Bitcoin Forum

I'm as happy that my holdings are rising as the next guy, but I admit that I cannot see the cause of it.  This kind of advance is not unprecedented within the Bitcoin economy, but the last time we were in this kind of multiple week advance it turned out to be a hype induced bubble, not the result of fundamental increases in the size of the BTC economy.  Anyone know what I'm missing?

Maybe it's BFL's Sonny moving fiat to a more easily transportable form for his upcoming trip to Bahamas :)

It's the best thing ever and the more value it can hold the better it works. Why it took 18 months and counting to put in new highs might be a better question.

The halving of the mining reward is the main cause of this rally. The new equilibrium price is above $32.

I'd agree with you that if the current rise was based on short-term speculative hot money from traders, then it's going to get unwound in a nasty way.

But, more optimistically, if the purchases are being done for the purpose of long-term wealth protection or store of value (there is some evidence to this, see https://bitcointalk.org/index.php?topic=136705.0), then although such purchases do not increase the size of the BTC economy, they are nevertheless quite legitimate and healthy for Bitcoin.  Similar to gold, the gold economy is nonexistent, but the store of value premium is the major component of the gold price, and I expect that dynamic to become dominant in Bitcoin as well.

You shouldn't be, it all seems pretty natural from where I'm sitting. Sure there will be a blow-off and retracement but this rally has been building for a long time .... and it is every bit as powerful as I was expecting.

The psychology of crowds is the driver ... the market sees $16 and $32 as important price points but has no real feel for anything in between at this stage. Once we cleared $16 (the August 2012 rally top) then there is no obvious point to stop going up ... until the previous rally top, $32. I don't think we'll get there but maybe. $20 is round number so probably have a pause there, maybe retrace, who knows.

Not bubbly yet, still plenty of money on the sidelines waiting to get in methinks :) When every one is in who is waiting to get in for now, the rally will stop.

Damn, now I have to refrain from purchasing BTC because I'm not sure if the rising price is trying to fool me into buying BTC at a price it's not worth.
It's just wait and see now.

Why is it rising? Has some new userbase seen the use of BTC and lots of people trying to get some? (demand for BTC rising?)

http://www.google.com/trends/explore#q=buy%20bitcoins&cmpt=q

Yes, google searches for "buy bitcoins" are almost up to 2011 bubble levels.

In addition, GPU miners are pulling out in expectation of ASICs, so the difficulty is dropping.  This means blocks are slightly less frequent then one per 10 minutes currently, in addition to the halving of the block reward.

Less fresh supply, high demand, and major long term resistances were recently broken.  We may see a bit of volatility before we can move up much more, but I'll continue to buy my chunk with each paycheck.

Another speculation bubble is probably in the brew unless we stabilize at the 20 mark for a bit longer. But it looks like we might stick around here, and then have a healthy price increase. The Bitcoin economy can probably support a price near 20, but anything above is probably speculation at the moment.

Plus, it isn't even that bad. Look at the chart:

http://bitcoincharts.com/charts/chart.png?width=940&m=mtgoxUSD&SubmitButton=Draw&r=360&i=&c=0&s=&e=&Prev=&Next=&t=S&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&v=1&cv=0&ps=0&l=1&p=0&

We've had much bigger in 2012, so it's premature to compare with 2011.

OMGOMGOMGOMG 18 BUX! :o

Will people learn from history?
No...

Much more to do to build the real BTC economy.

Learn not to buy in? I hope not.

Just because there is more to do doesn't mean a lot hasn't already been done.

This is a fallacy. The halving of the mining reward does not make it more difficult to obtain coins.

First, the number of coins mined each day is a small fraction of the total exchange volume. The change in the reward has only a small effect on supply, if any.

Second, this current rally does not coincide with the halving, so it is hard to claim they are related.

Most likely, the steep increase in price has been a result of the surge in articles mentioning bitcoin in the mainstream news media. I suspect/worry that there is a little bit of a bubble forming, but volume still seems reasonable.

http://img287.imagevenue.com/aAfkjfp01fo1i-5942/loc369/003050437_BitcoinWall_122_369lo.JPG (http://img287.imagevenue.com/aAfkjfp01fo1i-5942/loc369/003050437_BitcoinWall_122_369lo.JPG)

Pardon my ignorance, but I don't know what that drop off around $20 on the buy side means for the potential future price. If it gets to $20, then it'll also very quickly jump to $22? Can someone explain in a little more detail exactly how to read those graphs? Much appreciated.

The image is broken, but I assume you are looking at the Mtgox market depth graph. The height of the line indicates the amount of money it would take to move the price to that value. So, indeed it would take a lot to raise the price higher than $20, and not much more to raise it to $22. However, keep in mind that the graph is not static, every bid and ask, and every transaction changes it. Also, while it may be useful as an indicator of interest and "pressure", it is not very useful for prediction.

Isn't anyone concerned that Congress added $4T debt during the Bush years and $6T during the first Obama term?  Our debt stands at over $16T and will probably rise at least $6T during the next four years.  That's $135,000 debt for each and every American.

Since the interest rate to banks is at zero, Bernanke has run out of wiggle room.  He is spending $40B/month, "buying" bonds from Fannie and Freddie with manufactured dollars.  That's almost $0.5T / year in new money printed.  Google QE3 to read more.

I, for one, am very concerned my wealth will be inflated into nothingness.  I see Bitcoins (as well as metals) as a place to park my savings.  I believe the people of Greece, Italy, and Spain see this as well.

If I were asked, I would recommend BUY and HOLD.

Yes, I was looking at he Mtgox market depth. Thanks for that quick explanation!

Do you have any link or reference to support this statement?

On the other hand the evidence is irrefutable:


Fallacy.

Fact: There are far fewer coins in exchanges. Nowadays exchanges are running out of coins.



Fallacy.

Fact: This rally coincides exactly with the halving.

As my grandfather used to say, "mas claro echarle agua".



Put your money where your mouth is -> sell all your coins !!!

This was tweeted by Gavin ~two days ago.
"BitPay Surpasses 10,000 Bitcoin Merchant Transactions, Zero Cases of Payment Fraud" http://t.co/qmHd9Y7l
Maybe this is about lots of companies getting in touch with bitpay to start accepting BTC. If that's the case then I'm glad. Maybe there are many reasons for the higher price, but I need to wait until it becomes stable at least for 15 days before buying any.

The number of bitcoins sold over the last 30 days (according to bitcoincharts.com) was 1,885,000, while the number of bitcoins mined over the last 30 days was 108,000. So, the maximum possible contribution of supply by the block reward is less than 6%, and the actual contribution is probably much less than that. That is how I support my claim that a change in the reward has only a small effect on supply, if any.

The latest rally started two weeks ago on January 8. Prior to that, it was flat for nearly a month. How does this coincide with the block reward halving two months ago.

You are misunderstanding the whole situation. Real coins and trade volume are absolutely different animals. For example, yesterday I started with 100 bitcoins and after selling and rebuying them 5 times, I finished with about 103 bitcoins.

Real coins transferred = 103 - 100 = 3 bitcoins

Trade volume generated = 5 * 2 * 100 = 1000 bitcoins


The adjustment is not instantaneous, it will take several months (including many corrections).

If miner supply was turned to 0.25 BTC today, would Bitcoin reach 1700 USD in several months?

Block halving has a very negligible effect on Bitcoin prices because the supply change is miniscule. Difficulty's effect on price stems from how attractive mining is, not from how much money is injected into the supply.

Hyperbole. Your counterexample is a fallacy by design.

I get my paycheck tomorrow.. AND PRICES ARE ALMOST 18$ A BTC!!!! FML.

It is not fallacious at all. It's common sense. I modelled the economics of the block reward months before it happened. I concluded that each day, less than 1% of trade is from that day's mined coins—a value unlikely to increase after the block reward change. Now that this value is closer to 0.5%, price changes are no longer attributable to supply through mining.

Because of the way Bitcoin is designed, the supply entering the system is known. In effect, it is a combination of inflation and demurrage: inflation is known to a reasonable extent, and demurrage (through accidental coin loss) is inconstant, volatile, and unpredictable. These are the only influences affecting the money supply as a whole.

Although demurrage is predicted to become more important in Bitcoin's future, at the moment it is likely second fiddle to inflation. But inflation can be predicted to a reasonable accuracy even through ignoring mining altogether. So we can model mining approximately by untying it to inflation, and as an industry similar to any other. This is no more a fallacy than modelling the motion of the Earth relative to the Sun as an ellipse—sure, the Moon affects it, but not significantly enough to make our model unacceptably inaccurate.

Once we have established this model, mining becomes an industry like any other. Money is given to successful miners, and they earn a profit. This is no different from those successful in retail or in gambling.

A common fallacy repeated on these forums is that difficulty drives price. It does, but not in an intuitive way. With this economic model, we can see that mining is an industry like any other. If the cost of earning the money decreases (difficulty decreases), profits increase. And with increased profits comes decreased value—a result obtainable regardless of economic theory. The same is true when difficulty increases: with decreased profits comes increased price.

But we already know that mining is just an industry like any other. So clearly, mining alone is not going to make that large an impact. Difficulty doesn't really affect price that much because mining isn't that big of an industry. SatoshiDice alone is a bigger part of the economy than all miners at this stage. Price doesn't increase significantly because of difficulty.

So how do I determine that value is not affected by the block reward? Simple. Consider a situation in which the difficulty doubles overnight due to a bug in the protocol. What will happen? This is equivalent to a halving of the block reward, after all. Will price skyrocket? In a few months, maybe? No. Clearly, the only impact on the price is that miner profits are down and therefore there is a certain degree of price increase.

If miners were 100% of the economy, then only miners would be selling BTC. There is a temporary rift in the supply as the majority of miners run into negative profit. The price should increase significantly as the supply is severely crippled. This effect should be instant or at least rapid, as everyone is aware of this.

But miners are not 100% of the economy. They are 20% at most. Gambling, retail, service, and yes, even speculation are all parts of the economy. Speculation, gambling, retail, and service make up the other 80%. Supply, at most, can only be crippled 20%. This means that even if the block reward and transaction fees disappeared overnight, the price should not reasonably appreciate more than 25%.

Conclusion: Our current appreciation cannot be explained on the block halving.

I agree completely with your conclusion, although I think the analysis is even simpler and can be copied verbatim from decades of research into the price dynamics of the conceptual "mining" model on which Bitcoin was based: gold.

New supply (i.e. miner production) does not meaningfully influence the gold price because it is dwarfed by the quantity of pre-existing already mined gold.  

Similarly, at this point, with BTC.  The quantity of new coins that the miners can throw onto (or withhold from) the market cannot make any kind of meaningful dent whatsoever on the MtGox orderbook.  We are way past the era when the miner supply was a significant portion of the total BTC stock.  The majority of coins being traded do not come from miners.  They come from existing holders of coins.

It is a common (but often seen) fallacy to speculate that a mine strike in South Africa will cause the price of gold to rise.  For the exact same reasons, it is an identical fallacy to think that reduced miner supply will cause the price of BTC to rise.  The reasons why BTC has risen are due to huge new demand from buyers + unmatched supply from existing holders.  Miner supply is a tiny factor that can be mostly ignored.

Suggested reading, just replace the word "gold" by "bitcoin":

Why changes in gold production don't matter
http://www.321gold.com/editorials/saville/saville111009.html

That article was good, i co-recommend it.

One point: A miner is normally considered here as someone who sells all his coins when mined or when he needs to pay for electricity.

However, Many miners are also traders, and having less mined coins makes the miner more likely to stick to his coins as he cannot recoup a short by mining a week more!
So his trading pattern changes and he is more often long. The halving of the amount of mined coins might not in naked figures explain the rise, but the anticipation of scarcity makes all speculate in a rise.

It's like when there is a fire in an off shore oil rig. The rig produced 0.4% of world oil production, but when it burns, oil prices rise 8%

In gold mining, most gold is mined by poor people an the brink of starvation, they don't speculate in price. Neither do the big mining operation as they have high cost. They both sell to the nearest gold refinery which pretty much manipulate the price as much as it can. Gold miners are not selling at market price!

When you go to your local scrappy to sell some copper you get 65% of yesterdays market price as he has costs and is exposed to a risk of a drop in price before he has a container full to ship to the smelter. The smelter also pays the scrappy less as there are losses from impurities and he also is exposed to the same market risks. When copper is appreciating, you can usually get a slightly better price than 65%. So real gold or copper is not as liquid as Bitcoin from the miner or scavengers perspective and their effect on the price is less than the effect from BTC miners.

There have been several recent articles in magazines etc which have talked about Bitcoin.  Perhaps this is increasing interest in the project and hence, driving up the price.  The economy is still pretty small, so relatively small events can have a big effect on price.

this type of fluctuation is normal and donst nessisarly represent weakness watsoeva

id harldy call the current price a bubble   :D

I'm still not sure if it's because of a rise in demand, or just because of an expectation of rise in demand.

If its the latter and the expected demand doesn't trigger than it will have been a bubble. But that seems unlikely at the moment.

It's both, hoarding by old & new users. Lots of support, for now.

Enjoy the ride, hope you keep your arms and legs inside the vehicle at all times  :)

It's driven by speculation, any serious speculator will never miss this vehicle, this is just the beginning

5 hedge funds, each push the price to a target area (like 4x) and dump it to the next one, they keep buying and selling with profit, same game wallstreet guys have been playing for decades

Actually I think the biggest enemy of BTC are these players with huge amount of fiat capital, although BTC was designed to be a currency free of central banks manipulation, it still could be manipulated by the powerfull players in the market

+1

I think there is a real risk of people with deep deep FIAT reserves realizing the publicity of Bitcoin has given them a perfect vehicle through which to pump money from inexperienced speculators. The higher the price, the more press coverage, the more ordinary people come and put 1-2K USD into it, the more they dump and buy it back cheaper.

I called that 3 months ago :)

also

WE HIT $20 per BTC Mother-Falkners!

These are very real concerns, however as people rich in FIAT will try to destabilize the price of bitcoin, people rich in bitcoin could act to stabilize it. Sell when the price is rising too quickly, sit on the dollars and buy back bitcoins when the price is crashing. I think it's really a moment when we will see if the community is serious about bitcoin or just a bunch of greedy speculators.

No hedge fund can break bitcoin if there are enough early adopters that are willing to stand up to them.

If you care for bitcoin, you should sell when prise is rising and buy when price is falling!

This is very shortsighted thinking.  Central banks print at a rate of 2-3% per year.  After a hundred years, they can break anything.  They can break the entire economy.

You won't even notice until it's too late.


No, if you care for Bitcoin, you should learn to play the long game as well as they do.

Unless of course their game is to slowly buy up ALL the BTC. Remember it's divisible to 8 decimal places. Why not have some hedge fund buy up now a good portion of a future world currency? It would be like the cartel on the diamond market. Most diamonds are bought up just to be stored in vaults and thus protect the price level.

Lets say some fund decided they wanted half of all BTC, they slowely buy it all up. We don't notice except our glee at a rising price. The rising price raises BTC's value, and we start dealing in mili BTC like nothing's happened. Except something has happened, and this funds control over so many BTC means that they can artificially inflate the price of BTC, and when they sell it, demand ever higher amounts of FIAT. It *could* (read COULD!!!!) be a perfect way to suck money out of those afraid of central banks.

<occam's razor mode>
The price has climbed from 7 to 21 just in the middle of the halving. The evidence is irrefutable.
</occam's razor mode>

My hypothesis is that this rally is explained by:

• 30% -> new people discovering Bitcoin.
• 20% -> the halving itself.
• 50% -> the psychological effect of the halving (over the whole community, not only over miners). Nobody wants to sell their coins.

This is going exactly as most miner thought it would go.

The rise form 10 to 20 is simply a result of the block reward havling. Anything beyond that is actually growth of the bitcoin economy.

The simple fact is - miners have bills to pay - ever one of us that's still mining saw a 50% reduction in income when the block reward halved. Most of us held on and sold off bitcoin reserves to make ends meet. We've been playing chicken against other miner's bitcoin savings. The price adjusting now indicates some combination of two things:

1. some miners have decided they aren't making enough profit and have shut down (most likely gpu miners).

2. the bitcoin savings of the remaining miners are either tapped out or they've made other adjustments to reduce operating costs and have stopped selling saved bitcoins.

The basic support level hasn't increased much, but the supply has been cut in half. It's driven the price up accordingly -The next thing we'll see is continued slow rise followed by fast (but relative small) corrects repeated until asic release. Once that happens we'll see some wobbling and then have some steep crashes... but after the initial profit taking from that new equipment and difficulty adjustements, we'll see a relatively fast and steady rebound since those miners won't need (or want) to sell at the crashed rate. 

At that point we'll see some price stability that follows the rate of growth.

BTC is scarce, the supply is constantly decrease, if someone sold a huge amount of BTC, he will very likely to buy it back at a much higher price level, and it is not a guarantee he can get that same amount of BTC without pushing price much higher, so basically it is difficult for investors to act on the short side

Other things like gold/oil/house, the supply can always increase with added production capacity, so the price development is much more uncertain

Central Banks print 2-3% at year?
Where was you living in the last five years? Or ten years?

€ base went from 400 billions (2002) to 1200 billion (2012)
$ base followed the same trajectory in the same period of time.

2-3% at months is more realistic, in these days.

I would suggest this podcast from Goldmoney
ROBERT BLUMEN DEBUNKS GOLD SUPPLY & DEMAND MISCONCEPTIONS
http://www.goldmoney.com/podcast/robert-blumen-debunks-gold-supply-demand-misconceptions.html (http://www.goldmoney.com/podcast/robert-blumen-debunks-gold-supply-demand-misconceptions.html)

The concept of Demand to Hold is important to understand the dynamics of the price of gold and bitcoin.

If the Demand to Hold change (people start thinking bitcoin value is 25$ instead of 15$ and are unwilling to sell for less than 25$), the price will follow whatever be the supply and the request.
Mining is a part so small over the total of the supply available (of gold and bitcoin) that if someone want buy must exchange something with someone that bough them, not from someone that produced them.
If gold mined in a year is 2% of the total gold supply available, the price will be determined by the Demand to Hold of the people holding gold and the Demand of people wanting exchange other stuff for gold, not from the quantity sold by the miners.

Exactly!

I think this is saying two conflicting things. One the one hand it is saying the price of bitcoins is a result of what people think they are worth. On the other hand it is saying that since the supply from mining is a certain percent it can't affect the price significantly. But what if the increase difficulty in mining causes a change in what people think a bitcoin is mentally worth since it's now twice as "hard" to mine? mathematically it shouldn't affect the price much but much of the price is mental. If everyone that had bitcoins suddenly felt they were worth a thousand dollars each and wouldn't sell for less........ that is how much they would be.

I don't see how those statements conflict.  Sure, the miners' mental valuation will change with difficulty, but since we are not the majority of supply, we can not control price, only have a very small influence.  Most non miners don't pay attention to difficulty, even though it is one of the primary factors indicating health of the network.

I would disagree but only because it seems that the large fluctuations in price of bitcoin are not from millions upon millions of transactions from many people... but more larger transactions among less people. And I would bet that those who are dealing with such volumes and trades have a knowledge of mining even if they don't mine themselves.  Saying that the increased difficulty in mining doesn't have an effect on the price because the supply is only a few percent of the market... is almost like saying that if mining were stopped tomorrow and all the coins that were created were...... and no more... then the price wouldn't more than double simply because only about half of the coins which can be generated already are so doubling would make it about the right price from a sheer supply standpoint. I bet that would be wrong. And I apologize for the run-on sentences.

Is it me or is bitcoincharts suffering downtimes? That's where I check regularly, to see if there will be some BTC stability so I can get involved again...I found someone worthwhile to donate to!  ;D

I don't know if you'll agree but this is somehow how new religions are started. Keyword: Hope!

Religions start with hope, but maybe also depression. The good thing though could be if BTC stays at a higher price in a stable way, but it really must be worth it, otherwise we've lost precious time!

Exactly²

Observing the 2011 peak with .01% of the population interest. There is little to no correlation with the current rise in Bitcoins 2013 value. The current trend is due to a few major factors: block discovery at 25BTC, WordPress, France bank recognition and adoption, now 10x more public interest vs the .01% of 2011. Also, great exposure from BitPay at the 2013 CES. So even though it appears to mimic the 2011 growth. It is now a much more reinforced currency and not just excitable hype. I for see a very positive trend in BTC in the future. And will be very luctative to early adopters.

This form of world currency now has a decent foundation only to gain exceptional strength in the future. As the new ASIC’s become the norm. This will only bolster the strength of the network as a whole. The only issue to the casual consumer is the “safety” and ease of use with personal wallets etc. Albeit it is a fairly steep learning curve to the understanding to the currency itself.

It certainly isn’t the volatile crypto currency that it once was.

A few more major retailers acceptance will propel this currency almost exponentially. This world currency is now out of the “experimental phase”.

Any retailer adopting this form of currency will have reduced overhead in equipment fees and transaction fees (mc/visa/etc). Gaining this lost revenue is an added bonus. This is much more prevalent in world trade.

I think any investors and financial institutions will be impressed with the performance of Bitcoin in the future. Something to seriously bank on.

My 2 cents…

Ed (TooCasual)

While Bitcoin is fair and honest, it's price at any given moment might not be.

To few traders agreeing on where to take the price, smells like a bucket shop!

Time is up for a correction to $20 if we going to be sustainable over the weekend!

You sound like you "need" to purchase more BTC... :D  and it's painfull as it rises higher and higher.

Let me point to a post of mine I made a while back (we were already in rally mode): https://bitcointalk.org/index.php?topic=135622.msg1447544#msg1447544


It's "old good news" that's generating newbies (both users and speculators), helped by the network effect.

Also: it's much easier nowadays to sell bitcoin to new people. Just yesterday I irc-chatted with some dudes that made twrp (http://teamw.in/project/twrp2, an android recovery system that support encrypted mounts) and it was easy to convince them to accept bitcoin donations. A year ago they would've told me to go away and stop spamming their channel with bitcoin propaganda. Now they were open, had heard about bitcoin already and asked newbie questions like what wallet to use.

Usage is also going up as a result:

http://blockchain.info/charts/n-transactions-excluding-popular
http://blockchain.info/charts/estimated-transaction-volume-usd
http://blockchain.info/charts/my-wallet-n-users

On the other hand, there is a good chance we might see another -30% drop. I think a lot of coins are in the hands of speculators who see bitcoin merely as a vehicle for making fiat money. These dudes will panic-dump easily (also many bitcoin-lovers will panic-dump if the drop is harsh enough, hoping to increase their bitcoin stash). I'm having a hard time guesstimating numbers, but I think a 30% drop is quite possible. $12 will likely hold and recovery might be very swift.

Overall I'm not concerned.

haha. I actually loled. Yes, this price rise was pre-planned by the bitcoin gods and/or satoshi.

Sure, any post in a speculation thead is either wishfull thinking or lying, but 50 Cents increase every day  for the past week without correction is unusual, and too scary for me.

At some point, someone decides that suppoert is to weak, and risks dropping 50.000 BTC, if that is a safe entry point for me,  depends on a lot of things.

I dont mind buying back at $40 if it is after a dump from $60 that looks sustainable, in such a case, I'm almost guaranteed a bounce back to $55.

Well thats how I trade!

excuse my ignorance. but when do you sell?

My stategy, some of you will probatatly think I'm the stupidest trader ever, is to buy in on dips and sell after a bounce back. In a falling market, it makes a lot of money. In a climbing market, like now, I',m only getting like 30% of profits compared to a guy who doesn't sell.

The point here ist to expose my self to as little risk as possible, the last year combined, I've only been long 15% of the time.

The reason is also that it is impossible to know when the market has peaked. The market low's are a lot easier to spot.

So in a climbing market I get less and less Bitcoin but more and more Dollars. When the market crashes, I get my 200-300% (with some luck).

That's pretty cool, I didn't realize TWRP accepts bitcoin.  Good job.  Curious if you have talked to anyone else like Koush (Clockwork recovery), Cyanogen, AOKP, etc. etc.

I usually innocently ask for a bitcoin address for a small donation after I've been helped by someone, as was the case here. I don't actively approach people and suggest they accept bitcoin unless I actually want to give them some (or buy something from them). So no, I haven't talked to these other guys. I would however make a donation to Cyanogen if they put the "application permission edit" feature back in ;) I really want that.

Post-Gingerbread this feature is much more difficult to implement.  If you have a Galaxy SIII and don't mind a TouchWiz ROM, Synergy was able to hack PDroid to work on JellyBean.  That would give you the feature you're looking for.  It's probably available on other phones as well but I only keep up with the one I have.

TooCasual's post #53 provides some interesting viewpoint. Thanks for this viewpoint! LOL, like I've gotten used to seeing BTC addresses on most poster's signatures, I didn't see one on yours(or your profile page). Maybe you don't need one. Nevermind, you could have gotten a bitcent as thanks, though now my bare thanks+keep it up! will have to do. :D

So it's not just speculation that's driving up the price. This may just be a normal price change in BTC where it will settle somewhere. As usual I'll wait for 10-15 days until the price settles somewhere with stability.  ;D

Here's my two cents. Pun intended.

Who says those greedy bastards don't have their grubby little fingers in it already.

Banksters are your enemy. For now they are our asset to gain the BTC.

I fear the banksters manipulation on the market itself...I mean they do control their money.

What I don't fear is the inevitable market bitcoin can provide.

It can and does provide(s)...black market, free market, food markets, product markets, and becoming your own bank without a teller is great.

Sooner than later you will see less exchanges and more markets...

The day you pay your electric bill in bitcoin is the day banks are destroyed by the people and for the people.

I eagerly await that day.

Heh, thanks.  But it is the reality of the upward price trend.  Heck,  If a large retailer (Starbucks, Amazon, etc.) or large financial firm went for BTC... We would really see a huge price increase. :) Supply and demand.  Look at the http://bitcoincharts.com/markets/mtgoxUSD.html   now scroll to the bottom.. See the the orange? They WANT it  (and yes the 80,000 is BTC at the different bids).... the Blue is the available to sell.  That in itself will drive the price upward. :)  Hold on tight its gonna get wild.  Could be humpy bumpy but still she's gonna surge upwards.

Also, for real info see the genius Clark Moody's site... fantastic.   http://bitcoin.clarkmoody.com/

Now you will see the green and red lines:  selling and buying (and then watch the Time & Sales) Some will lower the last trade by trading 0.0100 BTC consecutively... No volume though.  But it could cause others who watch the Bitcoin charts to have cause for concern (seeing the last trade price drop).  Its always really the volume not just the "last trade price" that dictates the trend.  Those multiple lower trades at 0.0100 BTC are the "day traders" trying to make cash on the difference.  Trying to interpret candle sticks doesn't mean much on this market really (well not for me yet.. as I'm only an intermediate trader.. not a pro :)  )... until it finally stabilizes at 300BTC or so.. LOL :D

So.. she ain't gonna be stable for a long while yet... up n up she will go.  Remember this is a world currency... I have to keep telling myself that too.

TC.

PS.. No doubt the early early adopters are very excited (the smaller blue line on the bitcoin charts volume) LOL, they prolly were the ones that bought in at 1BTC - 10BTC... now paying bills, mining gear, etc or a new car. :D haha

Just read these..http://www.bloomberg.com/news/2013-01-28/bitcoin-s-gains-may-fuel-central-bank-concerns-chart-of-the-day.html  http://venturebeat.com/2013/02/08/coinbase-bitcoin/

Also read they'll be 20 million and no more after that..?Really?

The number of Bitcoins will never exceed 21 million: https://en.bitcoin.it/wiki/Controlled_supply

No, it wouldn't, what will happen is most people see credit cards and continue fractional reserve banking. We are going to see more than 22 million bitcoins if it actually takes off.

Taken alone, this is false. Do you wish to clarify?

I assume that he means that because of fractional reserve banking, the amount of bitcoins and bitcoin-equivalents will be much greater than 21 million.

In FRB, when you deposit money in the bank, the bank then loans out 90% of that deposit. The actual amount of money doesn't change but the perceived/effective amount of money does. The total is now 1.9 times the original amount.

Even with bitcoin, fractional reserve banking is inevitable.

Also, people are mistaken when they think that bitcoin will destroy credit cards. People like credit cards because of the security they provide. They want chargebacks. Ultimately, even if bitcoin does take off, people will use bitcoin-backed credit cards (or paypal) because they want the ability to call up the credit card company and dispute a charge.

I don't think fractional reserve banking is likely to happen in bitcoin. Why? Because bitcoin already has very low transaction cost so the use of money substitutes doesn't make sense (added risk, no gain)

For the interested I suggest an awesome read: Peter Surdas (lonelyminer) master thesis ("Economics of Bitcoin: is Bitcoin an alternative to fiat currencies and gold?"), especially chapter 3.7 "Austrian Business Cycle Theory, fractional reserve banking, money supply and Bitcoin"

http://dev.economicsofbitcoin.com/mastersthesis/mastersthesis-surda-2012-11-19b.pdf


also see Peters blog for some great articles: http://www.economicsofbitcoin.com/

Your point is perfectly understandable, from a "consumer" POV, but if you look from the other side and be the real producer of goods and services I think you wouldn't say the same thing. Reversible payments are not the solution, but merchant reputation and post-sale support they you receive as a "consumer", btw I hate that word.

That's not security, that's insurance.  The security model for CC's is awful.

You need to differentiate between fractional reserve banking and credit expansion. Historically, they coincided, but Bitcoin makes it explicit that there is no necessity for one to lead to the other.

Reversible payments can be implemented with Bitcoin natively, without a derivative medium of exchange (escrow based on multi-key signatures). Based on the impression I got from the developers, multi-key signatures will probably become practically usable (i.e. the will have a working user interface) sooner rather than later. In fact, probably every feature related to payment processing and financial systems that you can think of is possible to be implemented with Bitcoin natively, and in a more efficient manner than it was historically the case, and be voluntarily agreed by the parties to the transaction (as opposed to centrally determined by the payment processor). Merely because it can't be accessed now or is not implemented in a usable manner isn't important.

The only two projects I realistically see as having a chance of bridging the gap between Bitcoin-FRB and Bitcoin-credit expansion are Ripple and OpenTransactions. They may be able to provide some features more efficiently than native Bitcoin. I still don't think it is likely, but if it ever happens, it would be through decentralised systems like these two rather than banks.

AGREED.

A lot has to do with media attention. It has brought a lot of new people into the BTC market. At least this is one of many reasons.

If the 50% assumption of hoarding is true...well it's nothing new. Hoarding has always been a problem in Bitcoin, has it not?

No it has never been a problem.

In the U.S., where the governments and the majority of the population routinely spend more than they earn, it is not surprising that saving (a.k.a. "hoarding") is seen as a problem.

Bitcoin incentive to hoard is not a bug, it is a feature.  ;)

Also many people may not realise but bitcoin can only stabilise once it has a deep market. A deep market will be signified by significant holdings of value inside the btc ecosystem. Because of the fixed limit of bitcoins this will only happen at much higher values w.r.t. to dollar, euro holdings etc ... i.e. 0.adoption => hoarding => higher price => more stability => goto 0.

It is a kind of all or none, with us or agin us, type of deal. We are shooting for the fences.

I'm musing about beginning the "Plato Club", people who have gone 'all in' on bitcoin savings. Plato and Rick Falkvinge would be honorary founding members of course.