Bitcoin Forum

Yesterday night there was 1.1 BTC per $. This morning it was 0.9 BTC per $ briefly.

- Small core community.
- Not many services. People mainly using bitcoin as an investment vehicle.
- Sharp increases in value.
+ Linux users tend to be idealists and not invest in something because of money necessarily.
+ Lots of outside interest recently.

I conclude a large chance of a bubble soon happening.

I disagee.  Up, up, and away!

not sure if the arguments support the call for a bubble.

As with stocks, you can't buy anything with them and still people buy them when prices increase.

The technical picture is very bullish, supported by the underlying volume. Currently, the probability for further rising prices is in my opinion higher.

A bubble is imminent or the bursting of the current bubble is imminent?  I think a lot of people have good faith in Bitcoin, and there are a lot of new users (buyers) pouring into the system.  I had some sell orders in around USD 1, but I withdrew them.  I don't even like the idea of holding dirty, government money any more. 

What is a bubble ? something that pops and dramatically loses value?
I'm not going to be selling my coins cheap(er) in the near future and wonder who will?
I prefer having bitcoins than my swiss francs (and bank) personally and way more than any stock, option, derivative. And even more vs Euro and Dollar.
Nobody knows in the end but I personally feel we are far from a bubble and there is more and more, some will say small and meaningless, but there is still more and more businesses accepting bitcoins. The changes in mkt value is positive as a sign more and more people are entering into bitcoins.
Plus it serves as an incentive as coins you accept now at market value can be worth more in a few months time vs less purchasing power when accepting fiat money.
A bubble in fiat money and their next quantitative easing operation is much more likely in my humble opinion.

There are fundamental supply and demand reasons to expect bitcoins to continue to deflate. We are, like any currency with no inherent value, vunerable to runs due to lack of confidence. The reasons that people believe that bitcoins will continue to deflate are not solely based on past deflatation, but on the inherent cryptographic and economic basis of bitcoin. This means that we won't pop like a bubble. A bubble is when many people believe that the asset is overvalued, but want to ride the wave until it falls. Those types of invester we flee at the first sign of trouble.

I agree.

As long there is no technical weakness of the protocol and there is no reason to lose confidence in the network from the technical side, Bitcoin is most likely to rise forever (of course with spikes and falls).

Only the speed of the deflation can vary, and there can be small or medium bubbles which would be caused by overspeculation, but in the long term Bitcoin should always rise - as the number of goods, services & currencies offered for it will rise.

The only thing that can really harm bitcoin is some heavy mathematics or a bug, which would break the cryptography used.

I think the sociological risks are dominant, and under-recognised.

Suppose there is a virus that deletes the wallets of 1% of the Bitcoin users. I think that would give Bitcoin a bad enough reputation that it would not be adopted by the general public, only by tech-savvy early adopters like us.

The "word of mouth" would be "Oh, I don't use Bitcoin. I've heard about how your wallet can just disappear."

Those remarks are eerily reminiscent of Alan Greenspan saying that the housing market is not a bubble, but may "experience a slow, gradual decline". If an asset price is largely speculative, there is no such thing as a slow decline. Once it loses 10-20% speculators freak out until the price reaches a more realistic price.

Bitcoin will either find widespread adoption, or it'll remain an obscure toy for contrarians. I own 5600 Bitcoins. In the former case I expect they will be worth more than USD 1 mio, simply because to accomodate such use, the Bitcoin economy would have to expand more than 200-fold. Conversely, they may not, in which the Bitcoins would be worth a few cents, certain below what they are trading for now. (Certainly everything in between is also possible. :D)

It's calculated risk. It's certainly possible that the price will drop sharply on some bad news, maybe from 1$ down to 0.1$, maybe from 10$ down to 1$. In any event, I'm holding them partly as a long-term investment and partly because for those things that you can buy with Bitcoins, they are actually really convenient.

Or maybe a superior successor to Bitcoin. The field of crypto-currencies is still young and little has been tried. If a new system would appear that combines all the advantages of Bitcoin while fixing some of it's disadvantages (doesn't scale to well, takes a long time to verify transactions) in some smart way, it might replace Bitcoin fairly quickly. Those who switch last to the new system will be left with Bitcoins that nobody wants anymore.

However: Maybe the creators of such a successor system might make it recognize current Bitcoin wealth. The genesis block of the new system could include a snapshot of the latest Bitcoin block. That might actually be a good way to jump-start such a system among current Bitcoin users.

The new network would have to be totally technologically superior to the current one.

That could work, providing another Satoshi-like (japanese ?) genius happens to come along and make a new revolution on top of the current revolution.
Otherwise, IMHO unlikely.

Excuse my ignorance, but could it be because of processing power or to avoid lagging the network? And is it not possible to add these additional hash functions?

I just think that we do not really need that functions.
And we do not need any fork. Why should we split?lol
Nothing will help if someone can easy break SHA-256.
It is senselessly to use a set of locks on an one door.

I don't think the purchasing power of Bitcoin will increase that much (although I'd love it if you turn out to be right).

As Bitcoin becomes popular, more and more people will use "convenience" accounts that are nominally tied to bitcoin but not fully backed.

A "coffee card" for Starbucks, for example, might be denominated in bitcoin, but Starbucks might not hold enough bitcoins to enable them to buy back all the cards (just as they don't hold enough coffee beans in stock at one time to fulfil all the coffee cards).

Many people will buy things with bitcoin-based credit cards. Again, the denomination will be bitcoin but there won't be 100% backing.

Even it bitcoin completely replaces dollars, I think it's erroneous to assume that 21 million coins must have a purchasing power equal to the value of the entire economy.

And here we go again, seems that history will score a loop.
80 years ago we had similiar situation. First, everything was backed, and then value was robbed by government from american people (when they took the gold away after great depression).
Will the same happen with bitcoin after/if it replaces gold ? Will it be replaced by fiat currency, of which government says it's backed ?
I don't think so. Unless they shut down the internet completely to seize control.


Lucky us. Contrary to gold, using Bitcoin one can convert his home into digital Fort Knox and store as much value as he wants in it practically without the possibility of thievery ... So i don't see any need to store some bitcoin-based currency. I choose to store the real deal.
That would not have been possible before the internet era.

This is truly the century of wonders.

I'm not saying it's good that there will be non-backed bitcoin-denominated transactions. I just think that it's inevitable.

I hope that "actual bitcoin" will always be perceived as superior to "denominated in bitcoin".

mtgox has low volume- everybody buying up

The quantity of bitcoins  put into circulation in the second year was the same as in the first year, this is relative money supply growth of 100%.
The third year it will 'only' be 50% 33% money supply growth. The fourth 33% 25%. Suffice to say, in the start-up years inflation will be necessarily rampant.

It is amazing they are increasing in value in the face of such an onslaught of increase in money supply, relatively speaking. That or they are just not circulating (hoarding).

edit: bad numbers.

If money supply grew 100%, and number of currencies/goods/services offered for it grew 500%, then increase in value is really nothing unexpected.

As there is no 100% reliable way to calculate how much stuff is offered for Bitcoin at any time, then the growth could have been 1000% or even 10000%.

yeah, totally...

http://img593.imageshack.us/img593/6724/screenshotbjj.png

We have been slashdotted twice & podcasted lately, so the user base may have grown 200% or something in the last 2 months, which can explain that.
This chart should look like that if the userbase grows many times faster than new coins are digged out from the ground, which is happening with high probability.

Anyway, even if this is a bubble, then that's even better. I can't wait to buy new bitcoins cheap - I'm investing in the long term ;)

if that grows any steeper then the value of bitcoin will loop back on itself.

which is good because we'll go back in time so i can buy loads of bitcoins before it increases in value and repeat the process = infinite money. genjix: 1 market: 0

The chart is deceptive. It really should be using a logarithmic vertical scale.

If you invest $100 by buying bitcoins, a rise from $0.07 to $0.14 is just as profitable for you as a rise from $0.70 to $1.40, but it doesn't look that way on a chart with a linear vertical scale.

How does "low volume" lead to the conclusion "everybody is buying" ?   The observation "low volume" should lead us to conclude that very few people are buying.

because it means people are hoarding.

If they will be hoarding for a long time then the effect will be exactly the same as if there were less bitcoins on the market (less goods -> prices rise).

However, now if a major player (or mass of minor players) comes to the market wanting to buy a large amount of Bitcoins, the price would totally skyrocket (5x-10x or more).

That just means they're hoarding. It does not mean everyone is buying, and it doesn't say anything about what they're waiting for before they're willing to sell. Seems to me like it's kind of a standoff now - no-one's willing to sell below 1 USD, but few people are willing to buy at that level either, so everyone's waiting to see who blinks first. Maybe the volume being sold now is a decent reflection of the general volume of trade done with BTC without speculation driving the exchange trading.

My own gut feeling is that absent new, big buys pushing the price up again, speculators will soon start flinching and selling, bringing the exchange rate down.

There are many reasons for the growing price of the bitcoin.

1) More users
2) More goods and services offered
3) A lot of people hoarding them.
4) Ben Bernanke

Many people says precious metals prices aren't going to the moon after QE2 because JP Morgan is manipulating the market.
If that's true, maybe bitcoin price is a better way to watch the depreciation of the dollar than gold price.

I don't know how the dark pools work, but it seems to me that someone with a lot of bitcoins is selling them at 1.05 and that's why the bitcoin price doesn't keep on rising. Let's hope Blythe Masters didn't hear about Bitcoin and is suppressing its price to hide Bernake's sins just as she's doing with silver.

The dark pool point is interesting, would those trades show up in trade volume on MTGOX? If not, then it's conceivable the recent large buys that led to reaching parity are now being converted back into USD at some profit. Haven't looked at the amounts bought then to see whether that makes sense.

edit:
Did a small test buy, there does seem to be someone selling at 1.05019 in the dark pool.

Yes, dark pools show up in volume after the fact. But there are surely plenty of trades happening off of any books, not to mention all the trades for goods.

Mullvad has dropped prices again, now 6BTC/mo. Does anyone know what their very first bitcoin price was? I think I remember 60BTC, but I'm not sure.

The economy seems to have held pretty steady week compared to the rapid increase two weeks ago.

Darkpools could certainly be a factor:


The price on Mt.Gox rose up to 1.08 yesterday, so there is still some volume moving around that pool, but it does explain some trends.

Holding and buying are two entirely different things.

I did the same, i withdrew orders from 1.30, think about it, in second life the economy reached a total amount of 28 million usd dollars, compared to btc (there are 5 million bitcoins right now) it's 6$ per btc and Second Life is for losers....
btc can go much higher then 6$/1btc, it's reasonable to look for 25-30$ for 1 btc within 2-3 years from now.

It will be interesting to see how big this dark sell order at 1.0519 is (we will only know once it is cleared).
Since Feb 15, it looks as if approximately 6000 BTC have been sold for this 1.0519 price.
http://bitcoincharts.com/charts/chart.png?m=mtgoxUSD&k=&r=5&i=&c=0&s=&e=&Prev=&Next=&v=1&cv=1&ps=0&l=0&p=0&t=S&b=&a1=&m1=10&a2=&m2=25&i1=&i2=&i3=&i4=&x=0&SubmitButton=Draw&1297976972066

And to reiterate my opinion based on the technical analysis.
THERE IS NO BUBBLE IMMINENT.

But if you bought at $.07 and it goes up to $1.4 then the chart is correct.  That's a 20X return!!!  That's more than a 4 Bagger!

(If it doubles once it's a one bagger.  Twice is a two bagger, etc.)

What is the intended purpose of the dark pool on Mt. Gox? Is it just a perk for people with lots of money?

Then how come the price of BTC has gone from 1$ = 0.95 BTC to $1 = 1.06 BTC overnight? The bid price on mtgox is now 0.91 ($1 = 1.1 BTC)

Last 48 hours,
http://img713.imageshack.us/img713/1252/screenshotcco.png

Price is starting to swing now that the effect of the dark pool's coverup is weakening.

Everytime the currency market experience a deep plunge, people goes panickly:

"IT MUST BE A BUUBBBBBBBBBLE! WAAAAAAAAAAAAAAAAAAAAI!"  

::) ::) ::) ::) ::) ::)

What do you expect? Price is going to keep going up and up? It's going to correct sooner or later.

For the love of Eris, we experienced the greatest height of bitcoin popularity so far. And we're going to make an all time high bitcoin posting record, made membership record, and made all-time high downloads. We got slashdotted again, and a popular radio show sent us a gigantic amount of traffic!

It's going to takes a few weeks for new services and goods to pop up eventually.

The price went down because one or two people decided to sell relatively large amounts of bitcoin. Just like it previously went up because one or two people decided to buy large amounts. It seems anyone with about 10,000 USD or even less to throw at it can get people really riled up in this market.

In the bitcoin world, right now $10,000 is quite a lot. So if this is the case, that is just a few players with 10k are buying, selling then the reaason for the large swings is that the market is relatively small.

I agree. It also makes me wonder whether this is a possible attack vector against the market at this stage. A relatively small sum of money can be used to introduce significant instability into the market. Probably not very efficient though, I guess over time speculators would catch on and start to anticipate the up- and downspikes. Also it remains to be seen what the rates settle at after the last drop. I'm actually a little surprised that the effective drop was only 10% or so.

Currently, there's a little under 2000 BTC being sold at or below 1USD/btc.

Indeed.

As long as there will be influx of new people/services/currencies for trading, there is no chance of such strategy to ever work.
The price will be instable, but still rising, which is the whole point. Everybody wants tomorrow's bread to be cheaper that today's bread - this is the reason Bitcoin was created in first place - to avoid government thievery by inflation.

This is misleading, in the current expansionary phase, the bitcoin money supply is exploding by any traditional monetary measures.
The year on year percentage expansions in the first few years will be 50%, 33%, 25%, 11%.
https://en.bitcoin.it/wiki/Controlled_inflation

After 6 years the monetary expansion of BTC will still be 10% and only after 13 years will it drop below 3%. A hard money gold standard, where monetary expansion is the amount of gold being mined and added to the above ground reserves, has an expansion rate of about 2.5% (amazingly this has held true thoughout centuries). Bitcoin monetary expansion will not drop below gold expansion until 13 years has passed from the production of the genesis block.

An expansionary phase is inevitable with the bootstrapping of any new currency. There's no other way to do it.

A fairly safe assumption is that the growth in the number of users will exceed the monetary inflation during the early "bootstrapping" years. There is controlled and fairly predictable monetary inflation, but probably not price inflation.

2 days and bitcoin has gone from 0.95 BTC / $ to 1.16 BTC / $ ;D

LOL I was right! SUCK IT!

http://img231.imageshack.us/img231/1700/screenshotmg.png

So did you sell? Maybe you were the one who triggered the drop...

It might be interesting to collect predictions by different people and, a year later, see how they line up with what actually happened. I (OK, my ass) predict little long-term success in predicting the behaviour of the market to any reasonable accuracy.

1. What, you call this (drop drom 1.05 to 0 .82) a "bubble" ? Well, if that is a bubble, then i want all bubbles to be like this.
2. Usually after fast rise there is a correction. It's starting to rise again, and this time the rise will be more permanent.

It appears that we forgot the last bubble.

huh? by bubble I do not mean a crash to 0... Just bitcoin losing 1/4 - 1/2 of it's parity value.

Well, this "bubble" dropped bitcoin by about ~22%, so not a big deal.
IMHO bubbles like this will always happen, however they should get smaller as the BTC economy grows.

I like this very much anyway, because i was just planning to buy more BTC and this is the perfect opportunity.

http://gyazo.com/d24a2d3043705f5768e41e608b0f7b2f.png

Pop?

Something's up on bitcoin central.

I think it would be good for people trading bitcoins to study or at least inform themselves about how financial markets work before starting it or even wildly speculate about what is happening.

For example, what is happening now is a normal correction that happens all the time in markets.
standard corrections retrace between 38% and 62% of the recent advance.

This means that retracements of 1.1-0.5=0.6 * 0.38 = 0.23 or 0.38 $
results in either 0.87 $ (already exceeded) or 0.72 $.

A larger retracement from the 0.17 bottom can lead to a correction down to 0.5

all this is completely normal in financial markets and has nothing to do with bubbles or bubblegums ;-)

Yeah, because as we all know bitcoins can only go up. Buy now or be priced out forever. The bitcoin supply  is finite and the demand is infinite. Just like houses. You know, they are making no land anymore. 

There are never any bubbles in the markets and everyone will be rich. You just need to buy.

Something weird at bitcoin-central for sure.

At what volume is this exactly ?
The charts at Bitcoin-central are not very precise.

OK, i found better ones:
http://bitcoincharts.com/markets/

Volume = ~1121

As much as we all dream about ever rising bitcoin value,
there is not a single financial or commodity or land or housing market that goes up in a straight line.

And cuurently there may be some people interested to drive the bitcoin value down to be able to buy cheaper again.
this could be the reason why someone crashes bitcoincentral bitcoin value to 0.1
this can be done with minimal funds as the market is so illiquid.

So you suggest that eventually everything goes up just not in straight line? And how long must the leg down be to decide that it is no longer going up?

I'm sorry but bitcoin has zero intrinsic value. Just like fiat. The only thing that makes it valuable is the supporting economy of goods and services that can be traded for bitcoin. Growing a bubble is not going to strengthen it. And there is a lot of bubble mentality on this forum. Like this post:
http://bitcointalk.org/index.php?topic=3713.msg52668#msg52668

If bitcoin continues to go up in value without the bitcoin economy following, it will finally crash. And if the mass market learns that bitcoin is another "beanie babies", it will never become a global medium of exchange. It will remain a toy for geeks.

I could not agree more with you.
I am not saying it will always go up. Only currnetly, the market has been going up in a stair-step pattern and there is not (yet) anny reason to declare a crash or bubble.
As long as the longterm trend is up (trendline, see my chart analysis) the overall bitcoin market is in a strong uptrend.
If this changes, it might crash.
If the uptrend holds, then the underlying reason may be that bitcoin gets more wildly accepted which supports BTC/USD prices.

I don't get it, all they did was get rid of coins at a lower price than they could have gotten, the ask is still the same of course, they can't buy cheaper for it.

It looks like a bug or exploit to me.

The numbers I saw show 885 BTC traded at an average price sold about $0.76 per BTC.  That's about $0.10 per BTC lower than the highest available bids on other markets.

https://spreadsheets.google.com/pub?hl=en&hl=en&key=0AmcTCtjBoRWUdDdfVndrRkhNMzFIQXJjbnFNcDVJTlE&output=html

Those trades chewed up each and every piece of LRUSD and LREUR that was bid.  It is almost as if the seller didn't care that the trade wasn't rational ... like what would happen if the seller wasn't the true owner of the bitcoins being sold.  I'm speculating here, but I cannot think of any other reason to sell at a price so far below market rates.

a simple explaination is that the person wanted to get the market price down without harming the overall sale (this is what you see in the average price of 0.72: this person has driven the market to 0.1 and still got an average price of 0.72 $

these things are always happening in financial markets. big players = big banks do that all the time.

I am not saying this is good, it's just reality.

Agreed.  And that's almost become one of my mantras:  it's not about mining.

This most recent wave of slashdotting (and Security Now'ing) has brought a lot of mining activity and interest in mining, but I've been disappointed that forum posts about interesting new bitcoin businesses were notably absent.  In the past, we would see a flurry of new posts to the We Accept Bitcoins (http://bitcointalk.org/index.php?topic=30.0) thread (now en.bitcoin.it/wiki/Trade (https://en.bitcoin.it/wiki/Trade)) and the Marketplace forum.  Not as much activity.

If bitcoin is to survive, it needs a wealth of goods and services available, in multiple countries.  Bitcoin cannot exist without the bitcoin economy.

Just like everything else. "Intrinsic value" is a contradiction in terms, like "squared circle".
http://www.thefreemanonline.org/featured/the-fallacy-of-quotintrinsic-valuequot/


Even if it happens - and I don't think it will -, fine enough. It will remain a good way to protect your savings against inflation, like precious metals, only better.

Dollar/Euro has value ONLY because government says so.
Bitcoin/gold/silver etc have value, because people believe so.

That is nothing like fiat.

No. US government can claim anything about US dollar in the USA. They can force you to anything. But abroad, US dollar is valuable because there is an economy that supports it and indeed people believe it's valuable.

Says someone who effectively shorts BTC by selling mining contracts instead of mining on his own. You believe in bitcoin so much that you'd rather have payment upfront with fixed prices. Oh, irony.

By the way, care to explain how to short BTC on mtgox? Without having them?

No. You are missing what is cause and what is effect here.

People believe that dollar is valuable, because other people believe that it is valuable, because other people in the past believed that it is valuable, because in the past, government said so.

So the chain is belief/psychology <= belief (now) <= belief (past) <= government says so (past).
It all holds on the government's statement that it is valuable from the past. If we remove that from the equation, whole thing falls down like a house of cards.

Fiat currencies are "legal tender" bullshit. Bitcoin is not.

Of course you are mining on your own because there is no better way to utilize your spare capacity. But you wouldn't set up this whole business if it was just for hedging.


Shorting such an illiquid market is a stupid idea unless you are large enough to manipulate it. One single idiot with not too much money can force a big fat margin call on you. And also market can be irrational longer than you can stay solvent.

Don't all of you get me wrong.  I wish Bitcoin success. It's a clever idea. But pumping the BTC price is not a way of achieving it. We'd better have relatively stable BTC prices and growing bitcoin economy than a crazy bitcoin gold rush and later bubble burst.

Too much emotional investment here. Try to be more objective.

I think BTC is going to rise its value if it's denominated in USD. If it's denominated for example, in gold, probably it's going to drop in value.
I believe neither Bitcoins, dollars or gold have any "intrisic value". I think that none of them are well suited to be money. BTC and gold are deflationary (better for the saver) while national currencies (I'm including the euro here) are inflationary. In the past, gold didn't has to be deflationary if the production of gold was greater than the "economic growth". None of them can reach price stability.
The three of them, are scarce and that leads to interest, which is the worst a monetary system can have.
Gesell suppresses the interest with demurrage. It also have another benefit: the velocity of circulation becomes higher and the prices more controllable by the central banker. The flaw in Gesell's design is that you need a government to issue the money.
That is the advantage of BTC and gold (or precious metals in general). Owning gold makes you more vulnerable against a government than owning bitcoins.
LETS and Ripple avoid the interest by removing scarcity. The stability of prices in this case depends on the unit of account. They don't need a government but are vulnerable to them. Ripple could be less vulnerable if it's software successfully emulates bitcoin.
I want bitcoin to succeed because it's a step forward (away from the government) unlike going back to gold which is the more likely outcome when national currencies eventually crash in cascade.
I've invested all my savings (note that I'm not rich) like this:

172.54€ in BTC
914€ in Silver

I'm sorry for this weird post.

Would you want a "price stable" currency versus a deflationary currency? How would you achieve this stability of price? How do you determine if there is too much of a supply or there should be increase in the supply?

With Ripple (and LETS), there's no limit to supply. The stable prices just depend on the unit of account in transactions. There are other claims for currencies that allow price stability.

1) Gesell said that central banks can't achieve stable prices because they can't control the velocity of circulation. He said it can be controlled (and stimulate it) using demurrage. Then it would be easier to for the central bank to correct the changes in prices by issuing more money (giving them debt free to the government) or by letting it disappear with the demurrage. I can't recall it, but maybe the government was responsible to give money back to the central bank for destruction in deflationary times.

2) The terra (http://www.terratrc.org/) has demurrage too and is backed by a basket of commodities.

3) In a Ripple-like system you could create a currency dependent of the price of a basket of commodities. Since ripple doesn't need to store the commodities to "back the debts" and the currency is just a unit, the basket can be composed of any number of different commodities. However you measure inflation, you can use that to define a currency in a Ripple or LETS system.

I personally like the third solution.

Um. I am drawing a blank.

Maybe a few more links can help with that:

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

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

http://en.wikipedia.org/wiki/Terra_(currency)

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

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

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

Please define "stable prices" and then prove that "stable prices" are even possible when there is more than one person and more than two goods in existence.

It needs miners too though doesn't it?  If (when  ;)) bitcoin starts to catch on as an alternative to Paypal then it's going to grow like mad.  For small payments for Internet provided services bitcoin is just so much better.  If it does gain that kind of interest then there needs to be sufficient processing power underpinning the system to prevent powerful agents from doing monkey business. All in all, I think the whole system is developing very nicely.  I'm not sure it was all planned but it quite amazing to behold.

There is another name for "price stability", it is called "price controls".  If prices are stable, it is a coincidence and only possible of there are no new developments in any industry, people are born and die at the same rate, and do the same thing tomorrow that they did today and yesterday.

I do not care what you do with a currency it is not possible to maintain stable prices between any other pair of goods.  And if you accept that principle, then trying to maintain a price ratio between the currency and the average of all other goods is down right foolish! 

Bytemaster speaks the truth!

Ok, then I should define price stability as "abscence of inflation and deflation".

Hm. Not possible AFAIK.
At least it probably haven't happened in history in population larger than a village without any government-enforced regulation.

As a new bitcoiner today one of the first mystery's for me was...why is a bitcoin worth so much when there is very little commerce to back it up?, where is the demand coming from? and how is that demand sustainable when the bitcoin economy has so very little need of bitcoins to function...as a fundamental investor and keen chart watcher i just cant see the current exchange rate as being sustainable, the bitcoin economy needs some substance..needs some fundamental drivers.

The price is partly driven by future expectations.

Every month the amount of bitcoin-denominated commerce has increased. It's a simple extrapolation to see that the limited supply of bitcoins will need to be worth much more in the future to support the ever-growing amount of bitcoin-denominated commerce.

People aren't buying a bitcoin today so that they can buy a loaf of bread today, but many people are buying a bitcoin today because they might be able to buy ten loaves of bread next year.

Or maybe none, if Bitcoin fails, because it's highly speculative for sure. If, like me, you think the fundamentals are sound, it's not such a big risk.

1. I think that the early adopters of gold were also thinking that way. But then, there rose more and more markets for gold-to-goods and backwards exchanges.
Once people start believing that something is valuable, it is only matter of time before others will want to trade stuff for that thing.

2. More markets are being created as we speak. Just look at the "Market" section. They probably need time to unfold wings.

3. Due to the nature of Bitcoin, big, "traditional" financial institutions will be very suspicious & careful when trying to invest in it. So mainstream adoption will probably take some time.


Hmmm....

Aren't expectations enough ? After all, price of dollar is driven by expectations only.
People expect that it will be stable & have value, because other people think so, because government said so in the past.

This is pure psychology. No "inherent value" at all.

I have read many times that bitcoin needs more goods and services offered in return for bitcoins, but...

I think it might also be, well, let's say "nice for those who do make such offers" if there were also more actual taking up of such offers.

My landlord put is as "show me that someone actually bought something from you using bitcoin".

Mind you he also wanted to see me actually sell a bitcoin, dumurred at me doing it via IRC, and even seemed to somehow construe my response that I'd have to sell ten rather than one due to mtgox's minimum transaction size as somehow also indicating some kind of scam.

(I suspect though that this was partly an entanglement between his offer to give me a loony on the spot he held it out offering it to see me actually sell a bitcoin. I am thinking he kind of took me as indicating he should give me ten loonies. We'd both been at better off going to bed part of our wakecycles.)

But his basic argument is that like any other ponzi of course the people who got in early and profit{|ed} the most from it want it to *look* like people are really using it for real but fact is, go try offering things in return for bitcoin and does it turn out yes there is in fact plenty of people eager to spend their bitcoins? If it is a ponzi of course there won't be, because no-one is in it to buy stuff with it, they are there to play the ponzi game...

-MarkM- (Yeah I sell stuff, even give discounts if you buy using bitcoins. So join the game, there are real merchants to make it look legit...)

Offer food, and I will (not just diet shakes and snack bars).  Food is the only thing besides bills I spend money on regularly, BTC or otherwise.  Blowing all my bitcoins on pizza doesn't seem wise, but if I could get good prices with reasonable delivery on bulk items I probably would spend a few BTC.  Amway just doesn't have much to offer that I want.

I think most of us are the same way. At least I am.

Well yeah, typical people probably don't typically buy their fresh groceries, maybe not even their frozen groceries, maybe in general their groceries of any kind, online. (I can buy lots of kinds of shippable food via Amway, but not cheaper than pre-shipped stuff already sitting in a nearby Walmart or Sobeys or Superstore or Sainsbury's or Marks&Sparks...)

It also would not surprise me, though I have not actually checked, to find that buying one's books at a discount from Barnes and Noble by going to Barnes and Noble via the Amway site, might not beat Amazon's prices. Barnes and Noble never struck me as being a "low price is our selling proposition" kind of place. But as I said I have not actually compared their prices to Amazon's. Typical people maybe don't read anyway so typically don't buy books anywhere, online or off.

If you want to buy stuff offline using bitcoin having more online businesses accept it isn't really a whole lot of help probably. Most offline businesses probably don't accept any online payment systems, they accept offline payment systems that most online payment systems have pretty much been forced to have to also accept, such as credit cards and fiat currencies...

So don't bother telling we netizens that more of the grocery shops you shop at need to accept bitcoin to make bitcoin more acceptable, instead go tell more of the grocery shops you shop at that they need to accept bitcoin to make themselves acceptable!

-MarkM- (What, you don't take bitcoin? Darn, can't buy these cartloads of groceries here then sorry. Be a good clerk and re-shelve it, thanks...)

+1

Also selling contracts to mine should not be looked at as anti-bitcoin.  There are MANY reasons to structure a business that way. One of them is the up front capital, which could be used to expand business, mine more BTC or just for the money now aspect.  For every market niche there is a potential business opportunity. 

Shorting bitcoin would be not possible without some kind of deposit or collateral otherwise the person offering the market to short could be on the hook to back up the possible increase in value of BTC. I could without a deposit or collateral short BTC and only take my winnings if I win, I could walk away otherwise if I am on the loosing side.

I disagree, but then again, my eating patterns are very different than most Americans.  I generally buy bulk grains, beans, nuts, and other items to supplement the food from the garden and the meat (raised and hunted).  The prices are good and the shipping isn't reasonable.  For example, bulkfoods.com offers $5 shipping on any order over $75, and they have some really great deals.  Also, their ORAC Chocolate Berry trail mix is fantastic.  I'd donate 50 BTC if anyone gets them to accept bitcoins.

Its only a matter of time until someone sets up shop as a market maker (type) CFD provider here, potentially good BC in it if the clients and spread are managed well...i keep thinking this just cant be legal? it will take me weeks to get my head properly around all this.

I looked into this too, and I found the same as Vladimir, although I think you could meet FSA requirements for a bit less, maybe £200,000.

The UK does not have the same "bottom-up" entrepreneurial environment that, say, the US does. So new technologies are most often introduced by some existing big company deciding to branch out into the new field. And often they need to get the regulations rewritten to make it possible. The BBC and PayPal, amongst others, did this but it's not possible for the "little guy" to do the same.

For this reason, none of the big internet technologies were developed in the UK. None the new business models (as exemplified by eBay, Amazon, CraigsList, PayPal, Google, YouTube, Flickr, etc) originated in the UK, even though the UK makes up a large percentage of internet users.

The best we did in the UK was a couple of websites that started selling last minute holidays, or listing real estate online. And all of today's big UK internet sites are divisions of pre-internet businesses (e.g. the BBC, or newspapers, or bricks-and-mortar retailers).

That's an interesting thought. A bitcoin-oriented VCT would be a great vehicle for investors to use, because there are substantial tax breaks.

But I don't think it's so interesting to actually create and operate the VCT, because what you earn is the percentage that you collect as trust manager (ballpark 2% to 5% a year, I think), from which must be deducted the administrative and compliance costs.

Operating a VCT is, I think, a reasonably profitable occupation. But if Bitcoin grows as rapidly as we think it will, it will be more profitable to be investing into the Bitcoin businesses, than to be operating the investment vehicle.

Sorry guys...i meant setting up shop as a CFD (or similar) provider in the BC world, offering a way for BC speculators and investors to hedge or simply punt on BTC/USD movements....no FSA requirements would be relevant i would think as all transactions would be in BTC.

Or am i missing something  ???

not really. miners are needed only to finalzie a block and publish transactions that occured since the last block was finished.
this way confirmations are created.

what about "US can ivade your country (alone or with allies) if you have something they want and you refuse to trade with them in us $"

i'm asking this question since i came here
it's not about expectations, it's plain speculation.
inviting new "miners" just like low credit rates fuelled the real estate market
something went wrong a month ago.

Even if the current pricing does reflect a "speculative gold rush", it's inevitably self-correcting so it's nothing to worry about.

Personally, I think the speculative bubbles are yet to come. They will happen, and a lot of people will get rich, and a lot of people will get poor as a result. But the bubbles will be driven by large numbers of people (e.g. after Oprah mentions Bitcoin on her show, or Bart Simpson gets into Bitcoin).

The current market price, being determined by a few thousand early adopters who are mostly of above-average intelligence, isn't a bubble as far as I'm concerned.

Unless the shoe-shine boy wants the bitcoin so he can pay his rent...

I think that since QE2, many people are trying to protect their wealth by selling dollars. Maybe that's why bitcoins have increased its price so much.

Panic selling the USD for BTC  :D i doubt it...IMO the current exchange rate is the result of speculation and hoarding, there's 5 million BTC out there yet only a fraction of that gets turned over at exchanges, just look at today's MtGox spread, High:0.97Low: 0.845 with that sort of volatility the exchange rate could go anywhere.

---------------

I'm sure there's a reason why MtGox doesn't have USD accounts? i mean why the muck around with liberty reserve?

Wrong, there's just not enough speculators to stabilize exchange rate.


It's called paypal screwing with people.

Just like there aren't enough speculators in the gold market to stabilise the gold price?

Bitcoin probably fluctuate more than gold price fluctuate. The point is, there's a lack of volume. If you buy 10,000 dollars worth of bitcoin, it's going to change rapidly.

Yeah, it would move the price by about 10%, this is temporary though. Six months ago it would have bought all coins on offer several times over.

Not panic selling.
You don't need panic to protect yourself against inflation.
It is also interesting having money in different places so you can access them in different ways.
If your bank closes temporarily, maybe you can liquidate your bitcoins faster than the dollars in your account.

Bitcoin value is now at 0.6

what say you?

It's still above 0.7, today's low is 0.73 (mtgox)

not on bitcoin central.

Are you looking at the Euro? LRUSD is .83 on Bitcoin Central.

my bad, I was looking at euro.

Should've kept those bitcoins afterall >:(

naaah, you should have sold them all for $30.

I actually bought several $k around $0.2 or so, sold them and was like "fuck yeah! $100". Waited and waited after they sharply rose to $1 because I was *sure* a crash was coming due to the reasons in the OP.

Looks like my time will come again this time around! haha

I bought at 0.7 and... lost them all on bitcoinica :/

amazing walk back in time.  i remember fiddling around with offers at $0.50 at the time on OTC but not getting around to buying until $1.60.  what a roundtrip journey.  good news is we'll get to do it again.

R u subtly implying there could be another bubble...soon!

hindsight is 20/20, my friend.

Yeah, we had a bubble, it bursted, we lived through.
It was kinda obvious that this would happen and many people were saying that over and over again.

Now, can such useless topics as this be closed after they become totally & absolutely offtopic ?
I mean what is the point of existance of such a long offtopicked topics ? Does anybody even bother to read through them ? I seriously doubt so.

Perhaps all topics that are completely "used", should have their discussion moved to another [EMPTY] topic with changed title ?

Well, thread necromancy can be funny at times so I wouldn't automatically close them - but we now have a shiny new speculation subforum where this thread should probably be moved to.

Seems like we should make this thread active again?