Bitcoin Forum

It’s now looking increasingly likely that the record-high price of $32 on June 8 represented the peak of a speculative bubble that is now slowly deflating. The interesting question is: where will the price decline stop?

Most assets have a “fundamental” value: the value that reflects the practical use to which that asset can be put. You can always live in a house regardless of what happens to the real estate market, so we can be confident that house prices won’t fall to zero. Similarly, if the price of gold fell too much, people could always use it to make jewelry, so gold is a relatively safe investment.

The puzzling thing about Bitcoin, which I pointed out back in April, is that the currency doesn’t seem to have any fundamental value at all. True, you can currently purchase a limited selection of goods and services with Bitcoins. But the volume of Bitcoin-denominated commerce is small enough that Bitcoin-denominated prices seem to be driven by the current value of Bitcoin rather than the other way around.

This is different from traditional currencies. The fact that there are 300 million Americans who use dollars for their day-to-day transactions creates a floor for the value of dollars. Most of us don’t pay much attention to the exchange rate between dollars and other currencies, because we’re used to thinking of dollars as our fundamental unit of value. And even if we wanted to stop using dollars, it would be hard to do since most of the people around us won’t take anything else. So, barring a major screw-up by the Federal Reserve, we can count on the value of dollars not falling very much.

In contrast, there’s no significant community of people who conduct commerce exclusively (or even primarily) in Bitcions. And you can’t eat, live in, or make jewelry out of Bitcions. And this means there’s no logical stopping point to Bitcoin’s price decline. So far Bitcoin enthusiasts have been buying Bitcoins as the price falls, convinced that the price will go back up eventually. But as the hoped-for rally has failed to materialize, more have gotten discouraged or bored and cash out, pushing the price down further. This process has been going on for a couple of months, and now it appears to be accelerating. I suspect it’s terminal.

And as always, you can always remove 'Bitcoin' and replace it with 'USD' and all statements will be true.

The puzzling thing about Bitcoin, which I pointed out back in April, is that the currency doesn’t seem to have any fundamental value at all.

the problem is the article is partially correct.  

If we continue down this path of stealing, hacking and robbing each other regarding bitcoins,  it WILL fail.    I spent large amounts of money building flexcoin... I'm betting big that we'll be okay....   but in order for that to happen there cannot be another "150,000 coins stolen / robbed " every 10 minutes....  

think about it.

1 - dude saw 25,000 coins vanish from his desktop
2 - Goxed
3 - polish exchange 17,000 coins
4 - mybitcoin 150,000 coins
---- this list goes on....

I understand hackers...  but what's happening with most of those cases isn't hackers...  it's criminals and thieves...  that's not the same thing...   not even close.

hacking always meant (at least when I grew up) to try to break something... just to see if you can....   and if it turns out to be a security flaw you told the developer before publishing it.  

This?  These are people that steal bitcoins and in essence destroying what they are stealing,  hence they are idiots.

Picture this...  a company builds a program that secures stock transactions on NASDAQ and is listed on the said exchange....   hackers target the company,  and hack their software where they "steal a bunch of shares of it" ... then the criminals try to dump it as everyone else is because their "secure" software isn't so secure.

In a nutshell,  each time they are stealing it it's destroying the very nature of what makes it appealing...  hence destroying it's value.

It's my feeling that these people are not actually motivated by money...  they have a goal.. and that includes destroying bitcoins.

the problem is the article is partially correct.  

If we continue down this path of stealing, hacking and robbing each other regarding bitcoins,  it WILL fail.    I spent large amounts of money building flexcoin... I'm betting big that we'll be okay....   but in order for that to happen there cannot be another "150,000 coins stolen / robbed " every 10 minutes....  

think about it.

1 - dude saw 25,000 coins vanish from his desktop
2 - Goxed
3 - polish exchange 17,000 coins
4 - mybitcoin 150,000 coins
---- this list goes on....

I understand hackers...  but what's happening with most of those cases isn't hackers...  it's criminals and thieves...  that's not the same thing...   not even close.

hacking always meant (at least when I grew up) to try to break something... just to see if you can....   and if it turns out to be a security flaw you told the developer before publishing it.  

This?  These are people that steal bitcoins and in essence destroying what they are stealing,  hence they are idiots.

Picture this...  a company builds a program that secures stock transactions on NASDAQ and is listed on the said exchange....   hackers target the company,  and hack their software where they "steal a bunch of shares of it" ... then the criminals try to dump it as everyone else is because their "secure" software isn't so secure.

In a nutshell,  each time they are stealing it it's destroying the very nature of what makes it appealing...  hence destroying it's value.

It's my feeling that these people are not actually motivated by money...  they have a goal.. and that includes destroying bitcoins.

In a nutshell,  each time they are stealing it it's destroying the very nature of what makes it appealing...  hence destroying it's value.

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I'm a modern artist, and my work is highly sought after. To date, I have created 10 pieces of art that had a fairly high and stable value--until a break-in occurred and two of the artworks were destroyed by people who don't like art. Now there are only 8 of my masterpieces in the world and their value went up because there's fewer works of art with my name on them. Granted, I have more art in the pipeline, therefore seeing the value of those remaining 8 pieces of art worth less when my new art enters the marketplace.

In a nutshell, if there's 7 million bitcoins, and 1 million are destroyed, doesn't that increase the value of the other 6 million?

1 - dude saw 25,000 coins vanish from his desktop
2 - Goxed
3 - polish exchange 17,000 coins
4 - mybitcoin 150,000 coins
---- this list goes on....

I'm a modern artist, and my work is highly sought after. To date, I have created 10 pieces of art that had a fairly high and stable value--until a break-in occurred and two of the artworks were destroyed by people who don't like art. Now there are only 8 of my masterpieces in the world and their value went up because there's fewer works of art with my name on them. Granted, I have more art in the pipeline, therefore seeing the value of those remaining 8 pieces of art worth less when my new art enters the marketplace.

In a nutshell, if there's 7 million bitcoins, and 1 million are destroyed, doesn't that increase the value of the other 6 million?

This what I posted for Mr. Unimaginative at Forbes..


Why do people keep saying that bitcoins have no fundamental value? Is a service a valuable consideration in the law? YES! Even a promise is a valuable consideration.

The bitcoin network and it’s nodes authenticate , verify and reverify a transaction over and over and over. You can’t access the network without bitcoins. They are a right of access. They are a license to use. All valuable considerations.
Third party authentication is obviously a valuable consideration, ask any notary public, clerk of court, or recorder of deed.

The only thing that will kill BTC are the hoarders who sit on more than 500 BTC hoping to just cash out.  Spend your BTC on businesses that will, in turn, encourage more to accept BTC.  If you won't spend it, give it to me and I will.

That depends. If there are 7 million of - for example - a particular brand of washing machine and 1 million of them burst into flames, that obviously makes the remaining 6 million rather less valuable. (Also, most of the bitcoins lost so far have been stolen rather than destroyed, so the number in circulation hasn't decreased that much.) On the one hand you have the decrease in supply, and on the other loss in confidence in Bitcoins as a result of the heists.

You're trolling, right? Because the reason the same isn't true of the USD is fairly thoroughly explained in the bit of the article BitcoinPorn quoted.

That depends. If there are 7 million of - for example - a particular brand of washing machine and 1 million of them burst into flames, that obviously makes the remaining 6 million rather less valuable. (Also, most of the bitcoins lost so far have been stolen rather than destroyed, so the number in circulation hasn't decreased that much.) On the one hand you have the decrease in supply, and on the other loss in confidence in Bitcoins as a result of the heists.

Actually, I'd say the number in circulation has likely increased rather dramatically as a result of the heists.  Consider that the thefts were from people hoarding bitcoin and the thieves are likely trying to circulate them and cash them out as soon as possible.

Really? Hoarding? Do you even know what that word means? This doesn't make your company look good.

What aspect of what I said doesn't make sense to you?  The thieves stole money from people that were hoarding bitcoin and are (presumably) dumping it on the market.  The hoarders had taken money out of circulations and the thieves are taking it from the hoarders and returning it to circulation.  Seems logical, no?

This statement is nonsense.  A bitcoin itself might not have any intrinsic value, but the bitcoin platform has plenty of fundamental value.  The author is dead wrong on this point.  The issues will get resolved in time, effective defenses against theft will be crafted, and bitcoin will survive.