desirable.

~~~
toomim
Except that, with the price rising, they're making money from that "exposure"
on average.

And they obviously believe the price will keep going up, because they're a
bitcoin business, and believe in bitcoin. If the price stops going up, their
company will fail anyway.

And finally, perhaps you noticed that coinbase is processing thousands of
bitcoin purchases now. So I'd say, with all that data, it's not actually that
risky for them. If the price starts going down, they'll know it first, because
they'll be the ones making the purchases. :P

~~~
wmf
The exchange rate has no effect on Silk Road. People will still want to buy
BTC.

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robotmay
Any word on when they'll support purchasing from a UK bank account? Most of
the other options are a bit more convoluted than the straight-forward system
Coinbase seems to use.

~~~
DanBC
I hate to "me too", but "me too".

I'd love to be able to use coinbase but I'm UK only. I'm unlikely to get
involved with Bitcoin until something like Coinbase allows UK bank accounts.

(having said all that I'm going to be buying very small quantities of Bicoin.)

~~~
jerguismi
You might want to check out localbitcoins.com - our online buying process is
pretty fluid, and we have lots of sellers selling for UK bank transfer.

<https://localbitcoins.com/location/GB/London/>

~~~
devonbarrett
Second these guys, managed to find a seller and complete the transaction in
under ten mins! Although was only a small amount.

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johnmurch
Crazy to think BTC have doubled in price since August. I wonder how many
people are just buying up BTC and waiting

~~~
sliverstorm
It isn't that surprising to me, considering the payout for miners was halved a
month or two ago.

~~~
Dylan16807
Do you really think the price would change very much if the miner payout was
raised or dropped by a factor of ten? Over half the bitcoins have already been
mined; expecting the price to be based on the trickle of new ones is
unrealistic.

~~~
sliverstorm
It may change eventually, and the exchange rate does fluctuate dramatically
sometimes, but it has been shown in the past that the market value of bitcoins
tends to stabilize around the electricity cost of mining.

~~~
jzwinck
Does this mean the total value of all bitcoins is similar to the cost of the
electricity used for mining them? If so, isn't it worrying that so much
electricity has been used because of bitcoin? I have often wondered if a
currency could be constructed such that the mining would solve real
computational problems, thereby doubling the value produced per energy
consumed.

~~~
sliverstorm
_isn't it worrying that so much electricity has been used because of bitcoin_

I don't like it either, but you can't control what people do with their
resources.

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cj
I'm curious about the wording. Is "bought or sold $1M" equivalent to saying
$500k changed hands?

~~~
shazow
You don't need to buy or sell from just other Coinbase users. It can be
anyone. Coinbase doesn't have a huge market share yet, so it's even less
likely.

I think a fair way to read it is that $1M worth of transactions occurred of
which Coinbase made some money.

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tlrobinson
But not to me :(

 _"Unfortunately, we have decided to cancel this order because it appears to
be high risk. We do not send out any bitcoins on high risk transactions, and
your bank account will not be charged."_

I have no idea why I was flagged as "high risk", I'd be interested to know.

~~~
MacsHeadroom
>I have no idea why I was flagged as "high risk", I'd be interested to know.

Email their customer service and they'll whitelist your account.

Of course they won't tell you why their automatic risk algorithm flagged you.
But they will be helpful and make sure that you aren't flagged again.

Their customer service is seriously top notch.

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nazgulnarsil
In 2012 the bitcoin supply increased 33% In 2013 the supply will increase
roughly 13%

In another 4 years when the reward halves again it will decrease to 4%
inflation. At this point it will be harder than most government currencies.

(Gold inflates about 1.5% per year)

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zokier
But where are the bitcoins going? Are people actually spending over $1M of
bitcoins on something else than buying back dollars?

~~~
nate_martin
silk road

~~~
MacsHeadroom
Negative.

Silk Road only accounts for about 3.4% of Bitcoin's total monthly
transactions. (about $6mil right now)

Bitcoinstore.com, BitPay's 3000 business clients, the dozens of
casino/gambling sites processing millions of USD equivalent every month, etc.

------
centro
Notice how their success is measured in USD.

~~~
uwe_dushan
That's because it's the unit of value that the article's reader is most likely
familiar with. When you go on vacation you're most likely constantly
converting prices in the local currency to the currency you're familiar with -
that doesn't mean the local currency is worthless (if that's what you were
implying).

After I moved from UK to US, it was months before I stopped doing the mental
arithmetic from USD to GBP.

~~~
dasil003
When you move from the US to the UK you have to stop doing it immediately or
you'll drive yourself insane.

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ukd1
This is awesome! Any idea what size of the market this is?

~~~
mtgx
About 0.5% I think. Plenty of room to grow. And Bitcoin should grow a lot
more, too.

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nthitz
Wonder how much of that is being spent on the Silk Road?

~~~
pdog
Or the other vice, SatoshiDice[1].

[1]: <http://satoshidice.com/>

~~~
stcredzero
Drugs, gambling...get hookers in there, and you'll have a legit currency. ;)

No, seriously, once a currency gets to the point hookers accept it, it's
indisputable that it's real.

~~~
gojomo
If you wanted to make the 'Uber of prostitution', you'd probably find Bitcoin
helpful.

~~~
stcredzero
If someone did make an "Uber of prostitution," and avoided being shut
down/eaten by the law/established interests, they'd probably become rich.

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nym
If you have used coinbase, please write a review of it for us!

<http://howdoyoubuybitcoins.com/from/coinbase/>

If you want to deposit cash at a Chase ATM, you can do so with BitMe:

<http://howdoyoubuybitcoins.com/from/bitme/>

..and if you don't live in the united states, we have guides for you too:
<http://howdoyoubuybitcoins.com/in/>

~~~
nextstep
Can you explain how the BitMe Chase ATM deposit method works? Their website
doesn't say a lot (just to make a deposit in their Chase account and save the
receipt.)

~~~
nym
You go to their website, and say how much you want to deposit (lets say $100).
They will give you a final deposit amount that is pretty similar, but
different (e.g. $99.86), which allows them to identify your deposit. Once the
deposit is made, they verify it, and if there are any problems, they will
request your receipt.

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eeek
Congrats! Do you have any idea how this connected to the general BTC trends /
versus specific to Coinbase?

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vessenes
Congrats!

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jacoblyles
Do they have any plans to lift the 10 bitcoin per day purchase limit?

~~~
nym
They already did! You just need to buy a bitcoin, and wait 30 days. Coinbase
does this to limit fraud.

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slosh
Heck yea brian! killing it

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cointrust
Be careful with coinbase When they were trying to raise money as part of the
founders club, they broke a few regulations: they originally were supposed to
raise their set limit within 8 weeks and when they missed it they extended the
time by 2 weeks and when they missed THAT they extended the timeline by 4 more
weeks. At the end they only made their target by a last minute injection from
may have been an insider. On top of that, they have NO policy on refunds for
acts of god, hacking, or the government .

~~~
cointrust
I just realize that my comment came across wrong. I am very interested in
Bitcoin - I just want coinbase to come clean before I put my money and trust
in them

~~~
dmix
Hopefully it's just growing pains. But transparency is critical for running a
Bitcoin operation these days.

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Grovara123
I think Bit Coin is a fad... it will be replaced. Canada's 'Mint Chip' is
catching up quickly and it is a superior product/currency.

~~~
gamegoblin
How is MintChip a replacement for bitcoin? It isn't as anonympous and it isn't
decentralized. It seems like they go for two entirely different goals.

~~~
MacsHeadroom
I'm rooting for Bitcoin.

But FYI MintChip transactions are anonymous.

It is a digital form of cash.

