Bitcoin Forum

They think this spike is a bubble, and cite usability as the major reason for the instability of the currency.

Daily Chart:  A Bit Expensive | The Economist (http://www.economist.com/blogs/graphicdetail/2013/03/daily-chart-12)

Thoughts?

Sounds like something written last year...

They should post a 15yr gold chart, and call it a massive bubble* for exactly the same reasons. They could make the same arguments; very few people using it for transactions compared to how many people hold it (probably far more exaggerated than bitcoin in this regard, I'd guess). The core point being missed: bitcoin actually doesn't need a robust consumer retail transactional economy in order to be highly successful. Like gold.


* If gold's a bubble, it's because demand for gold will transition to bitcoin. I'm coming around the Cypherdoc's assertion that there's only room for one dominant gold-like medium in this world, and bitcoin quite simply does gold better.

Every time BTC goes up in price, someone calls it a bubble.

And then it isn't.  Unless we're supposed to be falling down to single digits anytime soon :)

MSM have been saying it about gold for years, no doubt they'll take the same approach with bitcoin.
Something you just have to ignore or get used to, I think they just do it for attention.

They should have looked at "buy bitcoin" trend instead: http://www.google.com/trends/explore#q=%22buy+bitcoin%22

screw 'buy bitcoin', check out 'blockchain' !

+1

Gold has always been a bubble.  I'll never understand why people seem to fetishise it as the substance that is the basis for all value everywhere.  I mean, I understand the history and all that, but it's not the greatest currency ever.  Now that we aren't on the gold standard any more we should be trading it based on it's use value, but it's exchange value has very little to do with it's use value.  People seem to think that when the zombie apocalypse happens gold will be the only thing worth having, rather than, say, weapons or clean drinking water.

That said, in the event of a horrible apocalypse style disaster gold seems more stable than bitcoin to me (although potable water would be better than gold or bitcoins).  Bitcoin is only usable if you have the internet, right?  I mean, there is no physical Bitcoin protocol like the IP over avian carriers protocol, right?  (AKA RFC 2549) (http://tools.ietf.org/html/rfc2549)  In an apocalyptic breakdown of society the infrastructure will be one of the first modern conveniences to crumble.  Bitcoin seems ideal for protection from financial sector meltdowns and protecting you from statist thievery like what is happening on Cyprus, but not for serious breakdowns like, "shit, my government is harboring Bin Laden, we're about to get bombed into the stone age!"

 ::)

Zombie apocalypse: no.  Financial repression and monetary dilution: yes (or replaced by bitcoin).

Gold was money pre-electronics because it has great properties as a unit of exchange/account in such an environment (all the "ideal money" stuff; eg, durable, scarce, recognizable, divisible, fungible, etc). And even until 2009, nothing existed that bested those properties of gold. It's just that in the electronic era, humans developed a strong need to transact at a distance, so we developed surrogates acting on top of gold (eg, representatively pegged to gold) that were exchanged in its stead. All's well so long as the peg is preserved (else you can lose the "scarce" quality).

Turns out humans like to mess with the peg because changing it can generate short-term wealth (and votes). So the peg ultimately has to go, and we end up with a grand experiment in pure global fiat in the vacuum left by gold. Interesting times.

Nothing that has gold's properties while providing transactional utility in the modern world existed between 1971 (gold un-peg) and 2009, and look what happened... Global debt of completely unprecedented proportions. Now that we have the ideal solution for modern times, it will be interesting to see to what degree it can unseat the fiat surrogates that are currently in use as money.

No matter what, bitcoin is almost completely a monetary superset of gold (eg, gold has few good properties that bitcoin doesn't, but bitcoin has many good properties that gold lacks).

So gold eventually melts into bitcoin.

I'm a believer of the Bitcoin,
but this chart shows something interesting, the bitcoin/dollar has grown by 3 times while the awareness of the coin risen only by 1 time.
although both of the graph don't have linear relationship, I'm afraid the price is a bit too high.

On the other hand I don't really care as I see my self as a long timer and not trying to make money out of speculations

I think it's not only the awareness of bitcoin causing the price to rise, it's also people's trust in its security and reliability that has grown. Even a few months ago, I was still a bit hesitant about BTC's future. But now, after seeing it recover so easily from a forked upgrade, and seeing in comparison the problems that national currencies like the Euro are facing, I see the current price rise as being fully justified.

Exactly this! People google up bitcoin and dismiss it quickly. Some of those people will come back to bitcoin in a few years, intrigued why it hadn't died yet.

What may be happening is that we are growing in number of people who actually trust the bitcoin idea. Google trends doesn't show that.

I sure hope you are right.

I do not think the bitcoin should be measured by is value (although most of us enjoy doing so these days:) ) but by the number of business who accept it and the number of transactions. I hope I'll find a graph of that one day.

I dont see or expect linear relationship,
and your argument does not have basis because we are talking about the total numbers then and now.
I just want to see the bitcoin price goes up because of higher awareness, more transactions, better security rather then speculations and investors.

these two graphs are showing something, I suggest you to observe it a bit more, there is clearly some connection between the two and something has changed there in the past month

This is actually quite bullish.   Remember when the economist put on the front cover that oil was going to $5 back when it was in the teens???

Can you think of ANY reason why there may have been an unnatural amount of demand for BTC in the last month?   Ignore the world crisis because not enough people know about BTC.   What about gold dropping?   seems like btc and gold interest a similar group of people.   what about the gold rush machines that you need BTC to buy?

Coinbase, coinlab, reddit, namecheap, etc.


No, I will not ignore that because it has influenced my trading decisions.


What about it?  Gold bubbled in response to the 2008 crisis.  It is merely retracing a bit.  I don't understand what your last question means.

Even better, we should always provide some meaningful comparisons:
http://www.google.com/trends/explore#q=%22buy%20bitcoin%22,%20%22sell%20bitcoin%22

That is really not telling anything
as a person who knows how to buy a bitcoin sure knows how to sell it but not visa versa

But there is one interesting thing from your chart...
Look when was the last time "sell bitcoin" went up? june 2011
that's scary no??

Not scary. Each time this happens the snowball grows along the way. Many people think the true value of a btc in USD is either >1000 or 0. How do you expect it to go from zero to 1000? A straight line?

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What about it?  Gold bubbled in response to the 2008 crisis.  It is merely retracing a bit.  I don't understand what your last question means.
[/quote]

1. when you have selling in one thing, people rotate (usually into something else that they feel is secure (US$ or Tbills etc).   If there is a lot of overlap in gold believers and BTC believers it would make sense that some of the money from the selling of gold has rotated here.
2.  You need btc to buy mining machines.   and you need them by friday.

Oh yeah, the same thing the analysts told when people talked about a housing bubble. And last year?
Jan 15th: 1BTC = 10,50€
Feb 16th: 1BTC = 16€  ->  +50% growth within one month. Did get Bitcoins more attraktive? Can you buy now from Amazon? In bars? No!)
5March: 1BTC = 25€ ->  + 50% growth withing a half month. Again, Bitcoins did not get substantiall more valuable)
20Mrch: 1BTC = 50€-> +100% within another half month. Again, no big change in termes of attractivness to Bitcoin occured).

400% in 2 months but nothing happened to justify this change? I'm really a big fan of Bitcoin. But in my opinion it would be madness to buy now (a big amount for investment).

I believe the price rise is due to the increasing popularity of gambling services.  Don't underestimate the power of the hopelessly addicted members of our society as they buy more and more bitcoins to chase their losses.  We are witnessing the effects of a growing pool of internet gamblers buying into bitcoin to satisfy their addiction.   As long as the pool is growing, the price will keep rising.

Well, quite a few things that can justify an increase in value have happened. Reddit&co, traditional gambling sites and Cyprus being the major ones IMO. Still, I do agree that the value may be rising too fast now, so personally I would welcome a dip to enable me to transfer more money into bitcoin at good rates. [Disclaimer: I have savings in Europe]

Oh you are right. Cypres could have and impact the last days ;) Anyway. With my strategy (not buy) I can only win: If the cource falls down, I am glad, that I did not invest. I the cource will never fall Bitcoin  will establish so I am glad as well.

don't want to be rude, but that's one hell of an incompetent reporter...

slightly better...

http://www.google.com/trends/explore#q=%22buy%20bitcoins%22%2C%20%22sell%20bitcoins%22&cmpt=q

I would agree with that.  The chart juxtaposing the search engine interest with the value against the USD is interesting, though.

I wonder what a regression exploring the connection between various search terms and the BTC value against traditional currencies would show.

Ecomomists doubt everything. Their job is making no mistakes, therefore they're only talkers of wealth, not the holders. :D

I guess it depends on what we want to mean with "bubble". My impression is that right now, considering the large amount of hoarding that went on in the BTC world in the past two years, the price is destined to be unstable. IIRC the share of never-used bitcoins in the network was estimated at 78% sometime last year, probably lower now, but still large. Some of that share is no doubt lost forever, i.e. wallets that were lost during OS reinstalls etc. back when BTC was worthless, but some is going to come back to the market at some point, especially if it was originally mined and then hoarded by savvy early adopters thinking in terms of the long run. We can't know anything about how this will pan out, and it is bound to cause fluctuations.

Also, with all the different opinions and uncertainty surrounding "usability" there's going to be ups and downs, i.e. if even a single new real-world company should announce that they're accepting BTC there would be a spike not because people are after the goods and services provided by the company, but because it would be received as a sign of credibility of BTC (hence becoming progressively "too big to jail").

So yes, IMHO there's going to be volatility, and short-term bubbles. As for BTC being a bubble in the stronger sense, i.e. destined to amount to nothing in the long term, I'm really not convinced at the current time. There's arguments in favor of both sides and my impression is that it's too early to say. I don't think we're going to be able to understand this in the next 6 months - 1 year, it's going to take longer than that.

http://www.google.com/trends/explore#q=%22buy%20bitcoin%22%2C%20%22sell%20bitcoin%22%2C%20fiat%20currency&cmpt=q

i like this one

To me, demand seems unnaturally low.  It is unnatural that more people don't want bitcoin.  The demand is the reality though.

WHAT THE HELL? What is AU 100?