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Bitcoins reached $300
121 points by kolinko on Nov 7, 2013 | hide | past | web | favorite | 128 comments
Here are the charts: http://bitcoinity.org/markets A screenshot: http://i.imgur.com/kW1CJz2.jpg

And a link to the front page of WSJ's financial section today: http://m.imgur.com/4bcGGZG




Damn. Sometimes I can't believe it. I have been following bitcoin quite closely for over 18 months now. The ecosystem is growing in ways only a few bold people have predicted. Fundamentally, it is about belief and trust. The protocol has largely proven itself. People are starting to believe in bitcoin. This is why the price is going up.

For those who say "It isn't being used as a currency!" here is my response:

Bitcoin excels as a secure protocol for tracking account balances in a decentralized, seemingly untamperable fashion, as well as transferring value very quickly to anywhere in the world at the sole, uncensorable discretion of the owner. It is both a payment protocol and a distributed ledger. A lot of people want these unique feautures, even if they can't buy groceries with it yet. Those types of merchants will always be the last to adopt.

Bitcoin also has the pontential to be used in diverse ways as "progammable money". It has a built-in API, and features like timelock, mutli-entity transaction signing (built-in escrow), and others that I don't fully understand. An AI bot could utilize bitcoin (might have trouble with a bank account!).

Also, see gold and its $8 trillion of largely made-up valuation (not stemming from industrial/ornamental demand). You don't see gold owners buying things with a few shavings ;) Bitcoin is far superior to gold in almost every way (it isn't quite as shiny tho). If society can make up several trillion dollars of monetary valuation for gold, then I definitely can picture bitcoin snagging a pretty decent slice (right now it is only 1/3,000 the size gold).

People recognize this potential, and thus choose to invest. The first mover advantange is massive. Network effects are very important - it will take quite the innovation to unseat bitcoin, and it has to be something that can't be simply copied/integrated into the existing protocol. The whole thing is sort of a self-fullfilling positive feedback loop. I'm a cautiously strong proponent, and find it absolutely fascinating to watch. These kind of events don't unfold that often.

TL;DR - magic internet money!

Sorry for the multiple edits. I wrote this on my phone.


Small addition: for something to become a currency, it must have value and market acceptance. The value is coming only from the speculative desire to hold money (either expecting it either to grow, or at least to outperform alternatives, like Argentinians holding dollars to protect against peso inflation). In case of Bitcoin, the amount of acceptance is reflected in the price because the more people want to hold it, the higher price they will have to bid. Therefore, price tells everyone that 1) bitcoin has value and 2) bitcoin has growing acceptance. Only after that it can be used as a currency.

TL;DR: Speculative investment is the only way for an asset to have value and thus become useful currency.


i wish bitcoin's equating with gold is going to last - but i believe that because bitcoin's uncontrollability (from the banker's point of view), it will be stamped out as soon as it threatens fiat currencies as the dominant means of transfer.


I was actually having a similar discussion with a friend today and we touched upon the topic of BTC getting outlawed by governments.

Hypothetically, what's to stop countries and ISPs blocking it on the protocol level, the way China blocks certain types of traffic? Wouldn't that kill it for mainstream use and make it work only on darknets like TOR?


Stamping out a global, decentralized currency with mass adoption won't be easy. Even if bitcoin will be legal in 10% of countries it would be enought to bridge bitcoin-fiat exchanges.


> Stamping out a global, decentralized currency with mass adoption won't be easy. Even if bitcoin will be legal in 10% of countries it would be enought to bridge bitcoin-fiat exchanges.

Especially if trading would just move to Tor-like channels if this happens.


The only thing I don't like about bitcoin is that the mining reward goes to 0. Sure, there will be fees, but fees reduce the usefulness of a currency. And if people don't mine, bitcoin dies. Perhaps something else will take its place?


I may be wrong, but due to the deflationary nature of BTC (limited supply, increasing demand), when that happens, those fees are worth more (in government backed fiat currencies) than they are today.

It's like being upset that the original miners could get a block reward of 50 BTC for mining on a CPU but today you have to use specialized hardware for less BTC. But as competition increased (and difficulty increased), the BTC is worth way more than it was and is less risky (although, still risky).

Profit is profit and some people/organizations will still have incentives to mine. Of course, there are problems that need to be sorted out before then though, like having more transactions included in each block to make it worth while for miners and cheap for users.


I am still learning about Bitcoin... so these may be a silly questions or questions based on wrong assumptions. From what I understand, as you get close to the max (21 million or so) the coins are harder to mine. Does that not mean transactions take longer to verify? And if you cannot verify transactions in a 'timely' manner is the system effectively dead?

What is the acceptable user experience for maximum verification time of a transaction? At that max 'verification time' difficulty level, how long would it take to generate all remaining coins?


The blocks (the fundamental unit of verification) get harder or easier to complete based only on how quickly the last set completed: this is to maintain a constant speed of block mining.

The bitcoin payout (which goes to the miner of a block) gets predictably smaller over time.

So no, this affect does not increase expected transaction time.


The difficulty will increase in response to the hash rate of the network, it doesn't directly correlate to the amount of coins in existence. So when the last BTC is mined, if people stop mining the difficulty will go down (after about 2 weeks I believe) and if more mine, it will still go up.

The difficulty is designed to be at a rate that will see a block mined every 10 minutes. So the ideal max verification time should be about 60 minutes (6 blocks) on average, although you should see your transaction included in the next block mined (in 10 minutes-ish, assuming the miner included your transaction, which they have an incentive to do if you included a fee) but to stop a double spending attack, it would be unwise to consider a transaction verified after 1 block, 6 blocks makes sure your transaction is not lost in a blockchain fork or part of a double spending attack. Some people consider 3 blocks to be enough verification time, it depends on how much money you are dealing with but the recommended amount of 6 blocks is in the original paper.

The last block to generate BTC that will be mined should happen in around 2140 (with the reward halving every 4 years) and then there will be a maximum of 20999999.9769 BTC in existence.

Interestingly enough, if you flooded the network right now with your own transactions and included a higher than normal transaction fee on those transactions, you could conceivably block other transactions from being included in the blockchain, at least for a while. Last time I calculated the cost of such a scheme it was about 72BTC per hour, so even without fixing the scaling issues of transaction volume in BitCoin, the rise in price makes this sort of attack less likely (still theoretically possible).


Would something like FreiCoin help? (bitcoin with demurrage - coins 'evaporate' over time so that there are always new ones to be mined and lost coins eventually go back into the pool)


The only way for coins to evaporate is for the wallets to get lost. It happens. The thing people seem to get stuck on is that a coin isn't divisible. It is. Even if there was only a single coin available to the market, it would still function, albeit the real value of that one coin would be equal to the size of the market.


No one would bother with Freicoin (which leaks money) because no one will invest in it when you can invest in Bitcoin. So it will not have a crowd of people that value it, therefore it won't have "value", therefore it won't be used as currency. Because currency is something that has widely-acknowledged value (by those who save it, of course).

There is no such thing as "transactional currency".


My understanding is that coins must sit idle for a full year before they "evaporate."

If you simply create another wallet, or another wallet address, and move your coins (transact) without buying or selling anything, you fulfill the demurrage requirement and your coins don't evaporate.

If you work with large amounts of digital money and you don't check on it for a year, quite frankly you deserve to lose it! You should have robots executing on arbitrage opportunities and it should be no problem for you to show some activity in the span of a year, if you call yourself an investor. That being said, I don't have any Freicoin and I won't put my money where my mouth is, there are more interesting bits to tune in Bitcoinia, like Terracoin which has shorter block targets and hard-coded limits on the amount of variability and swing that difficulty can have.


"you deserve to lose it"

Your opinion is irrelevant. People will not put money where they need to run some robots just not to lose their funds if they have a better alternative. Freicoin thus will never have any value and therefore no one would use it as a currency.

Terracoin is essentially the same as Bitcoin, but is compatible with Bitcoin ASICs and thus prone to attacks from their part. Litecoin, on the other hand, has incompatible hashing scheme, but no one would invest in mining Litecoin if you can invest in mining Bitcoin. In other words, people want one, most marketable, most popular, most liquid money. If Bitcoin was leaking savings, people would choose Bitcoin 2 which wouldn't and stick with it.


You say "leaking" but it's not leaking. It's demurrage. If you leave it alone for a year, it _all_ goes away. That's not a slow leak, that's making a bad decision and failing hard in a preventable way.

My hat is two sharks, your argument is invalid[1]. Asserting confidently that bitcoin is a transaction network not a value store mechanism, and that "people like you" who have excess value are the ones who attack it, by keeping the bitcoins and speculating that they will be worth more later, rather than executing or transacting with them, just holding them as some kind of "savings."

Terracoin is "susceptible" to attack by ASIC just as Litecoin is "susceptible" to the "millions of GPU-toting gamers" attack vector. Mining is "investing" in the network, and if your only interest is to see yourself on top and the network in shambles, you could probably find a better way to invest.

Then again, some people are anarchists.


[1]: http://alexsegura.tumblr.com/post/8691920116/my-hat-is-two-s...

Think of it this way. If I told you I was keeping my savings in bitcoin, and I've saved hundreds of bitcoins for the last two years, and never converted any of them to cash, and never spent any of them in the last two years, you would probably say "Wow. You've missed at least two great opportunities to cash in on terrible market crashes. You could have had thousands without investing any more real money, you'd be filthy rich and have placed nothing at risk."

Certainly I could have done better if I had made _some_ trades. History tells me I personally will pick the wrong times to trade, and the above strategy is probably best for me, given my strong propensity to buy high and sell low (otherwise I would have those hundreds of bitcoins still.)

But if you've never made a transaction, you have never realized any of the value, and an argument can be made that your entire portfolio is at risk.

Just like buying 50-year bonds, there is a risk you won't live that long. Nobody's going to contact your next-of-kin to alert them to your bitcoin holdings if you die having kept them a secret. That's a real danger to the network, and with a cap on the total number of bitcoins, it causes real harm to everyone when those coins are lost, unaccounted.

At least with someone moving them around from time to time, you will be able to know that the keys have not been erased and "those coins are still alive," you won't spuriously inflate the value of your own and your neighbors' coins on public exchanges, opening yourself to the real dangerous Satoshi attack of "rising from the dead and seizing all of the at-risk cash on everyone's trading accounts." If Satoshi ever comes back, we will likely have made him fabulously rich and all because we didn't think of it first, and people like to jump on bandwagons.

No contract! No fair. Ergo, demurrage is good.


I'm pretty sure you have some savings or belongings that you didn't touch for a year or more. Can I have those?


I have a closet full of crap that you are welcome to mine for good stuff. There are probably some old PS/2 keyboards and non-working motherboards in there, as well as questionable power supplies. I don't have time to look at it.

People even call me a hoarder, luckily I've got it down to just one closet now because of repeated moves. I can promise I don't have savings in excess of the bitcoins I already mentioned, sadly.


I don't think anyone sane would use that as a value store.


If I had money in bitcoin I'd find this movement terrifying. It is not correlated with broader economic movements or the inflation rate of USD, and has all the classic hallmarks of a bubble, including true believers telling everyone it is different this time, increasingly wild oscillations, and exponential growth.

I find bitcoin really interesting, love the idea of a cryptocurrency, and also find the idea of a deflationary currency interesting. I've no argument with that side of it. Obviously there are issues with things like exchanges which seem to be almost entirely run by amateurs who think that a VPS or leased server is secure enough for financial transactions, but those problems could go away in time, they are not inherent to the currency, though they're another reason to be cautious at present.

However there are a few issues with the use of the currency which can't easily be fixed. What I find more troubling is the commitment to anonymity and lack of accountability from the creators - it is designed to allow anonymous transactions, and the users seem to be resistant to regulation. Those two things mean people can engage in bitcoin theft, fraud, laundering, cornering the market, setting up bogus or insecure exchanges/banks, with impunity and anonymity. Without proper regulation, insurance, compensation, which means identification of users and verification of transactions and everything that goes with that, I can't see bitcoin spreading beyond enthusiasts.

I wouldn't use it for anything important because of the lack of regulation and controls, but do think it represents something of the future of currencies, after our latest experiment in hyper-inflationary fiat runs its course (see Fiat Money Inflation in France for a previous experiment). It'll be interesting to see if other cryptocurrencies are born which take a different direction and attempt to build in accountability and responsibility to secure transactions and allow them to be policed effectively by tying them to real world identity. Anyone know of any?


If I had money in bitcoin I'd find this movement terrifying. It is not correlated with broader economic movements or the inflation rate of USD, and has all the classic hallmarks of a bubble, including true believers telling everyone it is different this time, increasingly wild oscillations, and exponential growth.

I have money in bitcoin, I believe in its future, and I acknowledge we are in a bubble. Nothing to be terrified of; the aftermath of the last April bubble left the prices much higher than when it started. And with every single bubble bitcoin kept going no matter how big the crash was.

Those two things mean people can engage in bitcoin theft, fraud, laundering, cornering the market, setting up bogus or insecure exchanges/banks, with impunity and anonymity. Without proper regulation, insurance, compensation, which means identification of users and verification of transactions and everything that goes with that, I can't see bitcoin spreading beyond enthusiasts.

You have to consider that this is a new way of thinking of money. No regulation and a decentralized nature does not necesarily mean all sort of bad things will happen at once; this thought is what comes naturally when you think of money in a traditional sense, but people can adapt and start seeing and thinking of money in a different way.

Let me give you an example: Email. It's unregulated and decentralized, and anyone, anytime, can write anything to any email address with almost zero effort. In paper this sounds like a terrible idea, because the moment my email address is public anyone can send all sorts of crap to it, not to mention that malicious people could completely trash my inbox by sending thousands of crap emails having no repercussions. But, as a society, we still adapted and embraced it.


I have money in bitcoin, I believe in its future, and I acknowledge we are in a bubble. Nothing to be terrified of;

As long as you don't have significant money in it, it's no big problem, but say you had your savings in it or were paid a salary in it - at that point the volatility would be a nightmare and the prospect of a bubble seriously troubling (bubbles always burst badly, and frequently go through successive waves of euphoria before they do). That the price has returned to a new high does not mean it will stay that high.

To supplant other currencies bitcoin would have to deal with the volatility and perhaps more importantly the lack of regulation and verification - with the current setup and community that'll be a huge issue, and perhaps impossible. It'll be really interesting to follow the trajectory of bitcoin and similar currencies as they negotiate these problems but I don't trust them just yet.

I do think email is broken for precisely the same reason - it thrived in spite of its anonymous insecure nature, not because of it, they simply didn't think about having to verify identity at the start, which has led to all sorts of problems with phishing and spamming. A lack of verified identity is at the heart of both these systems and causes issues for both of them, so I think email is a great example of a system which has problems of abuse (spoofing, spamming, phishing, fraud) because of anonymity being allowed.


So, some people were meant to play craps and others blackjack. Some people don't have the stomach for a casino at all. I have played SatoshiDice and it's thrilling, I have never actually lost there, or if I did it was overtaken by winning. Still, I never bet anything like when I go to a casino. The bitcoins will still be there tomorrow.

By and large I have made a lot more money holding bitcoins and not selling them, than by gambling or actual market activities like trading or selling actual goods and services. I can't say I trust it, but when you take your first $50 and turn it into $500, only to spend it all on mining equipment that doesn't expect to make you 5BTC because other people are out there betting extra zeros, well hell, sometimes you gotta double down and make money.

I have no illusion that it's not a bit risky. I could also be paying bank fees. Today it looks like the last three years there has never been a bad day to buy bitcoins.


Look at Bitcoin closing price on a log scale: http://bitcoincharts.com/charts/chart.png?width=940&m=mtgoxU...

Not so scary anymore! From what I understand, people should be looking at this sort of data on a log scale.


I agree the log chart is the desired way to view the data because then a straight line is showing steady growth.

But look at the chart you posted. I see a sharp uptick on a nice linear trend since July. Now go look at the rest of the chart and ask yourself what happened every time there was a sharp uptick? Hmmm

I believe bitcoin will continue to grow, but I wouldn't tell people this is a good time to buy. Wait for the "correction" then buy.


Every sharp uptick will have a corrective period because upticks have momentum.

Now is a good a time to buy as any. No one knows if the correction is going to drop below the current price or not. So it really doesn't matter when you buy, especially so if you're holding for the long term.


Why?


Take a look at this explanation: http://www.fool.com/foolfaq/foolfaqcharts.htm


Ah, that makes perfect sense. With a logarithmic chart, each change is seen in the context of the current value. Each change is not equal to every other change. When bitcoin is worth $1, and it goes up one more $1, that's a much bigger change than when at $300 it goes to $301 but to have the line the same length is kind of misleading.


I think, because money as any other standard is always a network effect. Networks grow exponentially, in a self-reinforcing manner. Or they don't grow at all (when at a point of saturation).


I think of the value of any asset in the form of expected value. For bonds and stocks, it's present value for forecasted future cash flows. For Bitcoins, there is an element of underlying value, but also an element of acceptance as a broader currency. As the probability of Bitcoins becoming a more accepted currency increases, so does it's value. While the underlying currency value may not change (or perhaps it does, hard to tell), its probability of acceptance is going up as Bitcoins enter the mainstream via publicity and mass adoption.


Instead of "accountability from the creators" you have accountability of every single investor and bitcoin business. Every single one of them is motivated enough to keep system working well and preserving their individual wealth. Compare that with coercive power of government which simply declares something a "legal tender" and then you are forced to accept their paper and their monetary policy as a fact.


Well people were saying it was a bubble over a year ago when it was only $19. How do we know if it's not a bubble though? Is there any way to estimate what the "true value" of a bitcoin is? Like the number of bitcoins in circulation and the total size of the bitcoin economy?


When dealing with an entirely new concept, isn't everyone an amateur?


Securing money or valuable info is not an entirely new concept. There are basic precautions, like complete physical control of the server for a start, basic precautions which many of these exchanges neglect (see inputs.io, run on a VPS!). They could learn a lot from banks, who have been doing this for decades.


According to the bubble theory of money, all money is a bubble. The bubbliness is what defines money - it is that which is irrationally overvalued. See[1] Bitcoin is money, Bitcoin is a bubble

[1] http://unqualified-reservations.blogspot.com/2013/04/bitcoin...


Somewhere buried on my hard drive I have a fraction of a bitcoin that people were giving out for free when bitcoin first came out to encourage adoption.

I really need to find it, it's actually worth money now...

ps. that pizza is now worth $3 Million


All you need to do is travel back to 2010 and visit this page:

http://web.archive.org/web/20100703032414/http://freebitcoin...

5 free bitcoins for solving a captcha? Yes please!


Yeah, I did the same exact thing. I have a few "lost" bitcoins from the early days.


What about Ebay announcing that they might accept Bitcoins?


I've been buying up in the last week (previously I was in at 5, 10, 12$ and sold at the last peak at $240) because I think PayPal will jump in soonish.


When Silkroad went down I expected bitcoin to take quite a slump but what has happened is contrary. I am not implying that anonymous transaction s for illegal use are the only thing bitcoins are good for but its my guess that it forms a major part of the group that actually use bitcoins for buying stuff. I am not sure why would anyone would get troubled in buying bitcoins for purchasing rather than punching a CC number. What is pushing its value, I am not sure but I am really spectical that it has to do with bitcoin's popularity.


Most of the people of the world can't really have a bank account, let alone be eligible for a credit (card). With Bitcoin you only need internet access.

Most of the people of the world can't really save either. Cash loses value over time, gold is hard to validate and keep safe, and is even banned in lots of places. Bitcoin to the rescue! Now everyone can start saving, and even be rewarded for that.

I could go on all day long, the benefits are endless. Just live in a shitty country for some time and you'll figure it out pretty fast.


Most of the people of the world can't really have a bank account, let alone be eligible for a credit (card). With Bitcoin you only need internet access.

Yeah cause internet access and a modern computer are waaaaay more common than bank accounts or prepaid credit cards....


They are, if you define modern cellphones as a "modern computer".

Digging around, I found they're almost equal actually, and cellphone users vastly outnumber bank account holders (cell phone users exceed toilet access !!!).

50% of adults worldwide have an account at a formal financial institution.

60% of adults worldwide have internet access, with 39% having home internet access (the remainder having shared or limited internet access).

80% of adults have cell phone access.

Sources:

http://econ.worldbank.org/

http://en.wikipedia.org/wiki/Global_Internet_usage

http://www.gallup.com/poll/159815/home-internet-access-remai...

newsfeed.time.com/2013/03/25/more-people-have-cell-phones-than-toilets-u-n-study-shows/


It is. In fact I have never seen a prepaid credit card. And you can use Bitcoin from your phone, no need for a desktop PC. Yes, third world countries have phones. Will I have to explain this to every American? Besides this affects first world countries too. A lot of people in first world countries can't have a bank account, but there is wifi everywhere, and even the homeless have phones (I never understood why. A marketer told me it's related the reverse pyramid of needs or something like that).


... Children? I would've loved Bitcoin at age 12.

According to wolfram alpha, there are 1.871 billion children age 15 or younger: http://www.wolframalpha.com/input/?i=population+under+15

Those 1.871 billion children literally determine the future. And all of them can currently use bitcoin for buying anything available via bitcoin. That includes Humble Bundles, for example, not just drugs. Though admittedly they'll still just pirate most videogames rather than buy them. But they won't be able to pirate MMO's, and it's a matter of time before MMOs begin accepting bitcoins.


In Russia it's common to have computer and internet, but no credit card.


SilkRoad was important, but most important was its community (dkn255hz262ypmii.onion) that it's still online. You see, the most important things for the anonymous market are the WoT and the PGP pubkeys, and that's not illegal (at least until now). Additionally Black Market Reloaded was already very popular when SR was seized.

I believe that what is pushing Bitcoins value is that many people call it "the credit card of the 21st century" and they are buying bitcoins as shares of the next Visa.

EDIT: as wildgift said, there is no insurance in Bitcoin yet, but I'm sure that if Bitcoin starts being really popular we are going to start seeing online wallets with insurance provided by big corporations. CCs (as a technology) don't include insurance either...


I thought this too, but then, due to my lame password management, my mtgox account got owned and they took out around $250. Oh well. Easy come easy go. But what I learned is that bitcoins really are like cash. You lose it, and you won't get it back.

That's what's different with Visa - there's an element of insurance with a credit card, and that is greater than what you get with a bank's checking account.

The insurance of being able to cancel a check is what you get with a regular checking account, and that's greater safety than what you get with bitcoin.

Of course, there's a price to this insurance, and it's the fees, which are much higher than what you pay for bitcoin transactions.


Bitcoin is still very, very - VeRY - obscure to most of the world. Hardly anyone 'gets it' but every time something to do with Bitcoin appears in the news, a few thousand more people get interested enough in the subject to educate themselves about it, and invest in Bitcoins. This strengthens the currency - for as long as it continues to 'get known about' by the general population, the value will rise. It is still very obscure.


Bitcoin did take a hit, but it recovered fairly quickly.


I think the simple explanation is that Silk Road's takedown increased Bitcoin's media coverage, which is leading to new buyers, which offsets whatever sell-off there might have been.


Bitcoin is antifragile


silkroad 2.0 launched just recently


Bitcoins should lose 3 zeros, like many countries do to their currencies.

So 1 new Bitcoin = 0.001 old Bitcoins = $0.3

I think I'd like that more than just starting naming them something else all of the sudden, and call them Satoshis or whatever, and then when the Bitcoin reaches $10,000 we'll probably have to use new names yet again.

Cutting the zeros could be a little confusing at first, but I think less confusing than starting talking about Satoshis, or mCoins or whatever, all of the sudden.


A "Satoshi" already has the common usage/definition of 0.00000001 BTC -- the current smallest denomination.

[1]https://en.bitcoin.it/wiki/FAQ#What_do_I_call_the_various_de...


people have suggested mBTC or "millibits".

I think it's not something that can be mandated. A new terminology will naturally arise if the need is genuine.


I don't think it'll be needed until/unless bitcoin stablises enough that people start quoting prices in bitcoin.

Right now, advertising a computer at 3 bitcoins is not practical. The value of those bitcoins change to fast.


> Right now, advertising a computer at 3 bitcoins is not practical.

Only if you're seeing the "real" value as the USD. No-one says "$100 is meaningless because its conversion to Thai Baht varies so wildly".

The only thing that will kill bitcoin is stability without utility.


> No-one says "$100 is meaningless because its conversion to Thai Baht varies so wildly".

I would, if I lived in Thailand. I wouldn't quote prices in dollars.

Sure, what really matters is how well bitcoin price is correlated with food, labour etc. - things you actually need. But those are pretty closely correlated with USD in practice, and bitcoin is not well correlated with them.


What about 8 bitcoins = 1 bytecoin


And 1 nibblecoin == 4 bitcoins.


>Bitcoins should lose 3 zeros, like many countries do to their currencies.

I've never heard of that, although the opposite has been done plenty of times. But that's rarely a sign of a healthy economy, most of the time it's done out of desperation I would think.


It was very 'popular' in the 80's and 90's for countries coming out of high inflation. Off the top of my head, Brazil, Peru, Russia, Poland, Yugoslavia, Turkey and Bulgaria all cut three or 4 zeros from their currency to make the numbers easier to handle and to try to mark a psychological end to previous inflation.

Zimbabwe did it about once every other year or so back in the mid 2000's.


Mathematically speaking you are talking about dividing but GP talks about multiplying. That I've never heard of too.


Sorry. Realized I completely misread both posts.


Zimbabwe removed 25 zeros (in 3 stages).


I live in a country that used to need that. The real reason for doing that is simply not having to write so many useless zeroes. The people who were calling for cutting zeroes were mostly banks having issues dealing with whatever hard-coded limit was on their systems. There was no expectation that cutting zeroes would actually improve anything at all.

Though the situation was exactly the opposite of Bitcoin. Money was losing value so the numbers were getting too big. Bitcoin is becoming too valuable so the numbers are getting too small.


It's becoming 'too valuable' in USD. There are other currencies, and the world does NOT in fact turn around US.


No, it's becoming "too valuable" in terms of the goods a person would normally buy with it. It is more convenient to quote prices in whole number units than in tiny fractions of a unit. The USD is irrelevant here.


At the beginnings of 20th century ~310USD (which coincedentally is 1BTC at today's - or this hour's - prices) would feed an average american family for a whole year. http://libraryguides.missouri.edu/content.php?pid=298741&sid...

People used cents in day-to-day dealings and I doubt anyone found it inconvenient. Same stuff with BTC and satoshis. People will get used to that sooner than you'd think.


Ya, I don't disagree. satoshies or mBTC or whatever. I'm just saying that the argument has to do with cost of goods in BTC, not anything related to USD.


you really don't want that. imagine a confusion you'd have all the time when using software. say a year from now, you launch your older wallet software, and send 1 (old btc) instead of 1 (new btc) to someone. You'd need to double check every single place you'd ever spend bitcoins on to make sure that it's new bitcoins and not old bitcoins.

Similarily with software - everyone in the source code it'd say "bitcoin" programmers would need to check whether it's new or old.

The amount of confusion, and engineering work would be staggering. It's far better to have a new term alltogether. People have been proposing "millis" or "millibits".


There's a theory that it could just keep going for a while yet.

We're talking $10,000 to 1BTC. So what then? Lose another set of zeros?


To the moon! ┗(°0°)┛


Amen.


$320 now.


In this thread - people confusing up arrows with "good".

(Rapid deflation is not a great thing for a currency in general)


I'm wondering, is it as bad for a currency that still rather rarely get's used exclusively? I don't have a lot of economic knowledge (only what I learned in high school, though one of my majors was economics & politics; Germany, school until 13th grade) but it just seems to me that not all the normal rules would apply in the case of bitcoin.


But it might be for a world reserve currency - and replace gold to a large extent.


Looking at the chart it doesn't seem as volatile as mainstream media leads us to believe.


Your average currency pair moves less than 1% on almost all days. Moves above 1% are rare and days with moves of several percent are extremely rare and occur a couple of times a year at most. BTC, on the other hand, may be worth anything from 250 to 60 USD a day. That is the reason why BTC as a currency is of little use. You cannot do serious business with something like this unless you immediately hedge all of your exposure. In a larger organisation that would be impossible and, on the other hand, only means that someone else is holding the bag for the next crash.

BTC is driven by little to no fundamental data. Its exchange rate is subject to pure mass psychology which is why it repeatedly goes through boom and bust cycles. This is not going to stop unless something like a real BTC economy of non-trivial size develops. But I think it very unlikely for this to happen for the aforementioned reason of volatility and the fact that BTC is by design deflationary. BTC's deflationary properties would choke off any such economic system that is based on this crypto currency.

All in all, I am of the opionion that BTC is an interesting experiment and a case study in speculative behaviour. The difference compared to former manias (see [1] for historic examples) is that in BTC the process plays itself out at an extremely accelarated pace. Maybe this is even what the creator(s) intended. Maybe they created a purely electronic ecosystem of speculative behaviour to be able to study and better understand the phenomenon of financial bubbles. This would certainly explain the 'Satoshi' entity's non-interference.

[1] http://en.wikipedia.org/wiki/Extraordinary_Popular_Delusions...


This is the kind of response I wanted to invoke - that you for your insight!

I guess the closest 'real' currency examples would be something like http://www.xe.com/currencycharts/?from=ZWD&to=USD&view=10Y


The fuck? USD changes less than 2% a year. Within the last _six months_ BTC has been valued at anywhere from $65 to $321 USD (http://bitcoinity.org/markets). It would be incredibly difficult to oversell how volatile BTC is - it's really, really, really, really fucking volatile.


It increases 50% in a week, and you don't consider that volatile?


You know, its the oscillations == volatility philosophy.

Of course only should only look at daily graphs no older than two days.

http://bitcoincharts.com/charts/mtgoxUSD#rg1460zigDailyztgSz...


I don't think philosophy has much to do here. Volatility is a financial term with a precise, mathematical definition.


Some days are really volatile.


I wouldn't say it's a bubble just yet, because it's too close to the last ramping which was a response to the Cyprus confiscations. This is just a response to what many would perceive as the beginnings of capital controls in the USA... it's probably the tail end of that. Another "Bitcoin Bubble" to me would be around $500 in the next few days... thus entailing some burst or large correction.

http://www.foxbusiness.com/government/2013/10/17/jpmorgan-ch...

A better word would be "recapitulation."


Last rally started at $14 and crashed into $100. This time we started at $140 around Silk Road shutdown. If this history repeats itself, the bubble may crash into whopping $1000.


The main argument I heard against bitcoin from a Russian tycoon during the Cyprus shenanigans for bitcoin being a good store of value was that there was no quick way to liquidate large sums of bitcoin if you wanted to (I presume into some fiat currency for spending.) An interesting point: it wasn't really about the currency losing value it was about liquidity. But the counter-thought is that it's better having a store of value that one can't spend than not having anything at all! At least time is on your side with bitcoin in terms of liquidity, it's not with fiat if you look at capital controls on the increase. Capital controls are an issue especially if you want to move between countries. Anyone with $100mil+ and not in bed with government should move into bitcoin and get a good anonymizer .. the rest of us just get a free ride. Assume some goverment will then come after (if not those bitcoins) then you. And so the end game of bitcoins is when goverment ends up with most of them (or at least wanting them.)


Many people bet on Bitcoin becoming world money. Then you don't need to "liquidate" it at all. At the same time, market evolves: the more people invest tomorrow, the more btc you will be able to liquidate.

When Bitcoin becomes a world currency, then capital controls wouldn't matter.


I know that. Bitcoin's main risk is that it can make a person's fortune known, and accessible (or rather vulnerable.)

"You have 50,000 bitcoins.. transfer them to me now or alternatively do xxxx now .. or else." In fact some sort of time-lock or trusted partner would be a good busines idea, so that someone couldn't just come with a gun to your head. It can't become a world currency because it makes people too personally vulnerable... at least as it stands now, but it's a really good start.


People can find out about your coins the same way as they find out how much gold you have.


What website would you go to to find out how much gold I hold?


What website will tell you how much BTC do I hold? If you can trace from some exchange or a merchant my identity linked to some bitcoins, you can equally do that with a gold dealer. Of course, you can see where bitcoins are moved, but that won't tell you much: they could be equally sold or simply relocated.


Hate BitCoin or like it. Let's agree, nobody can explain this; and nobody can predict BitCoin value or usage.

Some top HN members criticized BitCoin heavily. I, for one, invested $0 in BitCoin.

But we can be sure about something: Bitcoin is weird, new and innovative. It's something completely new and has no rules. The game is open. How the market will react will not depend on your limited (or wide) experience.

Bitcoin can go all the way down to $0 and the rest is history. It can go up and widely used that it changes history. I'll be just watching though.


I don't see how Bitcoin could go down to $0 (assuming that it's not the philosophical scenario with $ growing to infinite), unless the entire thing is somehow compromised and exploited in an abusive manner; thus, destroying the trust of anyone left with Bitcoin holdings.


1. Bitcoin can be explained if you take time and study it. It has no new or strange constructs in it. Hash functions and digital signatures were around for decades. You may also like this glossary: https://github.com/oleganza/CoreBitcoin/blob/master/GLOSSARY...

2. Bitcoin has rules and those rules are strictly followed and very strictly specified in actual software.


The block size blockchain fork was resolved on an ad hoc basis. There was nothing in the software to deal with it. Miners lost rewards over it (or at least, wasted cycles).


Software has bugs. They need to be fixed and some people may lose money. This story only proves that incentives are correctly working in favour of everyone: miners voluntarily chose to lose rewards and stay compatible with the older network to not shake confidence in it.

The point is not to have a perfect system (which is impossible), but to have proper motivations for everyone to play along instead of cheating and stealing.


Well, now we are running away from "strictly followed" and "very strictly specified".

I guess I would be happy if you always posted a disclaimer with such claims, something like "But of course all software has bugs and who knows how severely a given bug in the bitcoin software will impact the network".


The value of bitcoins is tied to the size of the bitcoin economy. If you believe the size of the bitcoin economy is going to grow over time, then the value of each coin will also increase (as there will never be more than 20m coins).

If bitcoins are to be used as a niche instrument to make financial transactions easier, the total value of all bitcoins should probably be more more than a few billion dollars.


Awesome. I wish (as always) I hadn't sold mine earlier. But if I didn't I would probably sold them now and wait to see what happens.

Thing is, this fluctuations are not connected with any sort of events that make sense or justify the price sky-rocketing which makes me think that the whole thing is driven, manually.

When the whale leaves the sea, BTC will turn into peanuts. Till then...


It's something of a paradox isn't it: If nobody had ever sold their bitcoins in return for something else, then there would be no market for bitcoins at all and bitcoins would be irrelevant.


It seems to me the real price is lower as depicted by Coinbase or CampBX which have a stable and reliable system, unlike MtGox at the moment. I think the ~6% higher price on MtGox is a reflection of people's lack of trust in MtGox being able to provide withdrawals in a reliable and timely fashion.


So, I don't understand. Why does bitcoin have such high deflation?

Is this just because there has been a constant stream of people switching their traditional currencies for bitcoins at a rate faster than bitcoins can be mined?

Presumably at some point bitcoin will stop being deflationary if it ever wants to be useful as a currency. When does that happen?

Why do people buy bitcoins if it isn't really useful as a currency yet? I mean, there are supposedly 3.5 billion USD worth of bitcoins in existence, but if I want to buy any sort of physical product or pay for utilities, I have to use a traditional currency.

Currently it appears that bitcoins are most popularly used for less than legal purposes (payment for drugs, payment for services to avoid taxes, payment for blackhat services). Does this mean that by buying into bitcoin, I'm essentially providing USD to these black market activities which might not have had USD to begin with?

Many questions I don't understand...


Is there any serious research paper on BTC (and not an enthusiast blog post)?


Yes, it was originally proposed in a paper. http://bitcoin.org/bitcoin.pdf


it fails as a store of value and therefore is not money which is obvious given its volatility. Bitcoin is best described as a computer programme which sells itself on features written to provide assets to those with the mindset desiring such assets - libertarians, those anti fiat currencies, Austrian economists (more recently now gold is letting them down) etc... Such mindset are sure to only increase given the Wall St ownership of the Federal reserve so Bitcoin will continue to sell until its technology is made obsolte. If that takes years then bitcoin $100,000 soon enough but if tomorrow then hello bitcoin $0


What would make BTC obsolete?


Brace for impact.


This reminds me increasing at gold last year.


where do you personally buy/sell BTC ?


The easiest for the US is coinbase.com. Unless you want to buy a lot. But they are not an exchange so you can't setup buy/sell orders.


Not really if you want to trade. They are playing safe instead of having balances in USD and BTC so that you don't need an ACH for each buy/sell, which takes a week.


Bitstamp.net is excellent, at least in Europe (usually one day SEPA transfers). It also has modern responsive interface and works very well. Localbitcoins.com is another good one, it's a P2P exchange where you can also buy/sell bitcoins with cash.


I prefer localbitcoin and bitcoin-otc, but I do have an verified account in MtGox.


I wouldn't trust Gox as far as I could throw a piano right now.

I've been waiting more than 24 hours for a BTC withdrawal. It's not even showing up on blockchain.info yet. Search the forums there are a lot of people this is happening to. Some with more than 3 days.

I'd be EXTREMELY cautious and suspicious about Mt.Gox right now. Make very sure you can get your BTC/USD out of Gox before you trust it.


24 hours? but did you pay a fee? sometimes if you don't pay a fee it takes long time until some block includes your transaction, and specially when the difficulty of the network is high (like now).


3 days? People haven't been able to withdraw BTC to USD in months as far as I was aware. http://www.reddit.com/r/mtgox


Not BTC to USD. Just plain BTC to my wallet.

This is happening to a lot of people.

https://bitcointalk.org/index.php?topic=324918.60


I have used localbitcoins.com a few times to buy bitcoins, and have been happy. Remember to use the site's escrow though.


campbx.com within the United States. They do 2 day ACH withdraws for $2 and same day domestic wire transfers for $20. After bitfloor closed down I switched and have been very happy.


bitcoin.de if you are in Germany.




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