

Bitcoin drops 10USD in less than 4 hours - rommelvr
http://bitcoinity.org/markets?exchange=mtgox

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BoyWizard
The thing is, it doesn't matter. As far as I know, nobody prices anything in
Bitcoins, they price things in USD/AUD/<insert currency> and then _convert
that amount to Bitcoins for the transaction_.

You might end up paying 1.00 BTC, or 0.6 BTC, but it still works out to the be
same in USD/AUD/<currency> (numbers made up for example)

~~~
SODaniel
Though very hard swings in short time DOES hinder wide adoption as it can
cause retailers to lose money while a transaction is 'en route'.

No one wants to use a currency that swings 20% in hours of trading. Hell,
that's prob 4-5x the margin on a lot of computer hardware.

~~~
Maxious
BitPay, for example, absorbs the risk. <https://bitpay.com/bitcoin-payment-
gateway-api>

> The net amount that BitPay merchants receive is equal to the gross amount
> (USD) of the order submitted, minus our fee.

> It does not matter how many bitcoins we collect, how long it takes to
> collect them, what we can sell them for, or how long it takes to sell them.

(not affiliated, just said the same thing last time this came up on HN)

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SODaniel
For a 'currency' that has gone up from $4 to $45+ in the last 10 months and
the last 50% in a month, a 20% drop isn't really that unexpected.

~~~
akavi
Yeup.

Volatile thing continues to be volatile hardly seems to be news.

~~~
SODaniel
It's interesting how 'Bitcoin falls $10!!' is news, while the fact that it's
gone up 50%+ in less than a month, and over 1000% in 1 year somehow is not.

~~~
bdcravens
Of course its gain has been news.

<http://news.ycombinator.com/item?id=5262120> (when it broke $30)

<http://news.ycombinator.com/item?id=5144181> (when it broke $20)

etc, plus the many stories about ability to pay for things like Reddit Gold,
domain names, and more with Bitcoin.

1) You may hold Bitcoin, and talk from detractors is always frustrating.

2) Many Bitcoin advocates (I've mined and held Bitcoin, so I'll count myself
in this crowd) tend to extoll Bitcoin's virtues, while downplaying or
explaining away downturns

3) Even if it were true that the drop were news while the gain wasn't, that's
how things work around here. Much has been made of Apple's stock drops, but in
every case, Apple was actually up year-over-year, and it's 3 and 5 year price
was way up.

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jalanb
Meanwhile: Bitcoin gains nearly 10US$ in less than an hour

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tosseraccount
I only trust currencies backed by a precious metal. USD is backed by
plutonium.

~~~
pdelbarba
If that's the case then bitcoin is backed by unobtainium.

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SODaniel
My guess is that a LOT of the Bitcoin owners today are early adopters that own
very little BTC as a novelty and/or with the idea that "Hey, who knows. Maybe
my 4 BTC will be worth $1000s in a few years".

This makes for a super volatile market. Especially coupled with the new Mining
ASIC rigs coming to market, small volume trading etc.

I would suspect that it will take a LONG time before we see if/how the
'currency' will actually stabilize.

One must remember, less than 5 years ago, BTC were selling for $0.001! Today
it topped out at around $50.

~~~
tibbon
that's pretty much what I'm doing. I bought 3 on the chance that they pop up
at some point. I'm not fully convinced of their stability, and I'm not going
to drop thousands into it until I feel better about it- just don't have the
funds or risk appetite for that much outlay.

~~~
SODaniel
Yep. I am pretty much acting the same way. I have a few BTC that I got years
ago and a small ASIC mining rig ordered just 'For teh lulz'.

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SODaniel
Something else people seem to forget is: This is an unregulated electronic
currency without a paper trail.

Can you say "A market that a group of people wanting to rig value would LOVE!"

Nothing (as far as I can tell) stopping a group of large BTC owners to
completely run the price on BTC to their advantage. Wouldn't even take that
much money to drive prices, and impossible (almost) to detect and do something
about.

~~~
mikegioia
What do you mean no paper trail? I thought Bitcoin worked by having a master
list of EVERY transaction and then hashing the most recent for each new
transaction.

This is from the Bitcoin doc [1]:

 _We define an electronic coin as a chain of digital signatures. Each owner
transfers the coin to the next by digitally signing a hash of the previous
transaction and the public key of the next owner and adding these to the end
of the coin. A payee can verify the signatures to verify the chain of
ownership._

[1] <http://bitcoin.org/bitcoin.pdf>

~~~
SODaniel
Transaction records? Yes. Tied to a physical person? No. There is as far as I
understand nothing hindering private trades among owners, making 'rigging'
entirely possible (I may be wrong).

~~~
mikegioia
They're tied to a wallet ID which is unique.

Also, of course nothing is hindering private trades among bitcoins. Do you
understand that BTC is a currency and not a stock exchange?

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psychboo
I'm actually in the process of putting together a report on Bitcoin for a
university computer security course.

It looks like HN cares a lot about the topic, would anyone care to point me
towards some informative sources?

I've done most of my research through the official wiki and articles regarding
Mt. Gox and hardware development into ASIC

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apaprocki
Just looking at Mt. Gox, the volume in each hour of the day is such a small
representation of the overall amount of BTC out there, it seems perfectly
reasonable you'd see such crazy swings. Most hours it seems there is <= 5,000
volume. If there is no real liquidity when buying or selling any instrument,
the price will swing.

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alexdevkar
Bitcoin is going to be extremely volatile. I don't think that has a lot of
significance for its long term viability.

~~~
jussij
The last thing you want in a trading currency is extreme volatility.

~~~
jcoby
I watched this for three minutes and in that time its value went from 37 to
nearly 40 and back to 37 again. Several times.

How in the world can you use a currency that changes value by almost 10% every
60 seconds?

~~~
craftkiller
The more that people use it, the more stable the currency will get.

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escaped_hn
I don't understand bitcoin (any links for newbies?). Why can't they just make
it equal to the US or a Euro but use the bitcoins for the actual transaction
which would still grant you the anonymity you want and not have this bubble
behavior?

~~~
craftkiller
The issue is the price is not set by anything. Someone could set up an
exchange where they sell bitcoins at 1 US dollar but then everyone would buy
all their bitcoins and sell them at other exchanges. Right now the only thing
saying that bitcoins are worth $40 each is that someone is willing to pay $40
for them.

edit: link for video <http://www.weusecoins.com/>

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vellum
You can more detailed charts for the past few hours here:

<http://bitcoin-analytics.com/>

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SODaniel
Prediction time: 1 BTC under $15 within 60 days and relatively stable around
$6-$9 for the next 18 months.

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jussij
If you look at the 6 month chart it's fairly obvious there's something
unsustainable going on.

~~~
josephagoss
Bitcoin can't stay cheap forever, either more people use it and it has to gain
value (because its so small at the moment) or people stop using it and the
value ends at 0.

Those are your two options. Grow until the Bitcoin economy is worth some 10
Billion at least, or it'll be evidently dead and close to 0.

Its much more unlikely Bitcoins will stay around $20 - $60 for the next 5
years. (Although still possible)

~~~
SODaniel
I have no idea what variables you are using, or how you are reasoning that
bitcoins somehow are 'cheap' at a certain price.

Using the only scale we have available (history) $40+ per BTC is VASTLY
overpriced considering the previous historical fair market value.

~~~
kinghajj
What makes you confident that you know that the current price is "VASTLY"
above the "fair market value?" I thought that markets determine fair market
values--which is exactly what's happening at the exchanges.

~~~
SODaniel
Of course, but with a young currency without a set 'backing' (Gold,
merchandise etc) I am just saying that looking at historical valuation makes
it seem like the massive value increase would speak for it being valued fairly
high @ $40

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joejohnson
This post is an hour old and the price is already back in the $42 range.

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fosk
Anyone knows a real time trading platform for doing some BTC/USD forex?

~~~
phyalow
There isnt one!

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niggler
At this stage who is buying BTC? Who is the marginal buyer?

~~~
xb95
It is my impression that BTC are mostly used by people who either a) want to
stock up for the future "just in case" or b) want to minimize their digital
paper trail for online purchases.

Think of it as "cash" but for the online world. Some people pay cash for
everything possible just to eliminate the paper trail. Not because they have
anything to hide, but just to reduce their digital footprint. A noble goal, I
think, and one that I'm glad to see is starting to become a realistic goal
online.

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jrockway
Does anyone sell FX futures on BTC yet?

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obstacle1
Is there a market for bitcoin options?

