I'm sure those people who have been really affected by Cyprus incident had not have their account verified to be able to deposite funds yet, once they do, they will have a much better price to enter  |
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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.
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 |
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Eleuthria, can you explain why the Current Shares jump from a high number to 0, but the shares in Open Shifts and Open Shift Earnings do not change. I suppose that when a high number in Current Shares turns to 0, it means the current shift is over and the shares in open shifts will change?
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Something wrong again?  |
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Exchange means the connection to existing financial system, I think that is much needed cooperation, why don't directly list on some existing established exchanges like LME/CME/FOREX
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You can not move fiat money ELECTRONICALLY without any centralized organization
I think localbitcoins.com is one of the choice, this is essentially already a very distributed exchange system. Buyer and sellers meet personally and carry the trade using cash, which has nothing to do with existing banking system
But this system have lots of limitations, you can't trade fast, you can't carry a case of dollars on the street, and you really don't want to reveal your idendity if huge amount of money are involved
These just showed how much we are used to dependant on a centralized authority when it comes to trust
The trust model in ripple is worth studying, but then you are dependant on your social network, which again have some limitation and privacy concern
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What I see is: All of the exchanges do not have enough fiat to deal with such huge amount of selling. Maybe they have some accounts waiting outside, but the fiat money has not been funded into the customer account. Those who want to buy will feel lucky and wait for price to drop more, but those who want to sell suddenly lost the counter part that they can trade with
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Yes, silver is a highly manipulated market, maybe due to the majority of silver are hold by a few private hands. It's the same for today's bitcoin market, hope this situation will improve after more players join the trade
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In a normal stock market, if it crashes hard like bitcoin is doing now, then FED must step up and print a lot of money to support the exchange price of major banks. But for bitcoin, the only support is its limited supply. I believe, this single support is powerful enough to achieve the things that FED can not do, let's see how this will play out  There was a huge inflow of funds over the past few weeks due to the speculative run ... nobody was losing money and the value of their holdings increased nearly each day. But that's partly because there are no decent methods to short bitcoin. If there were methods to short, then on the way back down there would be short covering. The reason there's no decent methods to short bitcoins is because that would require a lot of pioneering in the legal arena to seek regulators approval to trade bitcoins as a commodity. So the methods that exist are like icbit.se, which operate pseudonymously. But the point was, it isn't just the FED that is needed. If we were to transact freely, there would exist options markets, futures contract trading, lenders, etc. all of whom, in concert, would help lessen the volatility that Bitcoin sees today. Before we have a mature derivative market, MtGox can implement the Limit Up/Limit Down rules to reduce the volatility By the way, derivative market could also be crushed by the price shock, cause more severe damage due to their higher leverage. A price drop of 30% in house price will destroy the whole economy due to many derivates based on it. The fundamental is important |
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In a normal stock market, if it crashes hard like bitcoin is doing now, then FED must step up and print a lot of money to support the exchange price of major banks. But for bitcoin, the only support is its limited supply. I believe, this single support is powerful enough to achieve the things that FED can not do, let's see how this will play out |
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I think this is purely psychological. People are just not used to such kind of fast price appreciation, because they have never seen this before
Interestingly, I asked my friends who do not know much about bitcoin before the crash, and when they heard the recent fast price rise, all of them saying this is a bubble and it is going to burst. It's obvious, people's mindset have been fixed at a yearly ROI of less than 100%, never a monthly ROI of 5X, and that fixed mindset will make them start to fear when price rise fast, and eventually drive their panic sell action
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A 10% Limit Up per day won't affect the latest rally, but can definitely help to avoid the sudden crash
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When the price was going up up and away I bet you were perfectly happy.
Now that it's returning to reality, out of the woodwork come all the people who want regulation by central authorities. It would be funny if it wasn't so sad.
I don't have an account at MtGox Notice that it also include "Limit UP". This rule is not targeted at exchage price itself. It is to avoid wrongly triggered incorrect trades and in case the exchange do not have enough liquidity or processing power. Give it 10 minutes, the liquidity will recover, but let it go, the liquidity will get worse and worse due to the panic sentiment change, although no fundamentals changed the price would still hit zero, and trigger a serials of other events |
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It's a trend in today's electronic trading world to limit the trading range during a reasonable time frame http://cdn.batstrading.com/resources/membership/BATS_US_Equities_Limit_Up_Limit_Down_FAQ.pdf"On May 31, 2012 the Securities and Exchange Commission (SEC) approved, on a pilot basis, a National Market System Plan, also known as Limit Up/Limit Down (LULD), to address extraordinary market volatility. As LULD is phased in, Single Stock Circuit Breakers (SSCBs) will be phased out. Upper and Lower Price Bands will be calculated based on a continually updated Reference Price and disseminated marketwide by the consolidated feeds (SIPs) with trading prohibited outside of the specified price bands." |
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Price drives difficulty and what miners are willing to spend on electricity.
Difficulty and what miners are willing to spend on electricity never drives price.
There are many reasons people are interested in bitcoin, many has nothing to do with the exchange price. Economy, political, technology, many reasons... Suppose that you are really interested in bitcoin and believe its long term potential, you never look at the exchang price to evaluate it, you only look at the most cost efficient way to acquire bitcoin, be it mining or buying, does not matter |
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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
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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
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. 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 |
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I think most of the hardcore supporter for bitcoin are miners with certain knowledge of computer and economy, so their first choice is mine the coin with most widely available technology, e.g. GPU
When GPU mining is not profitable due to rising difficulty (the generated coin could not pay back the electricity cost), they will start to shutdown the mining rig. But they are still interested in bitcoin, then they will buy coins from exchange, so higher difficulty will result in a higher exchange rate
Currently 1G hash gives 0.06 bitcoin per day, using $3 electricity, that is about 50 USD for 1 bitcoin
But when ASIC mining rigs arrived, this balance changed. If many miners upgraded to ASIC, they will have a very high return from the beginning, they won't buy coin any more, the number of miners who were forced to buy bitcoin will decrease, this will cause the bitcoin exchange price to lose some support
It's clear to see why Avalon did not want to expand their production capacity, since that will not only increase the network difficulty and reduce ASIC miner's profit, but also hurt bitcoin's exchange value
Suppose in the not too far future, ASIC mining devices become widely available, then it will again be the same as last year when people using GPU mining rigs. The amount of total electircity cost will drive the exchange rate
The bitcoin exchange rate is supported by the hardcore miners, they are the real driven power behind bitcoin economy, not like any outsiders who only look at exchange rate, they are interested in bitcoin itself regardless of used mining technology and exchange rate
Recent fast price appreciation largely due to arrival of ASIC miners which brought a 40x increase in mining efficiency and potential difficulty increase. I think in the future the price development will be more gradually
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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
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