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Bitcoin drops 10USD in less than 4 hours (bitcoinity.org)
31 points by rommelvr on March 7, 2013 | hide | past | favorite | 49 comments



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)


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.


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)


I feel like I'm missing something, but I can't quite understand the advantage of Bitcoins in this kind of scenario.

Who's handling all the instant real money conversions, and why wouldn't they just transfer the real money between accounts directly rather than converting it?


It's not that instant real-money transactions are happening, but if I owe you $5 USD, I can say "I'll pay you 0.1142BTC" and the value to you is the same (as others have said, as long as the exchange rate doesn't fluctuate too much)


Well it certainly matters for the people that are sitting on a bunch of bitcoins.


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.


Yeup.

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


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.


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.


We just saw an article yesterday.

"Bitcoin rises from $14 to $40 in two months" http://news.ycombinator.com/item?id=5323867 83 votes


Also, keep in mind this is nothing new. When it fell from $30 down to about $3, I heard the same complaints. Lot of people made a lot of money then; a lot have made $ now. Conversely, many lost huge then, and who knows what will happen now. It became so bad it cost more to mine than the resulting coins were worth, and I turned off my rigs. (Eventually sold them)

Bitcoin is a volatile, fun place to be. It's easy to convince yourself when it shoots up that you're a freaking genius for getting in it. When it goes down, the detractors think they're the ones with the clue. I think both groups suffer from confirmation bias, and this thing has several years before true stability.


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


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


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


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.


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.


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'.


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.


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


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).


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?


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.


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


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


There's a natural monopoly in a medium of savings used to defer consumption. Among competing currencies, the winner is the "bubble that doesn't pop". Until the monopoly is established, though, volatility is to be expected, as it would be with any bubble.


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?


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


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


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?


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/


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

http://bitcoin-analytics.com/


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


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


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)


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.


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.


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


More people are using it. Economics 101.


I prob wouldn't mix the term 'Economics 101' with a early adopter currency that has fluctuated between $0.001 and $50 in less than 5 years and between $5 and $50 in the last 10 months.


True, but supply and demand still apply in an all online currency.


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


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


There isnt one!


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


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.



Does anyone sell FX futures on BTC yet?


Is there a market for bitcoin options?




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