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Bitcoin Surges Past $400 (wsj.com)
408 points by Timshel on Nov 4, 2015 | hide | past | web | favorite | 249 comments



There is nothing that can guarantee that this ride is real, but here are a few things:

1. However big is MMM, it's probably too small for the size of the bitcoin economy right now. Remember that if you are transacting in bitcoin, there is one party buying and the other one selling. So you are not rising the price to the moon.

2. The number of transactions has been growing again as of late. It's heating at the blockchain right now ( https://blockchain.info/charts/n-transactions ). With 1MB, bitcoin can support less than 300k transactions a day.

3. The total output volume is jumping to crazy levels ( https://blockchain.info/charts/output-volume?timespan=all&sh... ) only seen in bubbles.

4. I have a localbitcoins post. I usually get 1-2 requests per week. In the last few days, well, I really lost count.

5. Google trends is spiking: https://www.google.com/trends/explore#q=bitcoin But maybe this is happening because bitcoin price is rising, not the other way around?

6. If the price is rising fast, the supply will dry because nobody wants to sell an appreciating asset. If an asset is appreciating, it'll drive demand. Which will drive the price higher.

7. Media will start talking about it. It'll drive more people. It'll drive the price more.

8. We'll see if the new fancy infrastructure that bitcoin got is rock-solid.

9. If you don't own the keys, you don't own the bitcoins.

10. It's nice, but only if you bought the dip and sold before the crash.


> 9. If you don't own the keys, you don't own the bitcoins.

Always the most important point. You need to hold your keys, and be the only person to do so (unencrypted).

As for the rest, they can be summarized into this simple advice: If you're getting in, DO NOT spend more than you can afford to lose. You'll regret going into debt more than you'll regret not making a twice as big profit.


Interesting point. I have some BTC at Coinbase. Not sure how I proceed to own the keys?


We offer multisig wallets so you can enjoy the convenience of using Coinbase while still maintaining full control over (a majority of) the private keys:

https://www.coinbase.com/multisig


I do as well. What's wrong with leaving it there?


Many times in the past bitcoin companies have been hacked, embezzled or otherwise lost user funds. There is no recourse.


> Many times in the past bitcoin companies have been hacked, embezzled or otherwise lost user funds. There is no recourse.

Many times, other companies have had that happen, and there is all kinds of recourse. To the extent bitcoin companies are special, its because people participating in the bitcoin craze have been willing to entrust large amounts of value with companies that don't have the basic characteristics that would otherwise establish trustworthiness, or at least accountability.


What do you do when the money is gone? With other payment technology you can get court orders to freeze funds, or judgments against current holders.

Bitcoin, on the other hand, is irrevocable and pseudo-anonymous. In July 2011 the owner of MyBitcoin.com web wallet allegedly walked away with 50,000 btc of customer funds. We know where those funds are. You can see them on any block explorer. But it is not possible to freeze or confiscate those funds. And we don't know what real world person or people have access to the keys controlling those funds. So what are you going to do?

MtGox went under with 850,000 btc of customer funds. Its creditors are currently fighting over the 200,000 btc that was found to still be in possession by the company. The other 650,000 btc? Who knows.

It's just a simple fact of reality. If you don't have physical control over the keys for that bitcoin, it is not your bitcoin. Some of us have learned that lesson the hard way.


>But it is not possible to freeze or confiscate those funds.

That is just a limitation of the Bitcoin protocol. One could build a protocol where communities could agree to freeze (not accept) or greatly devalue those funds.


Miners could conspire to mostly freeze certain bitcoin.

It wouldn't even have to be done in a way that was visible on the bitcoin network, they would just have to agree to not include transactions from whatever addresses.

A strong majority could probably refuse to acknowledge blocks including the blocked addresses, which would be a real freeze (rather than the hassle freeze obtained by not including the address in blocks produced by the conspiracy).


You'd need >50% of the miners to do that. It is precisely what I mean by building a protocol.

Of course, without strong consensus (and a real algorithm/protocol) such attempts will likely just result in fractured blockchains (basically the state at the moment, with many competing implementations of the same basic idea).


Not really. you are talking about an attack.

You'll need 100%, because if a single miner decided to include the transaction, then it is in!


You need only a cabal of >50% of the miners to agree to not build on any block that includes such a transaction.


An attack and a new protocol are the same thing.

If a single miner includes the transaction, a majority can just bypass that sole miner.

You do need 100% of something, but that something is just >50% of the miners.


Only if that miner is successful for a block. Until then the blocked transaction stays in limbo.


It is an explicit design choice of the bitcoin protocol (feature, not a bug) that doing so requires a cabal of the majority of the hash power. With properly distributed hash power like bitcoin had in its infancy, this would not have been possible.


Given that BTC is a currency that is not backed by a national treasury (and is, in fact, technologically not backable by printing more money), such insurance would be a prohibitively expensive percentage of a company's BTC resources.

The same features of BTC that serve as its advantage and, arguably, goal make it more difficult to offer basic protections that other fiscal infrastructures have had for decades.


You can store $100m in bitcoin on a piece of paper in a vault. It reduces perfectly to the solved problem of securing $100m in $100 bills in a vault (which, yes, you can insure).


While true, that does not offer the same protection as an FDIC-style insurance program (and restricts the storing entity's ability to compete and perform by preventing them from investing that $100m, so the market will tend ceteris parabus to punish companies that take such a step in good times with relatively-slower growth, acting as a disincentivizing counter-weight to offering insurance). In contrast, the FDIC has unlimited borrowing capacity with the US government; worst-case scenario, the Treasury can basically start printing money and the FDIC can hand it out to people with savings in failed banks.

Many see this capacity of the US Treasury to fabricate money from nowhere as the very sort of flaw that BTC's coin-generation process is intended to avoid, but that protection does not come without a price.


Since this is about an amount of $100m, I'd say the above suggestion (theoretically) offers much more protection than FDIC, which only covers losses up to $250k iirc...

I suspect that at the moment it may be more difficult to find an insurer for a vault with that piece of paper, compared to a vault with $100m cash though :) but perhaps that'll change.


> While true, that does not offer the same protection as an FDIC-style insurance program

Sure, but whether that difference from "the same protection" is more or less protection depends on the number of people that $100 million is held on behalf of.


That's security, not insurance.

FDIC-style insurance is for when the security is breached, not if.


In general nothing. In specific there is no FDIC for bitcoins so if a MtGox type situation happens then you have no coins.


There's no FDIC providing government backed insurance for most commodities, or for non-bank accounts in fiat currency (e.g., those you'd have with a typical brokerage), so I'm not sure bitcoin is really fundamentally different than most commodities as a speculative investment

So for a speculative trader, I dont e that holding keys if any more essential than physically holding goods is for physical commodities; you obviously have to account for trust/security of the entity serving as your agent/broker, but that's typical.

Now, holding the keys may be essential to realizing some of the benefits of bitcoin which drive is value to some users, but for people investing in bitcoin, that may be peripheral to the purpose.


There's a qualitative difference between "I own stock that might become worthless" and "I own a security that someone could just take from me because they notice my deed just sitting somewhere unprotected."

If someone steals my Schwab account contents for Schwab's servers, I can call on the government for help; and the stock market bookkeeping system has the technical ability restore my shares to me. If someone gets a copy of my wallet key, I've got no recourse unless (unlikely) someone can track down the obfuscated thief.


> If someone steals my Schwab account contents for Schwab's servers, I can call on the government for help

If someone steals your bitcoin from an exchange, you can call on the government for help, too. If the exchange itself is completely insolvent, that may not be effective recourse, and that risk is certainly greater for the kind of firms people have been dealing with in the bitcoin space, which often aren't held by their customers to the same standards that customers of similar services for commodities other than bitcoin would hold companies to.

That's my point: the lack of recourse isn't essential to bitcoin (yes, holding the keys is like holding cash, and not holding the keys is giving something up just like not holding cash is -- but we deal with other businesses with accounts denominated in national currencies without holding all the cash ourselves all the time, and have recourse available for losses.) The lack of accountability is because the firms people choose to do business with are, compared to the firms that people do other financial business with, shady fly-by-night operators.


> so I'm not sure bitcoin is really fundamentally different than most commodities as a speculative investment

That's the point, though. You're looking at it as a speculative investment, and proceeding accordingly, which is good. The OP is admonishing people to not treat bitcoin like a standard bank account (which is all too easy to do), but rather in the same terms as you already do.


It isn't quite the same as FDIC, but there is SIPC:

https://en.wikipedia.org/wiki/Securities_Investor_Protection...

Not blanket protection, but enough to ask why such and such bitcoin exchange doesn't advertise their participation.


Get another wallet (such as hive) and send the BTC from Coinbase to that.


I recommend https://electrum.org, even though the website doesn't look super awesome. You'll get a "seed" that generates your keys that is 12 words long. It looks something like this:

"help staple correct horse ..."

From there, just store that seed somewhere secure and you can use that to generate your keys whenever you want, on any machine you want. Personally I keep my seed in two different safe-deposit boxes and one on (shameless plug) my own encrypted text app I made called Onions - http://onionsapp.github.io.


Electrum is great, but not very easy to use (since it's desktop). Get Electrum, Mycelium or Breadwallet, depending on your platform. I've heard good things about GreenAddress, and I recommend a ledger hardware wallet. You can use the ledger with Electrum and Mycelium, so you can spend coins from desktop or mobile. I've also imported my Mycelium wallet onto my second ledger, just so I can move coins from the desktop.


Ledger is pretty good for the price tag it has. It is simlple yet effective. Trezor is a worthy mention since it can be used anywhere(even on an infected computer) whereas you need to setup the ledger on a secure host.


> whereas you need to setup the ledger on a secure host

Hmm, really? Why? The ledger sets up its own private key as well.


Coinbase lets you control your own private keys: https://www.coinbase.com/multisig


For Mac get the PRO Bitcoin Offline Vault https://itunes.apple.com/us/app/pro-bitcoin/id1003923093?ls=...


Short answer: get your own wallet (software/paper/hardware) and transfer BTC from Coinbase to that address.


> However big is MMM, it's probably too small for the size of the bitcoin economy right now [...]

That's very hard to quantify, but there might well be a feedback loop involving the media which leads to a price increase caused by MMM Global.

The following Google Trends data for South Africa and the Philippines shows a nice correlation between searches for bitcoin and MMM Global: http://www.google.com/trends/explore?hl=en-US&geo=ZA&cmpt=q&...


Someone should find out the bitcoin addresses the MMM victims are sending their funds to, it may help to give an indication of the size of the problem. I'm tempted to sign up to MMM to get one of the addresses they use. Of course it depends whether they are smart enough to use a different address for each user.


That's why I used "probably".

The thing is, transacting with bitcoin will not raise the price exponentially. BTC is already being exchanged in many millions of dollars a day.

So unless MMM turns out to be a billion-dollar ponzi scheme I don't really think it'll affect the BTC price much.


> So unless MMM turns out to be a billion-dollar ponzi scheme I don't really think it'll affect the BTC price much.

The actual transaction volume of bitcoin is not even that large. The total market cap is 6.5 billion and only because of the recent price surge.


> So unless MMM turns out to be a billion-dollar ponzi scheme

While I don't know much about this incarnation of MMM, the original MMM ponzi scheme in the early 90s is thought to have taken in about $10bn (not adjusted for inflation).


Never heard of MMM before,

Looks like Sergei is persistant with these pyramid schemes;

  In January 2011, Mavrodi launched another pyramid scheme 
  called MMM-2011, asking investors to buy so-called Mavro 
  currency units. He frankly described it as a pyramid, 
  adding "It is a naked scheme, nothing more ... People 
  interact with each other and give each other money. For 
  no reason!"[13] Mavrodi said that his goal with MMM-2011 
  is to destroy the current financial system, which he 
  considers unfair, which would allow something new to take 
  its place. MMM-2011 was able to function openly as Ponzi 
  schemes and financial pyramids are not illegal under 
  Russian law.[14] In May 2012 he froze the operation and 
  announced that there would be no more payouts.[15]


  In 2011 he launched a similar scheme in India, called MMM 
  India, again stating clearly that the vehicle is a 
  pyramid.[16] He has also launched MMM in China.[17] He 
  was reported to be trying to expand his operations into 
  Western Europe, Canada, and Latin America.[14] As of 
  September 2015 it had spread rapidly in South Africa with 
  a claimed 1% per day or 30% per month interest rate 
  scheme and warnings from both the South African and 
  Russian Communist Parties for people not to participate 
  in it.[18]
https://en.wikipedia.org/wiki/MMM-2011

Active thread talking about Sergei's current scheme: https://www.reddit.com/r/Bitcoin/comments/3p4kuf/mmm_global_...


> 4. I have a localbitcoins post. I usually get 1-2 requests per week. In the last few days, well, I really lost count.

Did you see a change in the type of customer?


Yes. People were usually asking in the $500-1000 range. Now, it's mostly $100. (it's my limit though).


11. The "halving" that is anticipated to take place sometime in 2016 is suddenly not so far off in the future.


> There is nothing that can guarantee that this ride is real

I'm not sure what you mean by "real" here. Even if demand is created from questionable/fraudulent sources, the transactions are just as real as any others. That's not to say it's sustainable or even driven by rational behavior (it never really is). Any trend, bubble or not, is just that - a trend. There may be numerous factors driving it, and it's almost never a good idea to make trading decisions based on the trend itself (the few exceptions of traders should be very aware of the limitations and risks involved in such a strategy).

> We'll see if the new fancy infrastructure that bitcoin got is rock-solid.

Are you referring to Bitcoin XT / BIP 101? As far as I'm aware[1], the support for this is still represented by a minority, so we're not really going to see any "new fancy infrastructure" tested, at least not for a while.

[1] http://xtnodes.com/


You misunderstand his point. The MMM ponzi schemers presumably don't want to hold bitcoins forever, and would be selling them for local currencies; if each bitcoin bought by a MMM victim is being immediately sold by a MMM con artist, then the net effect is zero and the effect on the price is much less than however much is being laundered and the price is boosted only by the float (however much bitcoins are being held at any particular second by a victim/con artist until they can send it or sell it and complete the circle).


I understand that, but it still doesn't make the trend any less "real" than trends seen from other drivers of price movement.

To explain a bit more: If a merchant receives fraudulent credit card transactions, he/she could reasonably refer to those as "not real" because once the banks discover the fraud, they have the power to move money and effectively nullify those transactions in many cases.

In contrast, on the blockchain (and off the blockchain for most bitcoin exchanges), that kind of thing doesn't normally happen. Even in Mt Gox's case where they directly manipulated the price from the inside, the people who bought and sold on the exchange still experienced "real" price movement, and as long as they got their money/BTC out before Gox imploded (which is another matter), those transactions and price movements were every bit as real as any other. From the perspective of other exchanges at the time it didn't matter at all whether the driving force for the trend was fraud or completely legitimate behavior.

Finally, if MMM's "net effect is zero" as you say, then we wouldn't be seeing the price movement that we're seeing (and a price "boosted only by the float" is no different from a price boosted by anything else), or perhaps MMM just isn't the primary driving force in the current trend.


> and a price "boosted only by the float" is no different from a price boosted by anything else

But the float is much smaller than the total volume of the fraud. If MMM is doing $10b of fraud a year, then it's not boosting Bitcoin's marketcap by $10b as one might naively guess ('$10b fraud drives Bitcoin price growth!' scream the headlines), it's boosting the price by much much less, by just the float (which could be more like $27m).


I don't think anyone claimed that there was 1:1 relationship between the volume of this (or any other) fraud and a change in bitcoin's market cap. As far as bitcoin is concerned, the particular details of the fraud are entirely irrelevant.


I don't think anyone was as exactly specific as that, but in reading discussions of MMM's possible contribution, the description was almost universally (on Reddit and HN) comparing, explicitly or implicitly, the previous MMM's total volume to the Bitcoin market cap, showing that pretty much everyone seems to have been intuitively confusing stocks with flows - the unspoken argument seems to be 'the old MMM's total was about as large Bitcoin's market cap is now; the new MMM is also quite large and may be a large fraction of Bitcoin's market cap; therefore, the recent near-doubling of Bitcoin's market cap may be mostly or all due to new MMM's large total'.


MMM works by constantly paying out. I.e. whole thing works as long as money circulate in the system. And as part of this circulation - people withdraw bitcoins and exchange these to local currency.


Don't discount how much nefarious actions can drive bitcoin prices.

Much of the $1000 bubble is discussed in terms of mtgox and "willie", but the initial peak was triggered by another driver which was the first large wave of cryptolocker infections.

It goes without saying I'd stay well clear of bitcoin still though.


You are working with a limited view of Bitcoin price history if you think there have only been two prior bubbles or peaks. There have been something like 6 Bitcoin 'bubbles' and busts since 2011. The very first major bubble is attributed to Senator Chuck Schumer in June 2011 advertising to the world that you could buy drugs with Bitcoin on silk road. That took the price from $1 to $32 before crashing.

http://www.reuters.com/article/2011/06/08/us-financial-bitco...

http://www.forbes.com/sites/timothylee/2013/04/11/an-illustr...


I remember that summer. Such a beautiful and simple time for bitcoin. I frantically unloaded the bitcoins I bought at $8 when the price crashed from $30 at around $15/coin, withdrawing my entire initial investment and feeling bummed about not getting out when the getting was good.

Then in a few months the 2 coins I kept were worth hundreds apiece.


> Much of the $1000 bubble is discussed in terms of mtgox and "willie", but the initial peak was triggered by another driver which was the first large wave of cryptolocker infections.

I've not read that before (and I was pretty active on bitcoinforums during the $1000 bubble). Got a link?


Here's the google trends for cryptolocker:

https://www.google.com/trends/explore#q=cryptolocker

Looks remarkably like the bitcoin price graph doesn't it?


So what numbers do you have to pump it to until you get your money back?


This is a blaming statement. Trust comes in all shapes and sizes, and includes information from individuals who don't trust each other sharing what they know about a given object or system. Trusting someone else's information is done on an individual basis, unless there is a decent consensus mechanism in place (Rai Stones for example).

If you don't trust what csomar is saying, then you should just say that instead of saying they are lying AND doing it for X reasons. Otherwise, you are just coming across as illogical in your arguments.

I would also point out that blockchain technologies implement a particular type of trust. Bitcoin's blockchain trust delivers an identity mechanism (note I did not say it doesn't allow pseudo anonymous identity), a way to track a value for exchange between identities, and a means to deliver a standard format of information exchange comprised of contract via script, transaction with identities and op_return codes.

That you are here doubting a known trust mechanism through a biased statement, and based on its momentary exchange value to a fiat currency, makes me not trust you as well.


I thought it was well known that you can't trust Lando Calrissian!


Maybe it's related to this auction of the silkroad bitcoins: http://www.usmarshals.gov/assets/2015/dpr-bitcoins/

Note the correlation between the registration deadline date and the start of the rise.


On top of that, remember that bitcoin has many prices, the most important ones being US dollar, Euro and Chinese Yuan. Right now bitcoin is around 500USD, but it's sitting on 450EUR. People buying in euros will be confident that the price will go up to 500EUR and they'll keep pushing up the price. Wich will push CNY price to 3450CNY, a very ugly price, so it will probably move to 3500CNY.


With all due respect, I don't think that's how markets work. I know that people tend to psychologically anchor to round figures, but I don't see this situation playing out as you've described.


There are very real 'sell walls' on most of the markets, hovering around rounded increments. Once those "barriers" get broken through, there is usually a spike in price afterward. I could totally see a spike on one market driving buys in another market, so it is a reasonable point to consider the effect cascading.


Citation, please. With evidence that it actually works with real markets.

This sounds a lot like the kinds of claims that are routinely made in technical analysis for stocks. To the best of my knowledge, new claims can always be generated because humans are very good at imagining patterns in random data, but attempts afterwards to verify those theories uniformly fail. However stock brokers have found that it is very good for business to have customers who believe in technical analysis, because it is always easy to convince those customers to trade. Therefore lots of people get exposed to all sorts of technical analysis theories about "psychological support levels" and so on. But it doesn't actually work in reality.


In earlier days of remember I think I do remember this happening. Once the price got to a certain point (~980?) it very quickly would get up to 1000, and then hover there for a while. Part of this is because people will put sell requests at that round number.


He doesn't understand Chinese. When you said "ugly number" this is very important to the Chinse. They will push the price based on what number they are attached to.

If the price is 314.44 they will push it to 316.88 because that is the number they like, and if they dictate that price it is like they have created their own luck. At least this is my philosophy dealing with Chinese and watching their buy patterns.


In 3 days the BTC price has surged around 40% without anything actually happening.

We are not talking about a regular market.


so can you buy in Dollars and sell in Euros at a profit?


Chatter in BTC trading forums puts a $3000 price target as "doable" ;)

A couple other points: mining is exploding as well with the global GHash rate / Difficulty accelerating. I have not calculated an exact correlation between price and compute but it could be an indicator of "real" moves in the currency.

The truest indicator is of course price-action. During last summer and into the fall, before Beijing implemented capital controls, when you observed the depth of book on orders on BW, you'd notice that the vast majority of orders were for even lots of ~0.0100BTC. This was indicative of algorithmic market making. Very few orders were above 100BTC. Now it's the exact opposite. Large orders with fast fills are common. I wish I had some real data and actual stats on the order book during the run-up ;( as I believe it would make a good indicator as to whether the current move is sustainable...


The China factor behind this "surge" is because this https://en.wikipedia.org/wiki/MMM_(Ponzi_scheme_company) started doing business in China. It's growing very huge.


There are thousands of videos popping up on YouTube with how much money these people have 'made' on MMM Global, it's sad to see;

https://www.youtube.com/results?lclk=week&search_query=mmm+g...

It's very likely a big part of the price increase, many of the local MMM sites advertise that they're bitcoin-only and all of the exchanges are extraordinarily shallow so small surges in demand really move prices.

Here's a pretty good article from a mid October predicting the huge run-up based on interest in MMM and how they reward posts to social media where people show off how much they've "made":

https://letstalkbitcoin.com/blog/post/mmm-global-republic-of...

If anyone pays for better website analytics, I bet you'd find a pretty striking increase in the MMMGlobal rankings in the past month or so that corresponds pretty strongly with bitcoin price. One more note is that the exact same price runup happened in July with Litecoin based on a different Chinese ponzi scheme:

http://www.dailytradingprofits.com/4669/was-litecoin-pumped-...


Thank you for those links.

It's crazy that people are falling for this even though they reuse the MMM brand and feature Sergei Mavrodi prominently. A simple google search should tell you what you need to know about the company and the people running it. It's sad really.


I thought google wasn't doing business in China. Could be a local search engine is getting kickbacks, or a cut of a the ad revenue.


These these videos feel like they're following a script. Even the titles of all the videos are the same. "MMM Global Pays <amount>!"


They probably are scripted, MMM was famous among Russians for creating ads featuring 'commoner' actors in the 1990s. https://en.wikipedia.org/wiki/Lyonya_Golubkov


Side note: I don't know if anyone with the skill has the extra time on their hands, but it'd be interesting to track BTC through the MMM accounts to try and locate their largest addresses. It has to be in the millions by now if not much more..


It is easy to hide those amounts by just using a lot of different addresses. Of course people can try to tie those addresses together again, but that's pretty hard.


Yes, the MMM Global ponzi scheme now requires participants to fund their account in bitcoins. This is likely what nudged the price of Bitcoin upward. Even the CEO of BTCC (China's 3rd largest Bitcoin exchange) admits it: http://www.coindesk.com/bitcoin-price-breaks-260-to-hit-two-...

However, at this point the Bitcoin price surge alone almost certainly ignited a Bitcoin speculative bubble that is self-sustaining and would continue even if MMM was shut down today. I mean look at a hockey stick graph like this, it's enough to trick people into thinking now is a good time to buy "because it's going up": http://bitcoincharts.com/charts/bitstampUSD#rg30zig6-hourztg...

This speculative bubble is taking place mostly in China right now, as all Chinese exchanges trade at a premium over American exchanges. In fact Huobi just hit 3188 CNY (503 USD): https://bitcoinwisdom.com/markets/huobi/btccny when most American exchange are at 460 USD —a 9% arbitrage opportunity!


It's only kind of an arbitrage. There's also a huge onshore / offshore spread for Renminbi, but you can only move currency onshore for very specific purposes.


I'm a bit confused, the Wikipedia link says it was shut down in 1997 and makes no mention of bitcoin. Is it the same company or is MMM now being used as a generic term?


As Tomku pointed out, it's the same company with the same scammer running it. I know back in 2011 they relaunched as MMM-2011 (creative, I know) and then in 2012, you guess it, MMM-2012. I know some people that were involved in it back then and one of them lost something like $5k. You can get people to do very stupid things if you convince them that you can help them get rich quick.


It's the exact same company run by the exact same guy using the exact same branding. Search for "MMM Pays" on Youtube and you'll get thousands of videos people uploaded talking about how rich they got off the current scam.



A film (PiraMMMida) came out in 2011 depicting the rise and fall of MMM in early-90s Russia:

https://www.youtube.com/watch?v=m-JgGV8cH1I

http://www.imdb.com/title/tt1606652/


I did not expect this to be published on the official MMM Worldwide channel


It's officially run as a pyramid scheme in all marketing for the last two iterations at least.


Wait, MMM Global is the same company that perpetrated one of the largest Ponzi schemes in history?


It's not just china. MMM is popping up all over the place lately.


Wow, so this is THE "MMM" that people are talking about. They took Russians for a ride in the 90s, I didn't think I'd hear this name again.


Agree this is unnatural. Mmm is one theory, gold commodity price isn't doing too well very little reason for Bitcoin to bull at this time

Still an impressive gain looking at 30 days trend https://www.coingecko.com/en/price_charts/bitcoin/usd


+1

Somehow I refuse to believe that this surge in price is natural.


Price fluctuation in tradeable products of any kind is never "natural", it is supply/demand-driven. And supply and demand are complex forces with much turbulence from a vast number of influences.


Speculation is a thing. BC is still infinitesimal in terms of the global economy and even relatively tiny movements of money can underline or pop a bubble.


Yes, and speculation is one of the forces affecting demand.

There is no such thing as a "natural" price move in any tradeable product. The term has no meaning; all trading is based on some form of speculation or other forces.


People use "natural" or "baseline" to refer to the price a commodity returns to after a bubble burst. Though, price movements are more chaotic than that and you can have short term spikes, swings from external effects ex: natural disasters, short term 'bubbles', and demand from things like tax policy changes so "natural" is somewhat vague.

So, the implication is it's what happens when you remove short term and artificial effects.


In practice I've never heard anyone use the word "natural" in regards to price movement in a tradeable product, not in the five years I've been working in the financial industry. Sounds like more of a layman's term, perhaps. But the line between short-term and long-term movements is nearly non-existent since one typically affects the other, and the idea that there is any sense of normal price movement that lies behind all that turbulence is fairly naive.


It is a defined term, but I think trymas is referring to the layman's usage.

"natural price" https://en.wiktionary.org/wiki/natural_price

A price for a good or service that is equal to the cost of production.


Oh well that is a totally different term than the context it is being used in here.


This is false, a lot of things are seasonal or weather related.


The weather does not cause prices to change. Traders do. The weather can be an influence on supply or demand economics, but price fluctuation at its core is not a natural phenomenon by any means.


Very unlikely the cause considering the amount of hits their website is getting.


Believe what you want but MMM isn't even getting 1/10 the hits of a single bitcoin exchange.


The Economist had a cover story last week on blockchain tech. http://www.economist.com/news/leaders/21677198-technology-be...

I'm sure that helped.


That may become the fastest journey across the Gartner trough of disillusionment that I have seen. So it answers Fred Wilsons's question at http://avc.com/2014/09/the-bitcoin-hype-cycle/


From Wilson's blog you'd conclude the opposite though, that the speed of the journey across the Gartner trough of disillusionment had been much slower and dragged much deeper into the trough than he'd been expecting at the time.

Wilson thought it was "well into" the trough phase by Sep 2014, with the price around ~$400 after one mini-recovery proved illusory. It then halved again, and has taken more than a year for this latest mini recovery to take it up to the heady heights of the bottom of Wilson's "trough"...

That trough sure looks long compared with that brief late 2013 spike.... http://www.coindesk.com/price/#2010-07-18,2015-11-03,close,b...


I think it's far more like this:

http://imgur.com/bcf2DbW


I find it ironic that if MMM is having an impact on the price, that irrational actors (people buying into MMM) are inflating the price of Bitcoin (mainly promoted by libertarians).

Anyway, the up swing is impressive now and can't be dismissed as normal volatilty: https://bitcoinwisdom.com/markets/bitfinex/btcusd

There will be a big drop at some point, no one really wants to sell when it's rising like this. This sort of upward movement is exactly why a lot of people have bought Bitcoin. Trying to time the top will be hard though. I imagine a subsequent drop of ~25% would be likely.

It's fun to be back at a time of thinking about when to sell again.


If it is MMM driven then at some point the organisers will want to cash out, a huge dump/sell of coins across multiple exchanges would kill the price, however they are unlikely to be able to sell all of their coins so it would hurt their remaining assets. A slow sell off would make more sense but given the illegal nature of the scheme they may not have a choice in the matter.


they have to cash out all the time, since they need to keep paying their members to get more youtube videos about "MMM pays XXX $"


Where did you get 25% from?


I keep biting my finger off, trading bitcoins seems so nice but to enter you need to give RID access to shady merchant, which is a bummer.

Anyone know an exchange where btc can be bought simply with paypal?


Ranked in order of my preference.

https://www.coinbase.com/global - Initial setup can be slow, as with identity verification, but once you're set up buying is relatively painless. Withdrawing can sometimes be slow, expect to wait 2 to 5 business days after purchasing before you can withdraw. Shadiness Level - Just shady enough it might work. 4.5 stars would cupcake again. (They're a YC company too, so you'd be helping, airquotes, the cause - as it were.

https://www.bitstamp.net/ - Better for trading, more like an actual exchange whereas Coinbase is much more of a broker/dealer. (Correct me if I'm wrong on that someone who would know better) Shadiness Level - Low. They're venture backed, Slovenian based, and good peoples in my experience.

https://btc-e.com/ - Great for variety of coins traded. Based on my experience I'd recommend. That being said... Shadiness Level - Moderate. Nobody really knows who runs the site, although there has been speculation. I think they're based out of Russia.

https://www.bitfinex.com/ - This would be my go to for actual trading if I wanted to make/lose a lot of money. Based in Singapore IIRC. Shadiness Level - Low from what I've heard, just low on the list because I haven't had any personal experience with them. Something about Singapore and Financial makes me think of super villains though.

https://localbitcoins.com/ - Limited by who is selling in your area, have to meet in person, cash only, and markup is usually high. (5% to 7.5% above market) Shadiness Level - hit-or-miss, ranges from awesome people to scum of the earth types. Make sure you meet in a public place.


> Better for trading, more like an actual exchange whereas Coinbase is much more of a broker/dealer. (Correct me if I'm wrong on that someone who would know better)

Coinbase operates a real exchange™: https://exchange.coinbase.com/

Available to US customers in most states and a few other countries. 0% fee if you add liquidity.


At least in the UK and France, localbitcoins.com let's sellers/buyers use alternatives to meeting with cash, for example direct bank transfer, or some apps we have (like Barclays PingIt in the UK) - the coins go into the site's escrow and the seller releases them once money comes in - which is usually instantly, unlike in America I guess. Not sure how prices or UI compares to other options, but certainly no shadiness if using it that way.


America has ACH transfers, Canada as interac.

Problem with all of these is that they can be reversed.


http://www.coinjar.com/ For Australians, take a look at Coinjar. They accept BPay for deposits & you can withdraw to an Australian bank account once verified. They also offer an EFTPOS card so you can use Bitcoin at most Australian stores. VC funding from Angelcube & Blackbird Ventures.


Nope since paypal is chargeback-able. You can try localbitcoins if you don't want to give out your info.


What does RID mean?

PayPal T&C says virtual currency isn't allowed.


I assumed it meant real identity


sorry it's a direct debt/bank transfer, sometimes I forget to translate acronyms


> I keep biting my finger off, trading bitcoins seems so nice but to enter you need to give RID access to shady merchant, which is a bummer

Yep. I'm pretty sure MtGox was selling identities, as my california ID got maxed out on pseudoephedrine not much longer after I was MtGox verified. It was a bit awkward when I tried to get some flu meds from the pharmacy.


[ed: bitcoin.de does require direct bank transfer, I'm not sure if I'd consider them shady though. So not sure if that helps or not (was it the shady part or the RID part that was a problem?)]

I have good experience with bitcoin.de -- although I'm currently stuck in a loop needing to verify my account (again), after they got a bit more strict with account verification.

At any rate, since I was "smart" and sold my experimental 5 btc test purchase and made thousands of percent (and 100s of USD...) - I don't really have any bitcoin to sell any more. It's kind of funny when you make back lots more than you put in, and still feel regret because the bubble kept going up (I forget when I sold, suffice to say it was way below 200 USD per coin - I think I bought at an overwhelming ~2 USD/bitcoin or something. And then forgot about it for a year or two.).


I'm not sure what you consider shady but several US exchanges are licensed under NY state banking regulations, which seem to be very strict (ItBit and Gemini, I believe, among others that are undergoing the separate bitlicense process).


Actually the break of price parity between China and Western exchanges is historically very bad news for bitcoin. It will mark China as purely speculative and will break ties with the only force that was keeping the price at the 300 USD level in the past months.

It's similar to what happened with MTGox. When the price parity was over (although there was always a ~1-2% premium on MtGox price) bitcoin crashed hard and never recovered.


Could somebody comment on how "future proof" the bitcoin technology really is? How large can the trading volumes become, and is there a limit? What advances have been made in crypto-currencies that will replace bitcoin?


Bitcoin is in constant development, so it's a hard question to answer.

If Bitcoin core development suddenly stopped right now it wouldn't be very future proof. Trading volumes are irrelevant from a scaling perspective, what matters is number of transactions per second (tps). Right now Bitcoin has a really low capacity, just 7tps, way below VISA for example.

However, progress is underway on creating the Lightning Network [2], which will enable billions of transactions per day. Just 11 days ago a major requirement of the Lightning network was merged into Bitcoin core, and things are moving fairly quickly in the right direction.

[1] https://en.bitcoin.it/wiki/Scalability

[2] https://lightning.network/

I doubt anything will replace Bitcoin, further crypto-currency advances will likely be built on top of it (like the Lightning Network and sidechains). Ethereum is looking incredibly promising (has been dubbed Bitcoin 2.0), but I think it will be used primarily as a blockchain programming framework instead of as an alternative currency.


Most of the things you can do with smart contracts in Ethereum involve some kind of currency...crowdfunding, smart locks, prediction markets, etc. It's possible to implement subcurrencies with Ethereum contracts, but native ether is more efficient, a little easier to work with, and is the one currency you can be sure everyone on the network has.


Lightning isn't going to happen any time soon. Bear in mind it's not even block chain based, nodes are stateful and control signing keys, and no existing software works with it.

Lightning will require entirely new wallets to be created for it, and those wallets will be very complicated. It's a multi-year project at most.

The reality is that Bitcoin will fall apart if too much load is placed on it, and it's getting closer to its (entirely arbitrary) 1mb scale ceiling too fast for comfort.


The good news is that support for BIP 101 is growing fast, so we should see larger blocks sooner rather than later. If the tps limit is reached before then, we will likely see increased adoption of micropayment channels, since most transactions at the moment are quite small.


To be clear, Lightning does request transactions on-blockchain to open a channel and to close a channel. The magic is what happens in between those two events. As such, it is not a gateway to infinite scalability, but it does offer the potential to greatly amplify the number of transactions on the network and having them consolidate down into occasional on-blockchain settlements.


Bitcoin is still actively changed, and they've been trying to push up the volume because, well, they have to at some point.

What they choose to set as the minimum amount of throughput for each node is ultimately dependent on the lowest common denominator in terms of bandwidth for every node on the network. With a truly distributed network like this, you need everyone on the same page.

This is a valid criticism of bitcoin IMO. For example, there was talk about forking the network in August because of disagreements about what was reasonable to expect for the network-- Internet in China is expensive.

http://www.economist.com/news/business-and-finance/21661404-...


Hmm, time o check the googlentrends "bitcoin" chart vs the bitcoin price chart again. They had a 1to1 correlation last time I looked.

EDIT: Just went back to look and peek Google Trends interest in Bitcoin happens prior to peek Bitcoin price so public interest leads Bitcoin price as I suggest. Trends crash before the price does.


Bitcoin was climbing steadily between Oct 19-30, and really accelerated on Oct 31. Google trends show an increase in interest from Oct 25-26. So the initial climb happened before anything showed up in google trends, but the acceleration happened after.


Correlation does not imply causation.


You're the kind of person who upon seeing a gun shot victim and as the coroner says, " He was killed by a bullet entering the body and piercing the heart" would shout out "Correlation does not imply causation" reflexively.

Do you really not think the general population's interest in bitcoin has any effect on the price?


Or maybe price is driving the interest?


Both of these things are likely true. Something creates a spark that drives the price up slightly and the media creates interest that drives up the price further, which the media reports on...

This will go on just like previously until the bubble pops again.


Perfectly fair question, but I highly doubt there would be a 1:1 causal relation from BC price to twitter mentions of it. Trending topics are more of a critical-mass "hashtags trending with exponential growth" kind of thing.


Nearly all the Twitter mentions of it I've seen lately were people talking about the price rise.


I'd agree. Buying BTC based on public interest would be too late.

I believe the public interest is sparked by the price - which is perhaps later adding additional additional price hikes sure - but the correlation is not public interest to price; I think it's the opposite, price to public interest.

Price drops - so will public interest.


Peek Bitcoin interest on Google Trends happens _prior_ to the peek bitcoin price for each previous bubble.


Or, both are true: this kind of positive feedback loop is the essence of a speculative market bubble.


Nobody said it did


Bitcoin seems more like a speculative commodity than a currency. As long as Bitcoin is experiencing such instability, how can it be useful as a currency?


yeah, it's definitely a commodity. but same can be said about other speculative commodities such as gold or silver, and they've been used as currencies (ok, not quite, but close enough) for thousands of years :) not to mention that instability in actual currencies happens all the time, if you look outside of the post-ww2 first world.


It's been stable for a long time before this jump, and over much of its history. Yeah it is disruptive!

It's very easy to use as a currency since it's the only way you can send value instantly around the globe with almost no cost and without any regulatory issues.


Ok, that makes more sense. Thanks.


Coincidentally, the Economist published two articles on Bitcoin two days ago, one of which was featured on the front page print edition (which I just got in the mail today).

http://www.economist.com/news/leaders/21677198-technology-be...

http://www.economist.com/news/briefing/21677228-technology-b...


Too late to edit now, but it turns out the articles were actually published four days ago.


There is a LOT of talk about "blockchain technology" going around these days. It seems like another "cloud", i.e. some vague concept that consultants can sell to CTOs who are afraid of appearing behind the technology curve. New clothes for the emperor.

Since bitcoin is the reference implementation of "blockchain technology" obviously all this interest rubs off. And since bitcoin at this point is all promise without much reality behind it (like a "pre-monetization" startup), it is a great vehicle for hype driven speculation, meaning that any price increase drives further speculation, until the next hard crash.


The Economist had an article of the magical wonders of the blockchain last week that kind of skimped on the downsides.


Why is it that the worst things always become the most popular? I mined my first bitcoin before it hit a dollar, so it's nothing against bitcoin, just as acknowledgement of the ridiculousness of the trend of cloud computing is nothing against the cloud itself. Why can't we get a fad that's reasonable for once?

I just don't get how people convert these specialized things that may help some companies sometimes into widespread hysteria, where every company feels like they have to go all in. Companies regularly take their basically-fine hardware offline so they can start renting the same or worse from Amazon, because then they can tell people that they're "in the cloud". I know one company that used to have all their stuff running on hardware and working pretty much fine. They switched to "the cloud" because they thought it was cool. They now pay Amazon the amount of money it'd take to re-buy all the hardware that used to run their site each and every month.

I should figure this out because if I can see one of these trends coming and time it right I could make a lot of money.


Maybe you should do some research before calling it a "vague concept that consultants can sell to CTOs".

It's the first distributed, decentralized ledger that successfully operates in the presence of malicious nodes. The white paper and reference implementation represent a fundamental breakthrough in computer science (a solution to the famous and previously unsolved Byzantine Generals problem).

Bitcoin is a big deal whether you want to realize it or not.


I slowly bought about 25 BTC since January. Honestly this is very exciting right now and I've basically been daytrading for the last few days. I'm no expert by any stretch of the imagination, but it's been enjoyable to set alerts for different price points then buy/sell as necessary. I like the liquidity and 0 government involvement/taxation - something I couldn't do with stock/options/CDs etc.


If you convert BTC to $$ or your local currency, expect a tax situation.


Local transactions from anonymous accounts. I'm not going to file anything.


Why would you want to do that when you can just pay for things directly?


Why would you want to do that when you can just pay for things directly?

That doesn't change the fact that in many places you'll still owe taxes, regardless if you don't cash out in a distinct step somewhere. At least as far as I understand things.


Where are you doing your trading?


Can you do this sort of thing in Coinbase?


I don't know if this is good outside of just pure speculation profit. Bitcoin seemed to hit a fairly decent stable point around $250 before this new bubble.


From a technical standpoint, BTC formed a nice base around $200-$250 over most of 2015. It was mostly quiet in the news, so it was an ideal time to invest. Now it is breaking out to the upside of that base. Sell when your neighbor tells you to invest in bitcoin.

There is a chance the price could go nuts (e.g. $1 million/BTC) - it could be a serious bubble, because of the technology behind it, and the implications it could have to the world.

"It is one of the great paradoxes of the stock market that what seems too high usually goes higher and what seems too low usually goes lower." - William O'Neil


For anyone that has been around BTC for long enough, this is expected, but also expect more rallies and more crashes.

Quick plug: If you are looking for a secure wallet with good privacy for your fresh Bitcoin, Try [Coinkite Multisig](https://coinkite.com/multisig), up to m-of-15, any/all keys can be generated offline, option to escrow backup, notifications, multi-user-multisig, support, notifications, works well with Ledgers, and the list goes on!


Why was this expected? Care to explain to someone who isn't around BTC?


There's a lot of pump and dumps [1] with bitcoin and other cryptocurrencies.

[1] https://www.cryptocoinsnews.com/wp-content/uploads/2014/07/P...


There is no evidence of a pump currently happening. This is not a pump and dump.


Right - they asked about Bitcoin in general which is rife with pump and dumps.

The bubble right now is mostly a response to the MMM buzz.


The little pile of bitcoins I had laying around from a couple weeks ago has doubled in price. Should I spend them now in anticipation of a bubble bursting or wait for the price to possibly go up?


Oh, you should probably sell them. Just like when I sold all of my Apple stock when it shot up to $30, purchased at ~$20. :/


Depends what you expected those initial coins to do. Did you get them as a speculative investment with a chance of "interest" of x%/year? Then a 100% increase is pretty damn good as far as investments go, you shouldn't feel too bad about selling now. You'll have regret if it continues to grow to the moon, so maybe sell half or 3/4. But also calculate the potential unrealized earnings if it went to the moon -- i.e. if your little pile was only worth $100, now $200, even if it doubles twice more the difference is just $600.


As with any volatile investment you should get out when you are ahead, or in need of the money. You may lose out on further gains but the likelihood of another crash is high. It's better to win than lose.


> It's better to win than lose.

Mathematically that's just not true. In objective terms not winning an extra $100 is exactly the same as losing $100.

This psychological fallacy (called 'loss aversion') is the primary reason the average player loses at poker. They're afraid of losing $100 when they might be behind but they constantly fail to extract that extra $100 value bet when they know they're likely ahead.


My logic is always sell half, keep half. Less regret maybe.


And it's starting again. Kraken is now down for me http://i.imgur.com/quLUvxf.png


Normal people don't buy groceries with bitcoins.

Actually I don't think I've ever seen a local brick & mortar business advertise their ability or willingness to accept BTC.


The price is now $500.


It seems to have hit the ceiling at $500. The price has backed off a few times throughout the day.


It is however less likely to be due to exchange manipulations this time because the exchanges are more diversified.


No, not really. If you can manipulate the price on one exchange, it will drag the prices in the other exchanges along with it.

MtGox's high BTC rates were too close to arbitrage until it was clear you wouldn't get your money out.


I was arbitraging MtGox vs US/Canadian exchanges up until 6 months before they blew up. The spread was easily 3% even then. Thankfully they took 28 days to wire me $10k and I saw the writing on the wall and stopped in time.


"The blockchain is the new shining star, and it spills over to the bitcoin world as well.”


The convoluted way they tie this to DAH is somewhat hilarious.


how would one trade bitcoin fast enough to profit?

can one short bitcoin in a single day?

last time I tried it was insanely slow to buy bitcoin, and then sell it...


Magnr give the best margins I've found, 10:1. You can short sell too.

My referral link https://www.magnr.com/?r=79019


It's amusing to me how, on this subject, Hacker News comments draw closer to regular internet comments in terms of the ratio of detailed discussion to biting one-liners.

I'm inclined to think that it demonstrates how very silly the whole thing is, that even us eggheads get snarkily dismissive, but I'm sure some will disagree...


Referring to Hacker News posters as 'eggheads' in the large is a little too gracious.


In the mean time, CasinoCoin gambles its way up as an alternative coin.


its because all those youtubers talking about a dollar collapse, because the fed wont raise the interest rate (more like the fed can not raise rates)


Time to dust off the ol mining rig, LTC to the moon!


Too bad difficulty increases mean your old rig will return a small % of what it did before (if any at all)


A counterpoint to some of the pro-bitcoin hype.

The developers are still arguing about the 1MB blocksize limit. Currently bitcoin is limited to a theoretical maximum of 7 transactions per second (~60k transactions per day). This figure was derived assuming the smallest possible transaction size but of course real transactions are larger and the practical maximum is only about 2-3 transactions per second (~20k transactions per day). This should have been a pretty easy limit to change, it's just a #define in the code. But some core developers are against it and we're deadlocked and have been this way for at least a year.

There is an alternative client called bitcoinxt, this supports larger blocksizes but has literally no support among either the miners or chinese exchanges which are driving the rally. (See https://medium.com/@octskyward/on-block-sizes-e047bc9f830 for a summary.)

A number of DoS attacks on the bitcoin network: some based on spamming lots of fee paying transactions, some based on retransmitting slightly modified versions of existing transactions, have rendered it practically inoperable for days on end. The fee paying attack isn't terribly expensive, costing only a few tens of thousands of dollars per day, while the "malleability" attack costs literally nothing other than an internet connection. There hasn't been any significant progress on solutions for either of these problems.

The bitcoiner response to this is that you shouldn't have been affected by either of these if you used the right client or paid the right fees, but imperfect clients and fixed fees are a reality of the bitcoin ecosystem so I don't see how wishing them away changes anything.

One of bitcoin's biggest advantages was supposed to be the ability to quickly react to changing circumstances by modifying the protocol. Recent events have shown this is pretty much impossible: too many people are too heavily invested in its current form, and they want no risks and hence no change. Techniques which supposedly allow risk free changes (called sidechains) still have a long way to go before we can be convinced they work as intended. Besides they're not even fully implemented on the bitcoin testnet, let alone real bitcoin.

Overall, even if people are buying into the "blockchain" tech, it doesn't seem to me that they would be interested in bitcoin itself because of the problems I've outlined. I think the safe money is still on this being a repeat of the Willybot/Mt Gox fiasco where the exchange operator used nonexistent dollars to buy bitcoin and drive the price higher. Other people were sucked in by the uptrend and they ended up with nonexistent bitcoin/dollars which they weren't able to withdraw from the exchange.


here we go again.


The Bitcoin dream of it being accepted by banks and replacing fiat currency will never come true, especially since financial institutions are focusing on blockchain technology as opposed to Bitcoin.

This recent price increase will possibly be viewed as a dead cat bounce.


You might find it interesting to note that USAA is partnering with Coinbase to give account holders a view of their Bitcoin balance along with their USAA accounts. It seems the partnership between banks and bitcoin is already happening. https://blog.coinbase.com/2015/11/03/usaa-and-coinbase-partn...

The next phase would be for people to buy bitcoins through USAA directly.

Banks are notorious for being "monkey see, monkey do". How quickly did Mobile Checking Deposits take off when banks starting putting these into their mobile apps? Coincidentally, it was USAA who helped develop the technology which allowed mobile deposits in the first place. Once a few banks begin to incorporate bitcoin, the rest will follow.


What people like you who raise this argument forget is that the success of a blockchain is intertwined with the success of whatever currency/reward is granted to the miners who make the blockchain work. So if Bitcoin's blockchain is adopted by banks, then Bitcoin the currency will succeed. And if banks adopt another blockchain, then the currency of that blockchain will succeed.

It is literally impossible to have a functioning decentralized blockchain without a proper reward/currency built on it to incentivize miners to mine on it.


Hey mate,

I feel like it has been ages since the two of us have talked bitcoin. Hopefully you've made some cash in the recent run up. Funnily enough we're both in NZ at the moment though I'm just here in Auckland for the week before heading back to Sydney so no overlap. I'd love to revisit some of our topics from last year though to see which ones each of us were right about. I have a feeling though it's a pretty even split.

Enjoy your travels. My wife and I did our own at northandsouthnomads.com and give me a shout on my email in my profile. I did always enjoy our debates.


Hey I did not know you were an Aussie. My travel blog is ~3 weeks out of date; we are in Thailand at the moment :) I do not have much time to spend online these days since traveling keeps us very busy, but you can shoot me an email if you want to discuss anything.


Canadian actually just live down here now. We did Chiang Mai for ~8 months this year. Enjoy your travels.


The only "bitcoin" that can succeed is the one that is originated from a sovereign state. For then it has the monopoly and can enforce its taxing power that is what ultimately gives value to fiat currency.


A currency has value because it is accepted, no matter who accepts it (sovereign state or merchants, doesn't matter).


It is accepted because it is needed. Everybody needs it to pay taxes, other than that it has no value.


No, plenty of things have value even though you can't use them to pay taxes. The kiwi fruit has value. Why? Because people want them, yet kiwis are not strictly speaking NEEDED.

Again, what gives value to things is that people want them, no matter what the reason.


We were talking about fiat currency.


But there is no difference between kiwi fruits or fiat currencies: people wanting them is what gives them value.

In the case of bitcoins, people want them not to pay taxes, but because cryptocurrencies offer benefits that only them can provide, so people see value in that.


Fiat currency is just a number. Who would want a number? It's taxes that create demand. The problem with the supposed usefulness of bitcoins is that the interesting part is the technology, but the numbers are irrelevant. You can make a transaction for 1 bitcoin just the same that you can make it for 0.0001 bitcoin. Now matter how you dice it, ultimately the number has no real value.


Taxes are just one small part of the demand. The economy makes up the rest of the demand, and it accounts for a much larger share. Even companies that are not US-based and do not pay US taxes can and do demand US dollars, eg. a Chinese company exporting goods to the US and receiving payments in dollars.

The US government income (federal, state and local taxes) was $1 trillion in 1988 [1]. I picked this year because it is hard to find up-to-date data for the next number: the amount of dollar transactions was estimated at $1.7 trillion per day in 1988 [2]; this is $620 trillion per year. So taxes represented only 0.16% of all dollar transactions. At most you can argue that 0.16% of the value of the dollar comes from its use to pay taxes, but the bulk of its value comes from the economy using 99.84% of it.

Still not convinced? Here is a thought experiment. What if for every dollar owed in taxes, the government asked to be paid instead 1 grain of rice? Would it suddenly make the dollar worthless? No! People would continue using it because many other people already use it to transact trillion of dollars every year. They know it is a liquid asset that can be exchanged for anything, and this is what gives it value.

[1] https://books.google.com/books?id=POjfDvabbpwC&pg=PA1&lpg=PA...

[2] https://books.google.com/books?id=F8DSBwAAQBAJ&pg=PA144&lpg=...


Comparing the sum of economic transactions to government income is not relevant. Just as with anything in economy you have to think in the margins (marginal demand, marginal tax rate, etc.) I'm not saying that taxes are the only demand. USD has value! It doesn't matter if you are Chinese! I have another thought experiment: imagine that the US (or any other country, you can think of a small country as it will be more evident) decides to issue a second currency, but you can't pay federal taxes with it and there is no fixed exchange rate to the USD (notice that it's not a bond, it has no maturity). In any case, there is no need for thought experiments with bitcoin. Reality will show you and me if bitcoin has any sustenance. I think it's an amazing technology, but bitcoins themselves have no value (in the long term).


"Comparing the sum of economic transactions to government income is not relevant. Just as with anything in economy you have to think in the margins (marginal demand, marginal tax rate, etc.)"

My comparison is very relevant. It means if taxes did not have to be paid in dollars, then with all else being equal there would be 0.16% fewer dollar transactions. Not a big change.

You talk about marginal tax rate, but I think you meant tax rate. (Marginal tax rate has nothing to do with our discussion). If tax rates where doubled, then taxes would account for not 0.16% but 0.32% of dollar transactions in my 1988 example. Again, not a big change. And yes in practice marginal demand of the dollar would skew this percentage somewhat, but it would still be insignificant.

You did not answer if you were convinced by my thought experiment, are you?

About your thought experiment: what you describe has actually happened many times in history, and many of these currencies had a floating exchange rate and could not be used to pay taxes, see https://en.wikipedia.org/wiki/Private_currency Turns out they had value, like Bitcoin.


A difference in the case of any currency, fiat or otherwise, is that a huge part of the reason people want them is an expectation that others will want them tomorrow.


Right, what we will see is financial institutions creating their own branded crypto-currencies and fixing their values in USD. For most people, the main benefit for crypto-currencies is the ability to transfer just like cash. For financial institutions, the primary driver is fraud reduction.

Bitcoin was always just an experiment to work out the kinks and get people to accept the notion of crypto-currencies. It has no long-term viability as an exchange medium, since it will be quickly superseded by institutional competitors which can provide the stability that businesses need to operate.


> The Bitcoin dream of it being accepted by banks and replacing fiat currency will never come true

Bitcoin doesn't have to "replace fiat currency" to be extremely successful. The transaction float of Visa and SWIFT (both of which are vastly inferior to Bitcoin) is enough to support a higher valuation than this 'bubble'.


Tulip bulbs! Got your tulip bulbs right here!


tulips that can be transfer digitally anywhere in the world at a low fee...


I'd like to also add:

- There is no "Federal Reserve" type entity attempting to influence BitCoin (whether that's a good thing or not, is complicated...)

- Privacy (with the help of Zerocoin)


If you wanted to sell a tulip ownership certificate this century it would also be digitally anywhere in the world at a low fee...


Low just like Western Union and Moneygram got it ;)


Assuming the network isn't overloaded again, and that you don't care about refunds or insurance.


I made an absolute killing on them last time, why not again?


Trading just for profits is no different from other kinds of gambling. Even though I like Bitcoin myself, I'm not the most risk-taking kind of person. The market price depends on the collective sentiment of every single trader, and no matter what I believe, I can't force them all to agree with me.


You're spot on that it's gambling.

My specific gamble last time was that I had an information advantage that others did not regarding Bitcoin. I sold up when that no longer felt true, and when the money had become enough that I couldn't afford to lose.

My specific gamble this time is that there is a bubble, but barriers to entry to owning Bitcoin are high enough that it still has momentum. I can afford to lose my current stake, and will stay in while I continue to feel that way, and while I remain under the UK capital gains threshold.


> Trading just for profits is no different from other kinds of gambling

I'd say this is absolutely false. Roulette is pure chance (and -EV at that). Trading currency/commodities is a bad idea for most people, however you can gain +EV edges with domain knowledge.


I sense unwarranted criticism here – it's not like the ups and downs of BitCoin are going to affect a major economy any time soon (or ever).

It's more a good thing there's this new game speculators can play; even if someone games the system, it isn't going to affect anything of value (e.g. a company producing something of value).

It's not like BitCoin is ever going to be a major currency, or a real currency, really. The distribution of it is even more skewed, and artificially so, than that of any real currency. (And no, it isn't analogous to early investors in a business.)


Btc is as real a currency as it gets, I bought VPSs with it just like I have bought them by unsafer payment methods in the past (supplying credit card info). Although more common in the trading of digital commodities, you can buy physical goods such as clothes and pizza with it, depending where you live. It just doesn't enjoy widespread adoption outside the digital world yet.


> I bought VPSs with it

Wow! A VPS! Something that 99% of the population has no use for. How about paying rent, medical bills, utilities, phone bill, groceries, tuition, gas, car payment, car insurance, car maintenance, tolls, daycare, taxes... you know, the kind of things that real people actually care about.

> just like I have bought them by unsafer payment methods in the past

Bitcoin is by far the most unsafe method of payment for 99% of the population. Credit cards offer comprehensive fraud protection; bitcoin offers zero protection and zero recourse if your money is stolen or lost due to a crash/virus/hack/forgot to backup my wallet before formatting (and when this happens, the user is always blamed, duh, you should have bought a trezor!). With a credit card none of this happens, and if money is somehow stolen from your credit card, the card is quickly deactivated and the victim is fully reimbursed for any fraudulent charges.

This straight up LIE about the safety of bitcoin relative to credit cards is infuriating.


I guess you missed the "it just doesn't enjoy widespread adoption outside the digital world yet" part. Suggested reading:

https://en.wikipedia.org/wiki/Currency https://en.wikipedia.org/wiki/Fiat_money

>bitcoin offers zero protection and zero recourse if your money is stolen or lost due to a crash/virus/hack/forgot to backup my wallet before formatting (and when this happens, the user is always blamed, duh, you should have bought a trezor!)

That has nothing to do with Bitcoin, but with the user habits and possibly his operating system choice. If you go out taking pictures of your credit card and posting on Twitter (as a lot of people do), don't check your account balance often (as a lot of people do) and constantly let strangers have your credit card info (as a lot of people do online) then you'd say that's an issue with credit cards? No, it's an issue with the person's habits.

>With a credit card none of this happens, and if money is somehow stolen from your credit card, the card is quickly deactivated and the victim is fully reimbursed for any fraudulent charges.

That is by design, as it avoids several issues* with money held or processed by banks or any other institution. It's a trade off, sure, but when it comes to my money I rather trust myself to keep sane habits than trust the payment processing website, the bank AND the gov. not to screw me.

* It can't be stolen nor lost if properly stored, unlike the info you must supply when purchasing with credit card (see Ashley Madison and others). Nor can you have your account frozen, like when buying with Paypal or wire transfer (if the bank or gov. find it suspicious), nor are there chargebacks in case you are a seller (if you wait the appropriate number of confirmations)...


> I guess you missed the "it just doesn't enjoy widespread adoption outside the digital world yet" part

Nah, I didn't miss it, I just don't think it matters. It's like saying "my solar powered car is as real as it gets, just yesterday I drove it down the block, it just doesn't enjoy more than a 10 mile range". Well ok... then it's not as real as it gets, it's a toy and not very practical since it can't be used to get to work, school, hospital etc.

> That has nothing to do with Bitcoin, but with the user habits and possibly his operating system choice.

In practice it has everything to do with bitcoin since permanent loss of funds is only a risk with bitcoin. Those behaviors you describe are not analogous to the problems of bitcoin. Just storing money as bitcoin puts it at risk of permanent loss. If you take out 100 credit cards and never check your balance you are still covered for every conceivable fraud scenario (and in many situations the bank will tell you that you've been a victim before you even realize it). With bitcoin you are never covered regardless of your vigilance or best practices. You can be an expert user and simply make a typo and send your money to the wrong address and then you're screwed. The general public doesn't have the time, patience, or technical skills to decide which OS is the most secure for storing money, especially when bitcoin itself doesn't actually provide any novel benefits for most people.

> It's a trade off, sure, but when it comes to my money I rather trust myself to keep sane habits than trust the payment processing website, the bank AND the gov. not to screw me.

That's your right and I'm glad bitcoin exists for you, but it's simply wrong to suggest that bitcoin is safer, it's not. If you trust yourself to keep your bitcoin secure, more power to you, but statistically speaking your money is still less safe as bitcoin than as a bank balance. It's like saying that driving your motorcycle cross country is safer than flying because you trust yourself not to crash. I'm happy that you can be your own bank and I think that it's cool as hell that this is possible because of an emergent econony based on open source software, but bitcoin is not practical, useful, and least of all safe for most people.


> Credit cards offer comprehensive fraud protection; bitcoin offers zero protection and zero recourse if your money is stolen or lost

None of that shit helps me when I can't buy what I want because the merchant is in the U.S., my credit card is issued in Canada, and my shipping address is in Thailand.

I don't care about other people, I should be able to buy things online in 2015 and accept the risk of fraud my own damn self. And the merchant should (and wants to!) be capable of serving me.


Nothing you said conflicts with my post. Your situation is extremely unusual and pretty much defines "high risk" from a fraud prevention perspective. For 99% of the population this is a non-issue.


My point is that with Bitcoin I can opt-out of the overpriced fraud protection racket that is my credit card. This allows transactions to take place that could not take place otherwise. It's a feature, not a bug.

If you think my situation is too crazy, then consider someone who wants to buy a $15,000 Rolex or gold bar online or place a $5,000 bet on a football game starting in 3 minutes. There are many applications for digital cash that are not being served by existing electronic payment methods.


> My point is that with Bitcoin I can opt-out of the overpriced fraud protection racket that is my credit card.

And right there is the crux of your disconnect from the general population. The vast majority of people don't view fraud protection as a racket; it doesn't cost them anything as far as they are aware and the benefits are pretty clear, especially compared with bitcoin where permanent loss of funds because of hackers or arbitrary technical problems is a real risk.

> then consider someone who wants to buy a $15,000 Rolex or gold bar online or place a $5,000 bet on a football game starting in 3 minutes.

Ummm, those all sound like pretty unusual use-cases that the general population has no use for. I never said bitcoin was useless so you can stop proselytizing, all I said was that credit cards are clearly much safer than bitcoin if you define safe to mean "protects my money from being lost or stolen".


It isn't a currency, it's just another payment method. Your provider will exchange the bitcoins for a real currency to pay their employees and taxes.



All aboard the speculation train!


More people are realizing that China and Greece are very close to default.

There are more holes in these economies than their respective governments has fingers to plug them in.

Flight to bitcoin is the only natural and logical progression.


Where the hell is the flight to gold and bonds then?

Something else is going on. Gold is still at $1,120ish USD. There is no flight to safety.


Two reasons.

1. US markets are priming for a temporary rise till approx. end of spring / mid-year 2016.

2. Gold is no longer safe bet in the light of a large scale government defaults and rather drastic domino effort that will follow.

For how long do you think Fed are going to kick the can down the road?


> 2. Gold is no longer safe bet in the light of a large scale government defaults and rather drastic domino effort that will follow.

That makes no sense what so ever.


https://en.wikipedia.org/wiki/Executive_Order_6102

In case of drastic economic downturn this is a possibility along with currency devaluation.

Back then there were no bitcoin in existence. Today it is.


If you're worried the evil gov'mt is gonna steal your gold, then why won't they just steal your BTC too?

There's a reason why Swiss safety deposit boxes of gold exist. You gotta pull that crap out of the country. Hell, if the US Government just declared ownership of the BTC Network through subpeonas, they can effectively 51% attack it and double-spend all the BTC they want anyway.

So no, your hyperbole does not convince me.


[deleted]


Oh no, another "Here's a huge market. Now imagine if only 1% of them buy your product" article to add to the junk pile.


[deleted]


How is control of these bitcoin being transferred to someone who is willing to accept the controlled currency?

Presumably they would have to be in mainland China.

I guess someone who is more able to circumvent the controls traditionally might be able to move the money out and could sell bitcoin to profit from that capability.

edit: argh.


Price surge is in direct correlation with Winklevoss "Gemini" exchange going online on October 8th. https://gemini.com/

This chart shows the price surge starting the exact same day Gemini went online: http://bitcoincharts.com/charts/bitstampUSD#rg60ztgSzm1g10zm...

I really hope this is genuine growth, but I have a sneaking suspicion it could be partially due to market manipulation by Gemini. The Winklevoss twins have a lot of money riding on this play.


Your claim is really US-centric. Most of the exchange's volume right now is from China. China is driving this and I don't see how an american-bank-only exchange would be the main reason, if there is one.


I guess no one remembers MTGOX and the Willy bot.

I'll take my down-votes in stride.

Only the future will reveal the truth.


Of course they do. The volume required to do Willy-style manipulation is far greater than what is occurring on Gemini.


No it isn't.

Volume on Gemini is miniscule, less than 1% of the chinese exchanges.


The suggestion that it is market manipulation by the Winklevosses related to Gemini doesn't mean that its a result of action on Gemini; an effort to use existing exchanges that can support the volume to drive Bitcoin in a way that would increase public perception of the attractiveness of Bitcoin to position the sales pitch for Gemini as a "grown up" exchange isn't entirely unthinkable.

Not that I think its likely, mind you, just that "the action isn't on Gemini" isn't sufficient to rebut that the movement is related to Gemini. I think, though, that MMM still seems likely to explain more of it, and other China-specific conditions may explain more of the China-focused movement. Manipulation around Gemini, while not inconceivable, seems to be a bit more of a leap from the evidence available.


Thank you.

I also think it's fairly unlikely, but the data points are there.

Causation versus correlation, I know. Probably it's part coincidence / part overall good press. I just found it odd that run-up started the exact day Gemini opened.




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