Bitcoin Forum

Economy => Economics => Topic started by: The Koolio on June 05, 2011, 10:13:50 PM



Title: Bitcoin gonna burst?
Post by: The Koolio on June 05, 2011, 10:13:50 PM
Hi guys, my friend wants to invest in a mining rig, he's new to this and he asked whether its a bubble waiting to burst? I dont know how to respond as so far its all been taken nicely!


Title: Re: Bitcoin gonna burst?
Post by: kiba on June 05, 2011, 10:25:12 PM
http://bitcoinweekly.com/articles/comic-reaction-after-dramatic-rise-of-bitcoin-s-value


Title: Re: Bitcoin gonna burst?
Post by: Vector on June 05, 2011, 10:37:11 PM
I think it did some time last night


Title: Re: Bitcoin gonna burst?
Post by: The Koolio on June 05, 2011, 10:41:33 PM
tbh i think the last 24 hour movement is part of normal market movement. Until we see a crash of over 1/4 - 1/3 in one or two days i wudnt call it a crash


Title: Re: Bitcoin gonna burst?
Post by: Vector on June 05, 2011, 10:45:04 PM
This isn't the stock market. The Bitcoin market, and its investors, are extremely fragile. It won't take much to topple the house of cards.


Title: Re: Bitcoin gonna burst?
Post by: Genrobo on June 05, 2011, 10:58:21 PM
This isn't the stock market. The Bitcoin market, and its investors, are extremely fragile. It won't take much to topple the house of cards.

>I like to underestimate financial systems that aren't back by billions of dollars and politicians.


Title: Re: Bitcoin gonna burst?
Post by: Bazil on June 05, 2011, 11:27:46 PM
I think it did some time last night

Did this last weekend too, the market slows on the weekend.


Title: Re: Bitcoin gonna burst?
Post by: bitcoinfrenzy on June 05, 2011, 11:32:21 PM
This isn't the stock market. The Bitcoin market, and its investors, are extremely fragile. It won't take much to topple the house of cards.

It depends, the stock market can get overleveraged and overbought also.  It remains to be seen whether Bitcoins have hit that point.  The real question is who is buying Bitcoins now and why?  Many of the big early holders got their Bitcoins from mining, not through debt financed purchases.  Are new buyers buying with debt?  Are they buying more than they can afford, and will need to sell them soon?  Or are they mostly people who are intrigued by Bitcoins and just buying a few to take part in this cool system with some spare cash?  Once the suckers buy en masse, that's when it will probably crash, although whether it will be a mini-crash or a major crash will depend on who the majority of holders are.


Title: Re: Bitcoin gonna burst?
Post by: Vector on June 06, 2011, 12:25:09 AM
That's the ultimate question. Why are people buying?

I think it's because it is profitable. But it won't always be profitable, and when it isn't, demand and price will fall, and people that got into the game for profit will sell. Sell-off? Probably. But maybe not.


Title: Re: Bitcoin gonna burst?
Post by: Bit_Happy on June 06, 2011, 12:44:51 AM
We need more people to develop the economy, there has already been real growth.


Title: Re: Bitcoin gonna burst?
Post by: marcus_of_augustus on June 06, 2011, 01:10:07 AM

A pull back is always welcomed when you're in for the duration.


Title: Re: Bitcoin gonna burst?
Post by: Anth0n on June 06, 2011, 01:40:07 AM
So far the pattern has been huge rally, partial decline, huge rally, partial decline, etc. During the rallies people say $1000 by year's end, and during the declines people wonder if it will collapse. Personally, I don't forecast a collapse since I can't possibly imagine everyone suddenly losing interest in Bitcoin simultaneously for no reason. Minor pullbacks, however, will always happen.


Title: Re: Bitcoin gonna burst?
Post by: CravenEconomics on June 06, 2011, 01:46:02 AM

A pull back is always welcomed when you're in for the duration.

this. there are too many people waiting to buy up cheap bitcoins for a major crash


Title: Re: Bitcoin gonna burst?
Post by: nrd525 on June 06, 2011, 02:29:09 AM
Hyman Minsky’s seven bubble stages:

http://economicedge.blogspot.com/2009/04/signs-of-bubbles-betting-on-market.html

Step 1 Disturbance - not sure about this. Maybe the creation of bitcoin and the launch.

Step 2 Expansion: media attention --> price increase

Step 3 Euphoria / Easy Credit:  this forum is full of euphoria.  Credit (in US dollars) is available at the lowest rates in 50 years.

Step 4 Over-Trading: the market accelerates. It went up 30% and 40% in two days.

Stage Five – Market Reversal/Insider Profit Taking: not yet happened

Stage Six – Financial Crisis/Panic

Stage Seven – Revulsion/Lender of Last Resort


Title: Re: Bitcoin gonna burst?
Post by: marcus_of_augustus on June 06, 2011, 03:03:43 AM
Hyman Minsky’s seven bubble stages:

http://economicedge.blogspot.com/2009/04/signs-of-bubbles-betting-on-market.html

Step 1 Disturbance - not sure about this. Maybe the creation of bitcoin and the launch.

Step 2 Expansion: media attention --> price increase

Step 3 Euphoria / Easy Credit:  this forum is full of euphoria.  Credit (in US dollars) is available at the lowest rates in 50 years.

Step 4 Over-Trading: the market accelerates. It went up 30% and 40% in two days.

Stage Five – Market Reversal/Insider Profit Taking: not yet happened

Stage Six – Financial Crisis/Panic

Stage Seven – Revulsion/Lender of Last Resort


You have to go way outside the box to find economic analysis of the monetisation of a newly discovered form of commodity currency.

Minsky was good but I don't think he was that good. I don't think anybody was .... icbw.


Title: Re: Bitcoin gonna burst?
Post by: Suggester on June 06, 2011, 05:06:52 AM
he's new to this and he asked whether its a bubble waiting to burst? I dont know how to respond as so far its all been taken nicely!

Tell him there's no bubble so he would come and buy some of my over-priced coins and later sell his over-over-priced coins to someone else. If we told everyone there's no bubble things will continue to be fine, just as in a pyramid scheme (https://forum.bitcoin.org/index.php?topic=57.0).


Title: Re: Bitcoin gonna burst?
Post by: Karmicads on June 06, 2011, 10:57:23 AM
This isn't the stock market. The Bitcoin market, and its investors, are extremely fragile. It won't take much to topple the house of cards.
The real question is who is buying Bitcoins now and why? 

It seems to me that the botom of the upward exponential curve began right when BTC hit parity with the USD. That is a milestone that tends to generate a little bit of chatter in the financial media and would have a fresh batch of economists and speculators exposed to bitcoin for the first time. Now hands up who's heard of the butterfly effect? My guess is that some critical mass of smart money people, who can see bitcoin for what it is, suddenly wanted in and the seculators seeing the sudden rise followed suit. Then we have the masses who are curious but unsure, riding on the sudden wave of publicity. So many of them now, are all hearing about bitcoin for the first time and they only need to be buying $100 or less worth of BTC to play with for micro transaction and the price will continue to rise. I don't think it's realy a bubble at all. I agree with Koolio, It's just normal market dynamics. The price of one bitcoin will have to be $1000 USD one day (if enough people want to use it as currency) and it might just as well go up now as anytime.

Some speculators may panic sell, but as long as many more average joes want to buy up smaler amounts to use it for trading and holy on to the little amount's they do have, then I don't see that it has to crash at all. It may spike (like the last couple of days) flounder around for a while like today and then grow more slowly until another spike drives it higher. I'm realy just speculating here, but I can't see the price crashing like the stock exchange has.

Commodities and financial products are traded on the stock exchange, almost exclusively by speculators mostly professinal, without a large reserve being held by people who buy it for it's utility. People seem to either think about bitcoin like investment brokers or like traders/consumers . But the market contains a combination of investors and consumers and traders the consumers and traders, wont stop wanting to make use of this utility bitcoin has, for making small online transactors. So of course that sugests the need to offer more diversity in the products and services that are traded in bitcoin is high priority, but nobody is going to go into a fit of panic, becasuse they have 73.50 worth of BTC in their wallet and hardly anything they can spend it on, especialy not if the price keeps rising. Even If the price goes down, they havn't got much to loose. It isn't worth trying to pull $25 out of the market because you think it's going to crash. Wouldn't the larger numbers of smaler amounts have a buffeing effect on any downward spirals? Not everybody in this market is a gun ho, stock broker trying compete with other stock brokers for nothing other than profit. In any case the serious investors will be smart enough to settle in for the long haul. Not everybody is going to go into overtime trying to sell out on the falling market.

I think we'll see a few dips of a few dollars, over the time frame of days perhaps, but generaly over weeks and months, I think BTC has to trend upwards. Bitcoin is too usefull to NOT be taken up by more and more people, and generaly it has to be divided more and more, while accrueing value as it must, to support the masses who want a piece of a limited pie. The scarcity and utility both function together, to make this a currency/comodity like nothing there ever was. I always assumed there would have to be a time of exponential growth as the masses caught on to the idea. Conversely, I just don't see why there must be a backlash counteracting the boom. I'm not saying this out of feverish optimism. I just don't see how a crash, is anywhere near inevitable, as if bitcoin were some infinitely renewable, artificialy generated comodity (like fiat currency). Of course I might not be seeing this correctly at all.  :-\ That's always a possibility.  ;D


Title: Re: Bitcoin gonna burst?
Post by: Vladimir on June 06, 2011, 11:12:47 AM
Talking of bubbles...

http://img121.imageshack.us/img121/1729/marketl.jpg

I suggest that we are in Stealth Phase right now, not even approaching the take off point yet.

Bitcoin indeed is going to burst... but not just yet... we will be in 7 digit territory by than...

Whoever is buying now clearing all the asks up to 100$ perhaps is SMART MONEY . Institutional investors have not even heard or seriously considered bitcoin.

When first bitcoin ETF comes online we will be around Enthusiasm and maybe Greed phase.



Title: Re: Bitcoin gonna burst?
Post by: piuk on June 06, 2011, 11:31:58 AM
At one end of the scale i'm thinking the wealth of these so called "bitcoin millionaires" must be coming from somewhere. Have they produced any products/services, done any work to justify their new found wealth? No, so it must be coming from the new investors pockets, this is why many people liken it to a ponzi scheme.

On the other hand if you think of bitcoin as a startup, by buying coins your buying shares in a company. Now do you think a company which can provide cheap, fast, anonymous transactions is worth $50milllon? To the black market, almost certainly, how much are companies like e-gold and liberty reserve worth? Of course not all 21m coins are yet in circulation, at the current price of $19, that would
require a market cap of around $400m. Is bitcoin worth $400m at present? I don't think so, but of course it has a lot of potential.

To sustain the current price and offest production $140,000 worth of new money needs to be coming into the system every day. Who knows how long that will be possible to sustain.


Title: Re: Bitcoin gonna burst?
Post by: Findeton on June 06, 2011, 11:48:07 AM
At one end of the scale i'm thinking the wealth of these so called "bitcoin millionaires" must be coming from somewhere. Have they produced any products/services, done any work to justify their new found wealth? No, so it must be coming from the new investors pockets, this is why many people liken it to a ponzi scheme.

On the other hand if you think of bitcoin as a startup, by buying coins your buying shares in a company. Now do you think a company which can provide cheap, fast, anonymous transactions is worth $50milllon? To the black market, almost certainly, how much are companies like e-gold and liberty reserve worth? Of course not all 21m coins are yet in circulation, at the current price of $19, that would
require a market cap of around $400m. Is bitcoin worth $400m at present? I don't think so, but of course it has a lot of potential.

To sustain the current price and offest production $140,000 worth of new money needs to be coming into the system every day. Who knows how long that will be possible to sustain.


Today more than $1M will be exchanged in mtgox. And miners don't sell every bitcoin they earn. I actually think a bitcoin's real value is about $22 right now.


Title: Re: Bitcoin gonna burst?
Post by: piuk on June 06, 2011, 01:09:47 PM
Today more than $1M will be exchanged in mtgox. And miners don't sell every bitcoin they earn. I actually think a bitcoin's real value is about $22 right now.

$1M is an impressive volume, but it doesn't give an indication of how much new money is coming into the system. The fact the bitcoin economy doesn't have a manufacturing or service industry means at some point people are going to have to exchange them back into USD. If miners aren't selling them now, but expecting to sell them in the future, they are just contributing to the bubble.


Title: Re: Bitcoin gonna burst?
Post by: nrd525 on June 06, 2011, 04:39:12 PM
Possible ways to burst a bitcoin bubble include:
1) Government intervention.  Shutdown of MtGox and a general crackdown on any website using bitcoin.

2) Big players start a sell-off. 

3) A better currency emerges.  Bitcoin is an upstart (and most internet startups get superseded by better ones or fail). If the client is open source then someone can easily modify the code and create another currency, right?  Given the amazing level of software and website development around Bitcoin I'm surprised that this hasn't happened already.   There is a fixed supply of Bitcoin, but the potential supply of Bitcoin alternatives is unlimited.

The sell-off will be aggravated by the fact that most people using Bitcoin to buy/sell goods are also speculators - so the whole bitcoin economy will be affected.

The fact that a lot of people think there is a bubble, but that they'll be smart enough to sell before it happens (or that it is a year or more off) is a sign that the bubble is strong and will burst soon.


Title: Re: Bitcoin gonna burst?
Post by: Findeton on June 06, 2011, 04:57:06 PM
The fact that a lot of people think there is a bubble, but that they'll be smart enough to sell before it happens (or that it is a year or more off) is a sign that the bubble is strong and will burst soon.

Maybe, maybe not. In the end a bitcoin will be worth what people think a bitcoin is worth. Mining though, will still be profitable.


Title: Re: Bitcoin gonna burst?
Post by: piuk on June 06, 2011, 06:22:12 PM
4) In a few weeks time, when the media have had their fill, price begins to level out. People who are in it for a quick buck realise this isn't a going to make them rich over night and sell. Less buyers due to less publicity, snowball etc etc


Title: Re: Bitcoin gonna burst?
Post by: Findeton on June 06, 2011, 07:02:46 PM
4) In a few weeks time, when the media have had their fill, price begins to level out. People who are in it for a quick buck realise this isn't a going to make them rich over night and sell. Less buyers due to less publicity, snowball etc etc

We could surpass the 20$/btc barrier rather soon. Anyway, I really hope to see bitcoin fall so I can buy some more. My target is no to earn dollars, but to collect bitcoins.


Title: Re: Bitcoin gonna burst?
Post by: CravenEconomics on June 06, 2011, 07:38:24 PM
4) In a few weeks time, when the media have had their fill, price begins to level out. People who are in it for a quick buck realise this isn't a going to make them rich over night and sell. Less buyers due to less publicity, snowball etc etc

We could surpass the 20$/btc barrier rather soon. Anyway, I really hope to see bitcoin fall so I can buy some more. My target is no to earn dollars, but to collect bitcoins.

Same here, I'd much prefer the use of bitcoins as a currency and not for speculation


Title: Re: Bitcoin gonna burst?
Post by: stic.man on June 06, 2011, 07:40:12 PM
i'd rather be using bitcents or smaller denominations for everyday spending haha


Title: Re: Bitcoin gonna burst?
Post by: WilliamJohnson on June 06, 2011, 08:44:41 PM
Why couldn't Bitcoin be used for legit business, too?

And, as for the Ponzi scheme, I'd suggest you read this thread: http://forum.bitcoin.org/?topic=7815.0


Title: Re: Bitcoin gonna burst?
Post by: The Koolio on June 06, 2011, 10:14:21 PM
Please cn speculators and those who dont cre about the moral success of bitcoin please be quiet, yes profits are great and make us happy but the real exercise of bitcoin is to create an decentralised currency and those who are uneducated about this must learn this! Read about how bitcoin could have helped the wikileaks scandal or help those in oppressed areas suc as china or korea!


Title: Re: Bitcoin gonna burst?
Post by: Findeton on June 07, 2011, 10:46:57 AM
Please cn speculators and those who dont cre about the moral success of bitcoin please be quiet, yes profits are great
The "moral success" of creating wealthy superpowers while the rest of the world scrounges for coppers?

You are talking about the dollar, right?


Title: Re: Bitcoin gonna burst?
Post by: Babylon on June 07, 2011, 04:23:17 PM
So far the pattern has been huge rally, partial decline, huge rally, partial decline, etc. During the rallies people say $1000 by year's end, and during the declines people wonder if it will collapse. Personally, I don't forecast a collapse since I can't possibly imagine everyone suddenly losing interest in Bitcoin simultaneously for no reason. Minor pullbacks, however, will always happen.

I expect this to continue.  The hugeness of the rallies has kind of shocked me, and I do expect them to slow down a bit, but I think Bitcoin will hit natural equilibrium at about $100 per bitcoin and at that point will only fluctuate slightly, plus adjust due to dollar inflation.


Title: Re: Bitcoin gonna burst?
Post by: Findeton on June 07, 2011, 06:11:39 PM
So far the pattern has been huge rally, partial decline, huge rally, partial decline, etc. During the rallies people say $1000 by year's end, and during the declines people wonder if it will collapse. Personally, I don't forecast a collapse since I can't possibly imagine everyone suddenly losing interest in Bitcoin simultaneously for no reason. Minor pullbacks, however, will always happen.

I expect this to continue.  The hugeness of the rallies has kind of shocked me, and I do expect them to slow down a bit, but I think Bitcoin will hit natural equilibrium at about $100 per bitcoin and at that point will only fluctuate slightly, plus adjust due to dollar inflation.

The math are simple, if more people use bitcoin, $/btc rate will rise like steam. $100/btc is not a natural equilibrium anymore than $0.01/btc.


Title: Re: Bitcoin gonna burst?
Post by: Babylon on June 07, 2011, 06:39:25 PM
So far the pattern has been huge rally, partial decline, huge rally, partial decline, etc. During the rallies people say $1000 by year's end, and during the declines people wonder if it will collapse. Personally, I don't forecast a collapse since I can't possibly imagine everyone suddenly losing interest in Bitcoin simultaneously for no reason. Minor pullbacks, however, will always happen.

I expect this to continue.  The hugeness of the rallies has kind of shocked me, and I do expect them to slow down a bit, but I think Bitcoin will hit natural equilibrium at about $100 per bitcoin and at that point will only fluctuate slightly, plus adjust due to dollar inflation.

The math are simple, if more people use bitcoin, $/btc rate will rise like steam. $100/btc is not a natural equilibrium anymore than $0.01/btc.

I think that the figures that people are coming up with for the size of the bitcoin economy are unrealistic and that it is likely to stabilize at approx $100/BTC  Just my opinion of course, based on a not terribly exhaustive knowledge of economics.


Title: Re: Bitcoin gonna burst?
Post by: piuk on June 07, 2011, 06:58:56 PM
if more people use bitcoin, $/btc rate will rise like steam.

Doesn't steam eventual cool and fall? :)


Title: Re: Bitcoin gonna burst?
Post by: buckeye on June 07, 2011, 10:07:10 PM
I think governments will try to shut it down before the bitcoin bubble can burst.


Title: Re: Bitcoin gonna burst?
Post by: nrd525 on June 08, 2011, 04:19:41 AM
Bitcoin volume (US dollars, MTGox) for the past 12 hours = 1.3 million

For the past YEAR: 13.96 million

Almost 10% of the volume (of course in US dollars), has been in the past 12 hours.  The bubble is nearing its peak.


Title: Re: Bitcoin gonna burst?
Post by: imperi on June 08, 2011, 04:21:29 AM
Hasn't the bubble been "nearing its peak" since it reached parity with the dollar?


Title: Re: Bitcoin gonna burst?
Post by: Karmicads on June 08, 2011, 04:22:54 AM
if more people use bitcoin, $/btc rate will rise like steam.

Doesn't steam eventual cool and fall? :)

This is magic steam. :P

Edit: I should have also said 'The cooler bitcoin gets the faster it rises'.


Title: Re: Bitcoin gonna burst?
Post by: Kid81 on June 08, 2011, 04:25:31 AM
how can you compare BTC to anything? There has never been anything like it


Title: Re: Bitcoin gonna burst?
Post by: tunatime on June 08, 2011, 04:35:34 AM
Bitcoin volume (US dollars, MTGox) for the past 12 hours = 1.3 million

For the past YEAR: 13.96 million

Almost 10% of the volume (of course in US dollars), has been in the past 12 hours.  The bubble is nearing its peak.

if people keep buying them then they wont be a bubble. And least say tomorrow some whit whit a hell of a lot of coins sells them all and coins droop to a few$ a coin you woudl have a hell of a lot of people buying them up and the price will go back. now if every one stops buying them then yes there will be a bubble and lest say that it stays at 1usd a coin but big stores start taking them driving prices back up. the only way there can be a bubble is some one can start making fake coins, the gov or some one whit a hell of a lot of power steps in, or people  just lose trust in the bitcoin. what will happen is that the price will stabilize someplace a lot of people sell out the price falls then ether stays that way or climbs back up as more buy them up hooping to get rich like the first batch of people did.


Title: Re: Bitcoin gonna burst?
Post by: piuk on June 08, 2011, 06:57:25 PM
Order book not looking very healthy.

http://i.imgur.com/saqh8.png


Title: Re: Bitcoin gonna burst?
Post by: The Koolio on June 08, 2011, 07:05:41 PM
Order book not looking very healthy.

http://i.imgur.com/saqh8.png

a bit of a downward motion is expected as we've had a sharp rally today... im sure over  the next week or two itll average upwards


Title: Re: Bitcoin gonna burst?
Post by: TurboK on June 08, 2011, 07:06:33 PM
It went down from 31.5 to 27 now.

BITCOIN BUBBLE!


Title: Re: Bitcoin gonna burst?
Post by: imperi on June 08, 2011, 07:08:34 PM
It's popping!! Sell everything! Delete your wallets!!


Title: Re: Bitcoin gonna burst?
Post by: The Koolio on June 08, 2011, 07:15:57 PM
It's popping!! Sell everything! Delete your wallets!!

Thats not a bubble, thats impatient fools getting rid of coins cause they are scared! There was a rally which needs levelling out... expected... all is good


Title: Re: Bitcoin gonna burst?
Post by: The Koolio on June 08, 2011, 07:23:19 PM
so much for bursting its back up to $33. Untill the influx of new buyers stops there will always be people ready to pick up the scraps for cheap. Whoever brought now just made an extra $5 per coin


Title: Re: Bitcoin gonna burst?
Post by: imperi on June 08, 2011, 07:25:42 PM
You're delusional... the bubble has popped... it is accelerating downwards and will reach -10 BTC per dollar by Saturday.


Title: Re: Bitcoin gonna burst?
Post by: TurboK on June 08, 2011, 07:30:09 PM
You're delusional... the bubble has popped... it is accelerating downwards and will reach -10 BTC per dollar by Saturday.

Actually, it's just crashing upwards.


Title: Re: Bitcoin gonna burst?
Post by: astonix on June 08, 2011, 09:30:32 PM
I wouldn't say the drop from 31.8 to 22.9 is a popped bubble. Due to the enormous increase earlier, it would be normal for it to drop down a bit, but it will make another sharp rise again shortly.


Title: Re: Bitcoin gonna burst?
Post by: The Koolio on June 08, 2011, 09:54:04 PM
I wouldn't say the drop from 31.8 to 22.9 is a popped bubble. Due to the enormous increase earlier, it would be normal for it to drop down a bit, but it will make another sharp rise again shortly.

my thoughts exactly


Title: Re: Bitcoin gonna burst?
Post by: kwhcoin on June 17, 2011, 03:40:59 PM
Talking of bubbles...

http://img121.imageshack.us/img121/1729/marketl.jpg

I suggest that we are in Stealth Phase right now, not even approaching the take off point yet.

Bitcoin indeed is going to burst... but not just yet... we will be in 7 digit territory by than...

Whoever is buying now clearing all the asks up to 100$ perhaps is SMART MONEY . Institutional investors have not even heard or seriously considered bitcoin.

When first bitcoin ETF comes online we will be around Enthusiasm and maybe Greed phase.



Here is a chart I made today at bitcoincharts.com that I felt the need to share.
http://bitcoincharts.com/charts/chart.png?width=506&m=mtgoxUSD&k=&r=60&i=Daily&c=1&s=2011-04-22&e=2011-06-17&Prev=&Next=&v=0&cv=0&ps=0&l=0&p=0&t=C&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&SubmitButton=Draw&
A more pessimistic comparison of your bubble graph to the 2011-04-22 to 2011-06-17 Bitcoin graph might be that we are entering the "fear" portion of the "Blow off Phase". It may be that the current Bitcoin price fluctuations become speed bumps towards your "7 digit territory" prediction, but it may also be that the striking similarities between the two graphs is telling us something.


Title: Re: Bitcoin gonna burst?
Post by: Edward50 on June 17, 2011, 04:35:31 PM
That chart is scary similar. I think that is exactly what happened with the bitcoin, the reason it happened so fast is because it is all digital and the bitcoin has no substance to it really.


Title: Re: Bitcoin gonna burst?
Post by: [Coins!] on June 17, 2011, 04:37:14 PM
kwh, solid graph.

I will be looking to buy once it dips back down below $10/coin, since it is pretty easy to eyeball your chart and see the linear price should be $10/coin.


Title: Re: Bitcoin gonna burst?
Post by: CravenEconomics on June 18, 2011, 03:29:22 AM
kwh, solid graph.

I will be looking to buy once it dips back down below $10/coin, since it is pretty easy to eyeball your chart and see the linear price should be $10/coin.

I think this graph comparison may be the most simplified understanding of what is going on...even with the information given.

And this conclusion which has been drawn from it seems ridiculous!


Title: Re: Bitcoin gonna burst?
Post by: Capitan on June 18, 2011, 03:53:50 AM
... So many of them now, are all hearing about bitcoin for the first time and they only need to be buying $100 or less worth of BTC to play with for micro transaction and the price will continue to rise.

Micro transactions to pay for what exactly? So far bitcoin has been used for: drugs, cheap way to make money (mining, which is dying soon), and speculation.  Not even that restaurant in NYC that started accepting bitcoins has conducted a single transaction using bitcoins (as of 6/17/2011). The only reason it will stay alive is for Silk Road, and even that use is now dubious due to the fact that you have to be tech savvy and go way out of your way to use it and still be anonymous. I like bitcoin as a decentralized currency, but not as a tool for drug and smut peddlers.

If anyone really wants to see bitcoin succeed they need to put efforts into enacting more trade using bitcoins. Mining doesn't help the bitcoin world because even if there were only 3 guys doing CPU mining, the difficulty would adjust so they could produce all the bitcoins at the same rate they are being produced today (with the most power aggregate super computer in the world).


Title: Re: Bitcoin gonna burst?
Post by: Babylon on June 18, 2011, 04:49:06 AM
... So many of them now, are all hearing about bitcoin for the first time and they only need to be buying $100 or less worth of BTC to play with for micro transaction and the price will continue to rise.

Micro transactions to pay for what exactly? So far bitcoin has been used for: drugs, cheap way to make money (mining, which is dying soon), and speculation.  Not even that restaurant in NYC that started accepting bitcoins has conducted a single transaction using bitcoins (as of 6/17/2011). The only reason it will stay alive is for Silk Road, and even that use is now dubious due to the fact that you have to be tech savvy and go way out of your way to use it and still be anonymous. I like bitcoin as a decentralized currency, but not as a tool for drug and smut peddlers.

If anyone really wants to see bitcoin succeed they need to put efforts into enacting more trade using bitcoins. Mining doesn't help the bitcoin world because even if there were only 3 guys doing CPU mining, the difficulty would adjust so they could produce all the bitcoins at the same rate they are being produced today (with the most power aggregate super computer in the world).

I've sold tarot card readings for bitcoins.


Title: Re: Bitcoin gonna burst?
Post by: CravenEconomics on June 18, 2011, 05:28:12 AM
I've sold father's day presents, external hard drives, coupons to a restaurant in Iceland, cash, and more...all for bitcoins


Title: Re: Bitcoin gonna burst?
Post by: Vandroiy on June 18, 2011, 10:33:53 AM
This thread is beautiful. It should be read in economics class by schoolchildren to understand bubble dynamics.

I especially love the denial phase as soon as an upwards spike happened. It's EXACTLY as the economists say. Doubts are drowned by one over-riding fact: the price is still rising. As long as the price shows a higher number, people are satisfied. Even though everybody should know it crumbles the moment the stream of new money stops, they all just take that risk.

No matter what happens from now on, the chaos and drop were unavoidable after the spike to 30, and there were people who knew that. But everybody ignored them until it was too late! It was just unreasonable to rise that fast, even with the exponential media attention.

I hope this will teach Bitcoiners a lesson; we don't want this to happen again. It's a crazy kind of game that disrupts normal trading. At least keep the price roughly close to actual trading market size.



Edit: Oh wow, I just saw the link to the bubble article, including the quote "The voices of the wise are ignored by the greedy who justify the now insane prices with the euphoric claim that the world has fundamentally changed and this new world means higher prices."

And someone answered "You have to go way outside the box to find economic analysis of the monetisation of a newly discovered form of commodity currency.". And another "how can you compare BTC to anything? There has never been anything like it"

Priceless. Pun intended.


Title: Re: Bitcoin gonna burst?
Post by: neptop on June 18, 2011, 11:22:13 AM
The second chart shows one month. What happens after the burst? The dotCOM stuff makes me think of Facebook ant Twitter. Especially Twitter has lots of investors. Does this mean it repeats over and over after the burst? Then it'd be a good idea to wait until the next bubble emerges.

Also couldn't we be at some point after 1980 (http://www.wolframalpha.com/input/?i=price+of+gold)?


Title: Re: Bitcoin gonna burst?
Post by: Vandroiy on June 18, 2011, 12:00:25 PM
Does this mean it repeats over and over after the burst? Then it'd be a good idea to wait until the next bubble emerges.
That's the interesting question. Bitcoin is still small; it could cancel out of the crash and form an even larger bubble.

I hope people will hurry up with the spikes so I get a clearer view. What's with those low-volume phases... seller staring contest.

If it continues onto a rising trend again, it will become a battle of speculators. I can't imagine it would end well for everyone; but the best might make a nice profit -- and the early adopters that didn't sell yet most of all. But I can see it doing a classical crash just as well. Gotta figure out what the buying folk is thinking right now -- that's the most important question.


Title: Re: Bitcoin gonna burst?
Post by: kwhcoin on June 18, 2011, 12:55:44 PM
I made another chart from 2011-03-18 to 2011-06-18 using a log scale to try and get an idea where this might go if it happens to be a bursting bubble of some symmetry. With bitcoin over $15 it seems difficult to believe that it may go below $1, but the only other time bitcoin ever went above $1 was in February.

http://bitcoincharts.com/charts/chart.png?width=505&m=mtgoxUSD&k=&r=60&i=&c=1&s=2011-03-18&e=2011-06-18&Prev=&Next=&v=0&cv=0&ps=0&l=1&p=0&t=C&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&SubmitButton=Draw&

Could this whole spike to $30 really be just a bubble? Bitcoin is open source software of a digital currency backed by nothing of physical value. It is a new technology with a number of unknowns about wallet security, government reactions, price stability, merchant usage, and Bitcoin's ability to compete with future Bitcoin-like currencies which may be backed by things of physical value. As far as I know, there hasn't been enough positive change in these unknowns over the past couple months to justify the 30-fold run-up in Bitcoin price so it isn't too much of a stretch to consider this recent spike to be a media driven bubble of people who don't care much about Bitcoin as a revolutionary new currency and instead primarily view Bitcoin as a way to get rich, which is the driver of bubbles.


Title: Re: Bitcoin gonna burst?
Post by: Synaptic on June 18, 2011, 01:37:23 PM
I made another chart from 2011-03-18 to 2011-06-18 using a log scale to try and get an idea where this might go if it happens to be a bursting bubble of some symmetry. With bitcoin over $15 it seems difficult to believe that it may go below $1, but the only other time bitcoin ever went above $1 was in February.

http://bitcoincharts.com/charts/chart.png?width=505&m=mtgoxUSD&k=&r=60&i=&c=1&s=2011-03-18&e=2011-06-18&Prev=&Next=&v=0&cv=0&ps=0&l=1&p=0&t=C&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&SubmitButton=Draw&

Could this whole spike to $30 really be just a bubble? Bitcoin is open source software of a digital currency backed by nothing of physical value.

http://i.imgur.com/qTLPM.gif

Did someone say, Alpaca Socks?


Title: Re: Bitcoin gonna burst?
Post by: kwhcoin on June 18, 2011, 04:32:00 PM
Did someone say, Alpaca Socks?
I went to the alpaca sock website linked to from the Bitcoin wiki's alpaca page and here is what it said:

“Each pair of socks is 2.5 BTC delivered to your door, no extra fees for shipping within the U.S. This price may fluctuate in the future depending on the current BTC exchange rate.”

The fact that the “price may fluctuate” means bitcoins are not backed by alpaca socks. There is not a promise but only a temporary promise to exchange alpaca socks for 2.5 BTC and that temporary promise can change at any time.