Bitcoin Forum

Seriously, what the hell is going on? I feel VERY lucky. On one hand I was able to sell my main coin supply on the 9th I think it was for like $247 / each. I refresh clean once in a while and that was the time. I told myself, once I see it go over $250, sell it all. I sold them all that day and a couple days later money was deposited into my bank account. The next day coin started to drop big time. Most places ceased operations, stopped business or just suspended trading until further notice. Then I had another whole wallet which I kind of forget about and tried really hard to sell those but no such luck. I pretty much have to hang on to them for a while and see what happens. My stupid fault for not remembering. That's a bad thing to do in this business.

Sorry, just wanted to post something positive in my world for once. I rarely EVER get to do that.

So what the hell is making coin go from $250 to $55 in 2 days or less? Yes, you can respond with sarcastic, anal retentive childish remarks if it makes you feel better.

Bitcoin is a giant ponzi scheme and the only winners are the ones that get out first. After that, it crashes.

Don't take the price seriously at the moment, MtGox (the largest exchange by far, at one point handled 80% of BTC trade) has stopped trading due to massive volume from new users. The price will recover, perhaps not as high as it was before though.

For anyone who still thinks this is a DDOS or a real crash, I urge you to read the latest update from MtGox:

The dog ate my homework?

Rubbish - provided that Bitcoin ultimately becomes a proven mass-adopted tool for exchange, then it has a clear value and is not a ponzi scheme.

However it's value as it was traded far exceeded it's current requirement or justification and a correction was inevitable. Where it's long term value goes will depend on it's success at it's main function. In the short-term fear is the driver (fear of losing everything by the holders and recent buyers vs fear of not owning the upside).

do you really think after gox is open people will rush and buy coins? goood luck

$38 is the new $2  ;)

Someone is dumping hard to drive price down in order to buy a lot at low price

The electricity cost for GPU miner is the fundamental factor for bitcoin price, currently 1G hash gives 0.06 bitcoin per day, using $3 electricity, that is about 50 USD for 1 bitcoin

Your definition of a ponzi scheme would apply to any commodity/stock that sees a large swell then crash.  I think you're looking for the term, pump-and-dump. It's not clear what exactly happened here and everyone is trying make predictions about what is next.  This is so unprecedented that I have to admit, nothing will surprise me now.
Either way its not a ponzi scheme.

That's interesting.  So bitcoin was a lot more profitable than it was supposed to be?

I have 3.2GH mining @ .18BTC per 24hrs @ .12kwh.My bill is approx $150 more while mining,so $150/6.3BTC per month=$23.80 per BTC.Thats what its worth to me  ;D

A non fungible commodity like gold or oil cannot drop below their price of production. I am uncertain as to why you apply this same logic to bitcoins, which are simply one of many fiat based mediums of exchange. The fact that you decide to waste CPU cycles to mine bitcoins does not somehow confer any underlying economic validity on that activity; when bitcoin crashes you can't exchange those wasted cpu cycles for something useful. When the tulip market crashed tulips fell well below their cost of production because one the speculative bubble burst their commodity value was deemed to be effectively zero.

Hmm!  And the price of BTC just happens to be right around here; wonder if it'll drop further than $23?  Miners aren't going to sell at a loss, after all.

Oh really? So nobody involved in speculative market activity every accepts a loss eh;  tell me how that works out for you.

Wait Wait Wait.

MtGox tells me the current price is $124.

Where is everyone getting $55 from?

Is MTGox actually down and posting a false price to placate anyone not in the know?

Some exchanges display that low price but not many are actually selling btc for that price.

Well, it would work out pretty bad, actually.  If I had product X and it was costing me more to produce it than it was to sell it, I would stop producing product X.  Since Unacceptable is producing them at a cost of $23.80 per coin, he would attempt to sell them preferably above this price.  If not, he wouldn't sell them until the cost went back up.

Now, somebody who bought product X might see the use in selling it to prevent further loss.  But if he didn't know what it was costing to make it, he could sell it to you for a nickel and wouldn't know the difference.

MTGox has shut up shop to try and protect the bitcoin price, but price discovers is occurring on other exchanges down to sub $50

Crashes like this have happened multiple times and the only people who win are the people who cash out at the point before it drops. Everyone else effectively loses. As with a ponzi scheme the only people who "win" are the people who put money in early and get money out early before the entire thing becomes uneconomical.

Screaming "UGH TROLL!! TROLL!" just because you don't agree with someone doesn't make you smart or correct, either, by the way.

somebody accidentally triggered a massive bot panic, that's all.

please sell me cheap coins, I'm buying.  =)  

i'd rather lose my money on bitcoins than make profit with centralized privately owned bank notes.
but in the end, those with the stomach to endure the swings will prevail victorious.  it's not every day that a massive infrastructure for processing currency transactions is deployed internationally....  nobody will break it.  =)

things like silver & uranium are and have dropped and remain at prices below the cost of production

Clearly too much reliance is placed on dodgy exchanges like Gox, which may very well be part of the market manipulation in the first place.  For all I know, Gox shut down trading to protect their own position, or to encourage more panicking.  I have difficulty accepting the purity of their motives.

No they haven't, not when they are mined without state subsidy.

somebody removed their support when they shut their systems down.  They probably shut their systems down because they saw the price was too high. The big fish don't really want to sell their reserves, so they can't sat an upper limit on the market.  But they don't exactly want Joe User making a profit by selling their stash at such a high price, because then the market makers would have potential competition during the rebuys.  So...  It's not pretty, but it's not all bad to stall the price climb a little bit while the currency gets ready for prime time...

look at the silver spot; then look at the bottom right here:
http://seekingalpha.com/article/1298981-what-it-really-costs-to-mine-silver-endeavour-silver-edition

It's nonsense, as are many similar back of fag packet calculations made by people hyping silver. The numerous profitable silver mining operations are a testament to just how wrong-headed such analysis is

The real question is what will happen when Gox resumes at 02:00 GMT.

a) since people can cancel open orders, it's fair to assume that most of the bids that were made will be cancelled. They were at much higher prices than what the other markets are at now. But there will be plenty of people who still want to sell at that higher price so they leave their orders in. Result? All sellers no buyers, very quick very deep crash with a big bounce up straight after.

b) Gox users have looked at other exchanges and noticed that the sky hasn't fallen, bitcoin isn't worthless they are still going for way more than they were a few weeks ago. Price will stabilize quickly and move upwards.


Going by what I've seen today, I'd put my money on option a. If Gox' servers couldn't handle a regular panic with bots fighting each other then this is going to be even worse. Data will be delayed creating a negative feedback loop.

So basically you can only envisage 2 scenarios, both which result in the bitcoin bubble reinflating rapidly.

Are you familiar with the phrase 'the wish being the father of the thought'? Seems rather apposite here.

Why do you think the same logic could not apply to bitcoins? There have been numerous comparison between bitcoin and gold and I think bitcoin wins by a large extent

Gold can be confiscated, can't be carried over boards, difficult to store large amount, difficult to transfer, difficult to identify the purity...

Tulips are not worth comparing, they can't even last a couple of months, you must find the next fool before it dies

True, bitcoin itself does not have some real value, just a number, but the network as a whole holds great value

FED writes 85 billions USD into his account each month, itself does not have any value, just a number. But as long as every other bank are willing to sell assets to FED in exchange of these numbers, these numbers have value. Actually bitcoin is better in this sense, it is generated using electricity, not just write number of 0s

Yes, very good.

But if I can go on Mtgox and sell my Bitcoins for $124, then I don't care what other markets are offering only $55.

Another possible reason of this crash is that there are too few number of powerful players now in the exchange

Suppose that there is one large trader from Goldman Sachs playing here, a typical strategy is:

1. Buy the coins on the rise, dump it from time to time and buy those dumped coins back after the crash, to make a illusion of crash immune. After 3-4 such move, the price will be very high and he accumulated large amount of coins

2. Dump large amount of coins, and this time he don't buy back immediately, but sell all the way down and cause panic selling and buy all the coins (and maybe much more) back during panic at a much lower level

Since bitcoin exchange is very illiuqid, this is a better way to acquire large amount of coin without push the exchange price to heaven

But this operation have some risk, if there is a hedge fund bought all the coins he dumped at higher price, he ends up with no coin at hand and have to buy them back at a much higher price. So if there are more and more large players in the exchange, the exchange rate will be more stable

There's a million different scenarios, that's true. I have no clue on the middle term outlook at all. But short term...everybody is playing "guess the bottom" with $$$$ ready to jump onto those cheap coins.

They might all go broke (well it's a zero sum game obviously) in a month, but come today and tomorrow the above scenarios are most likely in my humble opinion.

Agree. Looks quite overpriced  ;D

gox now resuming at 11 JST

whatever time that fucking is

Do you want a healthy price for bitcoins? Then do not sell, simple as that.

But there is:

1) Those who mine coins and want it to be as higher value as possible. In this way it will be adopted and everybody can buy things with coins.
2) Those who don't care about the outcome of the coins; maybe mine, or maybe has a big wallet with a lot of dollars. Wants the coin cheap to buy, and wait to be high to sell. Wants to speculate, buy low and sell high. They damage the coin.
3) Those who don't know what to do, the sheeps who follows. If everybody is selling, they sell; if everybody is buying, they buy. This "no think people" are easily manipulated and if a "speculator" wants the price low they can persuade this little guys to do what they want.

Sadly, the most important (and the bigger) group of people is the last one. If they can't be tricked, then you have a good value on bitcoin and a stable market. But if they pay attention to speculator, then, they believe when they say: "Sell now, it's dropping!!" or "BTC is Skyrocketing, BUY BUY BUY".

Tee hee.

That phrase could be applied to 80% of the 'opinions' in this place.

That was the last price before they halted trading.

Oh yeah? What are big banks doing then? Go spread your filth elsewhere

Japan Standard Time

How much have you been paid in Bitcoin by the Bitcoin hacker mafia to make this post?

Congrats on getting out, drop is due to a great amount of panic and I'm sure the failure of exchanges hasn't helped.

It's the weak giving into the strength of the hacker elite. Why bother investing in Bitcoin if you'll just sell it back to the same hacker elite you bought it from the moment there is a DDOS?

This reminds me of the news article about the guy who lost 500k from his Bitcoin wallet which his wallet.dat file was left unencrypted. Everyone sold down to $2.

I hope that happens again so we can afford to buy thousands.

Big banks are probably behind hiring hackers to DDOS Bitcoin and then pay or blackmail posters into spreading disinformation.

Seriously if the big boys are now involved expect a lot more of that. Expect industrial espionage as well as people will resort to trying to hack into exchanges for personal or professional gain.

Simple :

The price is low because USD liquidity is much lower in these other exchanges.
because MtGox was almost always at the forefront when it was time to sell at the highest price.

MtGox is was also the best place to make big purchases (1m$+).

The real believer in bitcoin don't hold more USD in an exchange than they need.

LOL

and 1 week's the new 12 months

Stop calling it a ponzi jackass. Ponzi's don't recover, they go bust and that's it. Bitcoin has recovered plenty of times. Learn what a ponzi scheme is before you use the word. Nobody knows where the price of bitcoin will end up so stfu already.

I enjoy your comment but I disagree with the extrapolation to tulips - which are not a currency and therefore expendable. 

I suspect that the cost to mine does matter with regard to the value of bitcoin because the whole deal would come crashing down if no one was mining. 

Miners have the choice to switch to anything else, such as LTC or even something not yet invented.

It appears to be a common habit for morons and noobs to declare anything a Ponzi they don't understand or somehow lost money on (usually through their own stupidity).

It is annoying because it acts as if words don't have meanings.  A Ponzi is a very specific kind of investment scam or (more recently) a kind of gambling game open about its intentions.  BTC is simply not a Ponzi by any rational definition of the term (although arguably BTC is somewhat prone to being used in Ponzis but pretty much any currency or commodity could in theory be used in a Ponzi).

No, Bitcoin can reasonably be classified as a pyramid scheme though.

Not really, although whereas unlike a Ponzi, which Bitcoin is nothing like, it is merely almost, but not entirely unlike a pyramid scheme.  And again, BTC can be used in a pyramid scheme, like bitcoinpyramid, but that is entirely different from being a pyramid scheme.

No, it's exactly like a pyramid scheme. The founders availed themselves for very little effort millions of bitcoins, these same coins are now only available if purchased or mined at a slow rate with expensive dedicated hardware, and as the difficult ramps up even the means to mine with dedicated harware will be beyond anyone without the means to drop 100k on dedicated hardware.

Under that definition, any company is a pyramid scheme in its beginning. (which is obviously false)
You clearly don't understand what a pyramid scheme is.
So the masseuse in Google was part of the pyramid scheme because she got paid with shares in the beginning of the company? Employees getting paid in Google with shares were risking their neck because there weren't having a salary, and there wasn't anything reassuring that it would be such a commercial success. They didn't even had a business plan.
Today everyone who lent their time to Google, they are billonaires. Even the masseuse.

The same with bitcoins, in the beginning nobody gave a damn about this project and it was just experimental.
Nobody would have expected to grow so fast and to have such a relevance.
So those who put their necks and time in this project ended up being rewarded for trusting in it from the very beginning.

So please, study better your terminologies and get more life experience.

There is a difference. Nobody involved with Bitcoin was ever told they were really working for Bitcoin Inc.

This whole discussion of pyramid vs not is useless.  Obviously not.  More explicitly, is the USD a pyramid scheme?  one that you've worked all your life to achieve?

By the "definitions" used by people who make these claims, anything that appreciates in value is a pyramid/Ponzi/whatever derogatory word they want to use.  Please, people.  Words have meanings. 

State fiat is just a straight up fraud, you know that, no point bringing that up in this discussion.

Think about that a minute and you will realize that you just shot yourself on your foot.
That very statement of yours shows how riskier was to be involved in bitcoins in its genesis and how pointless is this discussion when you lack of the most basic understandings of how the world works.
You are just wasting useless rhetoric to dissimulate your ignorance.

In short, bitcoin is not a ponzi (wtf, I am tired of hearing this crap), and it is not a pyramid.
Both terms have very specific meanings of very specific modus operandi of scams, they are not synonyms and they can't be used as blanket terms to mention anything that seems to be scam-like. IF bitcoins were ever designed to be a scam, it would still wouldn't fit either modalities.
Please, either speak with propriety or shut up.

Arguing over semantics or definitions of words and phrases is all very well.

What ever the case is, one thing is clear.

An entity, whoever it/they may be, has the Bitcoin market cornered and tied up like it was their bitch, and this entity has the power to both push the market extremely high and to crash it. Anyone who fails to acknowledge at least this, is a grade A fkn clown.

All this DoD attack blah blah etc etc shit is fkn bollocks and is not what is responsible for what has gone down today.

Semantics is everything.
If I say "MtGox is the shit!", is completely different from "MtGox is shit!"

In which case the difference would be syntactical

good nitpicking lol go back to school.

The greed of people make them think it's a pyramid scheme. Who tell you guys you will get "more money" with bitcoins?

The objetive of BTC was to create them and buy things (an economy separated of the actual), not to be created and changed to dolars...

In theory. In practise the vast majority of bitcoin talk revolves around people hoping to become millionaires for doing nothing of any societal value; just like the banksters they hate.

as long as gox queue still long, it shall rise

It's all about the Dunning-Kruger effect http://en.wikipedia.org/wiki/Dunning-Kruger_effect (http://en.wikipedia.org/wiki/Dunning-Kruger_effect)

When you raise them one way, they tend to stick with it.  Change starts at home :P

Spot on.  Frankly I find it amusing that the same people who saw the price rise at an exponential rate find it so inconceivable that it could drop by a similar degree, the level of naivete is just staggering.

This, smart money says it cant go below $50. I might not be worth $250 either, but it wont go below $50.

I wish I could send you kudos.

Why all the new users? Has Bitcoin gotten free/new exposure on a national level or something? I'm trying to find out what has changed to warrant these fluctuations and I can't find any.

Not really - In a Ponzi there may well be actual trading and value adding, but they pay out more then they make to attract more funds to have bigger leverage/market domination. You only hear about the ponzies that go on to long and crumbles, or the ones who  misses the market and have their books combed trough.

Still - bitcoin is not a ponzi or pyramid - it's just very new at having a value at all, and very volatile.

Sorry, don't know who that person is.

its not as simple as one thing, and it's not liek bitcoin market is PWNed by a few players.  its just that people get out of the way sometimes when they see somebody playing games

it'll get fixed, by those willing to figure out how to profit off that game

4 USD per bitcoin next days... be prepared to grab some cheap coins which might doulble or trible in 2014 if this game repeats.

Was gonna open a new thread just for that. Really merchants that hold BTC should base the prices on that, well maybe add a little.... But now speculation based on Gox price!

For the millionth time in these forums. The price of BTC has absolutely nothing to do with the price of mining. The difficulty will adjust towards making mining a break-even venture. The difficulty rate lags the price due to the time it takes to bring miners on and offline. The price is solely determined by supply and demand.

This is so obviously true.

I could pay people good money to polish turds all day long.  Doesn't mean that they are going to be worth anything at the end of the week.

This is complete vodo stupidity. If the price goes to 20USD then most people turn off their equipment and difficulty is reduced and you can mine bitcoins for 19USD. If the price goes to 1USD, you will be able to mine for 0.95USD or whatever the general consensus on what the profit margin should be.

Mining does not set the price.

It doesn't set the price, but there is going to be serious problems if it stays lower than the cost to produce them.
That's a big incentive for miners to NOT sell them lower than the cost.

You contradicted yourself in your own post... Let me help you out...  In the PAST, the value of BTC has moved towards the point of making mining a break even venture as the difficulty level adjusts.  Like every broker will tell you though, past performance is no guarantee future results.  

ASIC mining hardware is a major disruption in the mining community.  It is vastly out performing widely available, consumer-level hardware.  It is very expensive and only useful to mine bitcoins. It is currently concentrating the new found wealth in the hands of very few people.  The expense and single, functioned nature of the mining equipment is quite unique in bitcoin history.  It may take quite some time for this situation to stabilize.

While I can agree with your final "supply and demand" statement, those concepts trivialize all the chaos and complexity underneath to such a degree it's pathetic. Why not just take the last step and say the price is solely determined by economics?

The higher price of bitcoin brings in more miners, until the least profitable ones are at about zero profitability.   

This means more electricity is used.  In other words, total cost of mining goes up.  There is a lag in this process, as you can't buy hardware in a minute.

Once more miners join, they all have to pay for their running costs in currencies other than bitcoin.  That means they must sell their BTC on the exchanges.  This creates a selling pressure on the exchanges, and keeps the bitcoin price in check.

So, yes,  the price of BTC has absolutely everything to do with the (total) price of mining. 

My guess at the Nash equilibrium in this speculation zero sum game would be this:

Try to get everyone else not to sell, then sell them yourself first.  Telling others to "hold" while you are selling is optional.

Sure it can.

While the "endowment effect" is certainly real, it is not a law.  You might not want to sell below costs, but others will, and the price can go down.   Especially in markets where you have many producers (and bitcoin mining is a perfect example of that), and their costs are different.   What might be your cost of production, might be twice expensive as others can produce them, and they will certainly sell bellow your costs.

It might also work if you are a monopolist, and you have the power not to sell below costs.  And again, this is definitely not the case in the bitcoin mining market.

So, yes, bitcoin can go to $0.50, no problem.

Well, you are wrong.

Mining does set the price, but in an indirect way.

Mining costs are the true costs of running the bitcoin network.  Somebody must pay those costs.  It turns out that when miners sell their bitcoins on the exchanges to cover the costs,  those that bought them are the ones paying for the costs of running the bitcoin network.

Higher bitcoin price will bring in more miners.  More miners, more running costs.  Those costs will end up on the sell side on the exchange.  This pushes the price down.   

There might be a lag in all those cause-effect relationships, like miners holding to sell them later.  But this will not change the pressure, it will just postpone it, and the price will swing more wildly,  just as we see in reality.

So, there you go, mining does influence the price.  The higher the price, the more that mining pushes it down.

The big question is, at what point do we reach an equilibrium?

Post your math.

I caluclate that if SR is the only user, and they have $5 million monthly volume, and if of that volume, you take 2% as "value created" because of bitcoin,  the price of bitcoin should be $1.

There are no sirious problems with that situation.  Some miners simply stop mining.  No problems in bitcoin network at all.

I don't see how this is a big incentive for miners.  Are you thinking of the "endowment effect"?  If they think the price will rise in the future, fine, miners will hold them.  If they see the price as falling in the future, they will sell, even if way way bellow their costs.  Miners are just human after all.

99% right.

The price is almost entirely determined by what the holders of the 11m coins do and how any potential buyers feel about the current price/value.

The views of the holders of the few thousands coins mined daily has only a very a small impact in that they might all be partial natural sellers, although I suspect most are natural hoarders.

There will be no equilibrium as people continually enter into the Bitcoin economy.

Besides, even if miners are running a deficit for the bitcoins they are currently mining, they could wait until bitcoin prices increase (they are guaranteed to, they are deflationary as you've heard) to sell their coins. Besides, the operating costs for any mining rig will be less then the purchasing costs of the rig.

And of those 11m coins, the price if only determined by those that trade them on the exchange.  Those that simply hold have no effect on price at all.


In an up market everyone is a hoarder.  Except those that must pay their running costs.

In a downward market, everyone becomes a seller. 

As for the 3600 coins having a small impact,  speculators will come and go, and those 3600 will be there every day for the next 3-4 years.  A large part of those 3600 will be sold, simply because miners have running costs they must pay in money other than bitcoins.

By that logic, any pyramid scheme can go on forever.




So, you agree that they have to sell them eventually.  Postponing it doesn't change the basic facts, only makes the price swings worse.   (Just as we are seeing now.)

Take a look at the price from the bubble in 2011 to the end of the year.  Explain that price action.



Purchasing costs of hardware don't enter the picture after you have it.  You keep your hardware on until your running costs are more than the value of the bitcoins generated.   So, there will always be (a sizable) part of miners that are running close to a very small or zero profitability. 

mestar is on a roll! :D bitcoin fanatics getting buuuurned

Thanks, that's an interesting way to look at it. 

Someone living in an area where the electric price is very low, they still make a profit selling at $ 5
Energie = power

Let me make this simpler for you, since you seem to be unable to understand basic things about how BTC works.

Let's say tomorrow the price of bitcoin falls to $10. Mining will be unprofitable at the current difficulty rate.Miners will come offline, the difficulty rate will fall, and it will tend towards making mining profitable for those with cheap power and/or large economies of scale. Overall, with a lag, the ROI of mining will tend towards the same point.

Let's say tomorrow a new type of processor is discovered that violates Moore's Law and makes mining super cheap. More miners come online. The difficulty rises, tends to make mining reach the same break even point, but has little-to-effect on the price/. Overall, with a lag, the ROI of mining will tend towards the same point.

To the extent that miners are "forced" to sell for fiat to buy new equipment or that they "sell for fiat" when mining is profitable but "hold" when it is unprofitable, sure mining effects the the supply and demand for bitcoin, but the overall supply and demand pretty much makes what miners are doing irrelevant, as miners are not some homogenous group doing the same thing anyway. Some are holding bitcoin, some trade for fiat daily, etc with.

Mining prices don't even affect the price of precious metals all that much, and there's no automatically adjusting difficulty rate for getting gold out of the ground. Bitcoins are extracted at a predictablew rate, no matter how many resources are thrown at it. Because of the difficulty algorithm, mining cost is simply a lagging indicator of price, not a driver of it.

I am still GPU mining, at the current difficulty and electricity consumption I will be profitable at anything over $17.76.
It so happens that the electricity is part of my rent, so it is 100% profit. Should I move my rigs to home I will not run them unless the price is $17.76 or higher in summer and in winter the extra heat offsets my heating cost and I would be profitable at anything above $10.

Not all bitcoin users are speculators, there are many bitcoin supporters, they don't care too much about the exchange price of bitcoin, they just want to get more coin. They can either mine or buy the coins. whichever is cheaper

At $200+, even the GPU mining do not need to care about the electricity, so these people will just buy more GPU to mine the coin, the number of these people are huge, so if they don't buy coins, the exchange rate will lose support of these people

When the exchange price has falled below the normal GPU miners's electricity cost, they might still mine at a loss, but there is always an exchange risk that price will never recover for a long time, and they have to pay the electricity, so many of them will stop the rig and buy the coins directly, and that will support the exchange price

Of course when the coin is in a fast adoption phase, the demand could drive price up, but I suppose most of the people who are really interested in bitcoin have both computer and economy knowledge, so mining or buying will always be their consideration, and works as a rough guideline for the base price of bitcoin

Do view my thread on the theory whether BC are a pyramid-ponzi or not.
But the USD is certainly not. It is constantly printed and is directly correlating in the best case scenario to increase in economic output.
BC mining is not remotely correlating to any real world event and are mined out of thin air.

But if this service becomes the "only viable" service in its market say by gaining monopoly status (60% market share) in the anon-currency world and maintaining it then as a service it can be valued at this price or even higher.

That's the only question. Those investing in a "deflationary currency" are greedy individuals (we all got it a bit) trying to make money out of no produce and are thus contributing to a bubble which the actual users do not want.
Frankly all you folk into this and gold and silver and so on aren't doing anyone any good.
You're basically storing up funds instead of investing them back into the economy more or less hoping that everything else goes to hell.
You're hurting america :(

The difference is that since BC depends on commerce things aren't quite the same.

USD is printed without any effort, so essentially it worth nothing when the gold backing has been removed since 1971. Before, you can always exchange USD for gold at central bank so it has value. This is a critical point that most people do not understand or don't know

Since then, the value of USD is purely decided by people's consensus (like: if everyone believe it worth a cup of milk, then it worth a cup of milk), this also showed how a consensus can hold value for something for decades, even the fundamental support of value is removed

But the biggest question is: If that USD cost nothing to produce, how come central bank could use that nothing to buy something that has real value ??? This against any trading/bartering principle in the world. Again, the consensus (people's trust) are utilized by central bank

BTC on the other hand, is created by using modern processor and electricity, and that cost basically decided its base value, so each BTC worth something from the beginning. This is a fundamental difference

It's just BTC is new and people have not reached a consensus about how much a BTC should worth, it takes time to do this price discovery

In some people's opinion, you should totally forget about fiat scam and start to trade real goods and services for bitcoin, in this way you give it a value

BTW, it is not always a good thing to invest, all the investing is just a waste of resource when effective demand is low

lol, USD is printed w/ plenty of effort to thwart counterfeiting.   let's just bust out the monopoly money, right?

the value of the USD decided by people's consensus...   sounds like some sort of utopian community.

how come central bank could use that nothing to buy something that has real value ??? This against any trading/bartering principle in the world.

luckily we don't live in the stone age anymore..  most of us, anyway.  i suppose some people still trade camels for harems and what not

Saying that bitcoins have intrinsic value of electricity used to produce them is very dumb since you can't turn bitcoin back into electricity. In fact, for it to even exist, you need electricity to run all the computers that have bitcoin client installed on them and servers used to connect them to internet.

Paper money at least have intrinsic value since you can use them to attend toilet but with bitcoins, well you can't do even that...

Try sending your paper money thru internet then.

By Visa, Mastercard, paypal or Am. Ex?

without electricity?

By printing I mean that 85 billion dollar that FED added every month to his balance sheet, just number of zeros, no paper money is printed physically

You have to use your labour/service to exchange for those numbers, comparing trade camels for harems, which one is more fair?

UR HURTING MURICAAH!


Is someone printing morons?

Welcome to the party Mr. Keynes.

Contrary to your belief, savings don't destroy the economy. There's a good series of videos on youtube on the subject, the channel is: https://www.youtube.com/user/EconStories (https://www.youtube.com/user/EconStories)

Yeah I read your thread last week, it is sad and irritating to see what happens. I feel for you.

Actually your story is one of the things that convinced me to invest in Bitcoin business.
Well.. investing skills since I'm nearly broke ;) But I'm good at software design, so I was thinking to create something to help Bitcoin to fight back against the madness of the bankers.

Dude I'm sorry for your loss but first of all you will not lose your 720 000 unless that bank is a shady crap-bank (and in that case it's your fault) but you will just pay a small tax on it. On the topic you didn't invest your money but kept them in fiat currency which is just as bad as keeping them in bitcoins or gold or anything else.

Depending on what you do 820 000 isn't necessarily to much to have in currency so I can't blame you dude, I'm sorry for your loss :(

Well pointed :D

Shady crap-bank?
Say that to the Argentines, to the Greeks, to Cypriots and maybe soon to the whole European Union.
The whole fractional banking concept is rotten and it will hit harder than you imagine. It is not about a single crappy bank, it is about the system itself.

The only banks that will survive are the Islamic banks, because their superstitious belief that usury is sinful made them create the most stable banking system in the world: full-reserve and no interests in loans.

So before bashing something new to you, you should wonder how little you know.
You guys are bashing that bitcoiners are making money without creating value, what people here are doing is insignificant compared to what actual banks are doing, which is exactly that but on steroids. Ever heard about the money multiplier mechanism inherent in the fractional reserve banking? They create money out of thin air, without printing bills. The most ludicrous way of making profits by doing nothing. A single bank is making more per day than the whole bitcoin economy a year.

The big difference here is that bitcoins are not creating money out of thin air, but appreciating in value in response to actual demand.
The fractional reserve banking is a money printing machine without the ink, and EVERY western bank makes money that way. Infinitely.
If you all bashers still don't understand the difference, go back to your textbooks because this is flying way over your heads.

poppycock.

Just keep repeating it to yourself over and over until you believe it.

Miners are the primary suppliers of bitcoins for sale at sane prices. The vast majority of miners sell some large percentage of mined coins to cover electric and hardware costs. Whatever's left they speculate with...

The degree of speculation of any subset of miners is up for debate, it can be as simple as holding until the price reaches some point or as complicated as day trading.

~

Speculators probably actually control more bitcoin that miners... but they generally aren't placing market orders like most miners are.

What he meant was that the prices can go way lower than the production cost, in which case miners might simply stop mining.
It is not like the prices on the market are hardcoded just because it is the cost of production, that's a fallacy.
The $50 a bitcoin is a pretty tough resistance, but if it breaks through it, mining might not be an economical venture for many.

Some might choose stopping the mining altogether until the price recovers, and some others might think that it is just temporary and simply keep generating bitcoins at a short term loss believing that the prices will rise again in the future and recoup their losses then.

In either case, the bitcoin market price is not tied up to the cost of production.

This happened because of greedy fuckers.

We could of steadily reached 500 dollars by the end of this year,from 10k BTC for a single large pizza.

But noooooo, we had to reach the highest price as soon as possible.

Agreed. I don't know very many serious miners (10s or 100s of gh/s of mining hardware) who'd operate at a loss for very long...

That being said, I'm still adding GPUs to my fill slots on my rigs. the 7950s I'm buying are still profitable at anything over 12.50 But I'm not actually selling any btc currently. I pretty much sold all my reserves when it hit 240, so the hardware I'm adding and the electric costs are covered until the end the end of the year. Now I'll just forget about the market and take another look in december. My biggest decision is how much of the left over fiat from my profit taking pre-correction should be used to purchase btc at these lower prices.

Totally.  I calculate that my break-even is at ~20$/month and I have a super small operation (360 MH/s; 3MH/watt). 

Not to mention the hardware cost.  Certainly no [intelligent] new miners will jump in.

This happened because Bitcoin has no approperiate structure for exchange against fiat. No one got a stake in the game but us "Who believe in bitcoin". So either address the real problem and do something about or speculate silently like other useless non-contributing-positivly members.

I'm fascinated by this math but it doesn't seem logical to me. I don't think the break-even prices you give are constant. Now I haven't thought about this a lot so there's a strong likelihood I'm wrong. Please show me where.

Manfred says currently he mines 6.3 BTC/month at a cost of $150/month or $23.80/BTC
Adrian-x says the same (I'm guessing) calculation gives him $17.76/BTC

It seems to me however that at current BTC prices similar rigs must be profitable for everyone else as well. This encourages more people to mine raising the difficulty.

As the difficulty goes up, your constant hash rate rigs generate LESS coins at the same energy costs. RAISING what you see as your break-even rates. So say the hash rate doubles and difficulty doubles. Now aren't your break-even rates $47.40/BTC and $35.52/BTC respectively?

Do you simply recalculate your particular rigs minimum break-even every time the difficulty changes?
Can you do this calculation in advance? Or are you simply doing it retrospectively.

The real problem are two:
In short term, there is no centralized way of controlling it. That was the classical approach before bitcoins.
In long term, it will keep being volatile unless we develop a self-sustaining Bitcoin economy, that means businesses that can sell in bitcoins and get supplies in bitcoins, pay employees in bitcoins, because they can purchase whatever they need for a comfortable life in bitcoins.

Until that can happen, volatility will keep going and going unless its liquidity increases, otherwise it will keep fluctuating until it destroys the currency.
A "national" currency with a "national" economy.

The next step for stability is to become the first global digital nation.
We will eventually have to refer to a Bitcoinian GDP when we are all producing goods solely for the Bitcoin market.
I mentioned here and I thought about my worries about the difficulties of such future:
https://bitcointalk.org/index.php?topic=171412.msg1860746#msg1860746

I know this post was from a few days ago but can anyone explain to me the logic in it?

I don't see the drug trade being very supportive of the bitcoin price at all. Tear apart my logic and show me where I'm wrong.

Presuming a drug dealer sold $1,000 of (X) per day when coins were stable around $30/BTC.
That means that on any given day drug purchasers were buying $1,000 of new BTC on a market = (-33.33 BTC)
AND the drug dealer was selling yesterdays $1,000 of BTC on a market = (+33.33 BTC)
As long as his sales stay flat the drug dealer exerts no pressure on BTC price at all.

In fact if the the BTC price goes up then the drug dealer needs fewer coins to transact his business.
Only if the price goes down does he needs more coins.
As such, the support level that drug dealing lends must be less than $30/BTC

If the price oscillates around $30/BTC slowly the drug dealer doesn't have to care.
If the price moves faster, drug dealers are very likely to become day to day speculators and amplify the oscillation.
(turn over BTC slowly while the price moves up, turn over BTC quickly while the price moves down.

In no way to I see how the drug trade could possibly "support" a BTC price at the $550 level. You would have to presume that the drug trade had grown crazy exponentially since the $30/BTC level.

personally, I recalculate it periodically.

I choose to evaluate my operation as a whole. Total cost to run relative to earnings at btc/usd rate. I include a repayment plan for any hardware i've purchased. Often this amounts to vastly reduced earnings in a given time period, since I'm inclined to think of the $700 profit as 'paying off' the last 2 graphics cards I bought and only making 100 bucks that week.

Thank you for answering! That sounds quite sensible to me.