Actually, to be accurate, you lose only when you buy because you have converted currency into an asset that is not worth what you purchased it for if you can't find a buyer.

Tell me a concrete reason why I should every buy a bitcoin. Ever.

I get paid in dollars. I put the dollars into a bank. Zero transaction fees to do that. My monthly bills are paid automatically from my bank account. Zero transaction fee to do that. I have a credit card (electronic cash) that I can use anywhere in the world. I pay no fees, the merchants pay the fees. I get 2% cash back for using the card. The balance is paid automatically every month from my bank account. No transaction fee for that. I can buy whatever I want online using my credit card and if I have a problem, I can dispute the transaction and reverse it. Transactions are immediate.

I don't have cash under the mattress. I have stocks, bonds, real estate. None of those are dollars, they are priced in dollars.

So, since you believe in the technology, tell me why I would ever want a bitcoin.

And no, I am not worried about the "value of the dollar" because as I stated, I don't have dollars under the mattress. I have stocks, bonds and real estate. I don't hold dollars as an asset (and neither does anyone else).

When you bought your virtual coins, you likely bought them from someone who paid $100 for all of them. You paid them $1000s for something they paid $100. They are very happy and probably used the money they got selling you their virtual coins to buy a nice car, some dinners out with family and vacations.

Now you are holding some virtual coins. You hope to find someone else who will pay you more for the virtual coins than you paid so you can buy a nice car, some dinners out with family and vacations.

Why would they want to buy your virtual coins for more than you paid? Because they, in turn, might think they can find someone else who wants to buy those virtual coins at an even higher price in the future.

Now... when will that person come along who wants to buy your virtual coins for more than you paid?

That is what you are waiting for. Nothing more. Nothing less.

Bitcoin and all coins are dropping because the price is determined by the last buy/sell transaction.

To maintain a price, you need buyers matched with sellers. How excited buyers are vs. sellers is what determines the price.

The reason the price goes down is because you have more excited sellers than excited buyers.

The reason there are more excited sellers than buyers at this specific time is likely due to the ICOs.

People who would buy into bitcoin want to get rich buying coins and selling them to someone else at a higher price. They want that risk. The biggest risk right now is ICOs and the ICOs have taken in a lot of money. That is buying money that would have gone into bitcoin. Instead, those people have been buying new coins from well.. scammers taking their money in ICOs

So, that new money isn't flowing into bitcoin and because of that, there are fewer excited buyers. Fewer excited buyers = lower prices

You need a constant influx of buyers to keep the bitcoin price where it is because you have a lot of people who own bitcoins and who want to sell them to get cash to buy things. More ICOs and other coins take money away from bitcoin.

Segwit has absolutely nothing to do with anything. It has zero effect on speculators.

Venezuela and Zimbabwe are two countries where the currency failed because the government failed. When a government fails, the currency it issues fails.

If the miners and developers of bitcoin got in a fight, the miners starting adding features and the developers started trying to take over the chain and users starting using alt coins because they didn't want to deal with the mess, bitcoin would fall apart in the same way.

I am in silicon valley and started a company during the dotcom bubble. This is well beyond that. When people were raising money, the investors had shareholder rights. They were on the board of directors of the company, could attend meetings and did due diligence on the company. Not all investments in the companies worked out but when they did shut down, the investors were involved.

On the going public side, companies went public that had huge losses. But they had a company behind them. It wasn't one guy selling you nothing but virtual coins where you had no ownership in the business at all.

In the long run, things with value are worth something. Things that don't have value aren't worth anything. Amazon, Google, etc. came out of that era and produced something of value that made money.

In this case, even if the company that does the ICO makes money, the buyers of the coins don't get it. So, the question is.. does the virtual coin itself have value in the long run? Why will people want to own them? For the hope they will go up in the future? To buy something?

Right now, nobody is buying any of these coins to use them. They are all buying them in the hope to sell them to someone at a higher price in the future. That works out fine if you can find someone in the future who wants to buy them at the higher price. If you can't, it doesn't work.

The only credible use for any of these coins seems to be illegal transactions. Drugs, gambling and ransomware, primarily. There is a market for that but you don't need 50 different virtual coin types for it. Just one will do.

The price of bitcoin is the last price someone paid and someone sold for it. Nothing more, nothing less.

When someone who got in early sells and makes $300, someone who got in later loses $300. It is a zero sum game. For everyone who makes money, someone loses money. This isn't stock where there is a business behind it with profits, losses and reinvestment and where people are employed. This isn't a bond (loan) that generates interest.

And it isn't a dollar. A dollar is what things are priced in. It is not a speculative asset. You can't compare the "value of the dollar" against an asset value because the dollar is what things are priced in. Nobody holds dollars. They hold stocks, bonds, real estate, etc. And most people are short dollars, they have borrowed dollars and bought assets (mortgaged homes, financed cars, etc.).

Additionally, money is taken out by miners in terms of coins mined and transaction fees. Every time an exchange is made, money goes to the miners. If the transaction fee was 1%, after 10 transactions, the miners own 10.46% of the bitcoins transacted.

There is no money "in bitcoin". Bitcoins are exchanged for a price. If there are no buyers at the current price, you can't sell. You can only sell to another buyer. And there is nothing behind it. Saying "there is nothing behind the dollar" and trying to compare it to the dollar doesn't make sense. Things are priced in dollars. People don't buy dollars and hold them hoping for a gain. They buy homes, stock, bonds, real estate, clothes, food. They get a paycheck each week and either pay down borrowed dollars, buy assets with it, put it in an interest bearing account (which is a loan to a bank, it is not dollars), buy stock, etc.

So, where is the money going.. money is being taken by miners and early buyers and money is being lost by people who bought in recently.

Right now, if I go to bitfinex I see a price of $1,956

BTC/USD    1956.1

https://www.bitfinex.com/stats

and right now, if I go to coinbase, it says the price is 1 BTC = $2,135.59  (at the top of the page)

https://www.coinbase.com/home

So, can someone explain to me why there is a $179 price difference between those two exchanges. Are they the largest exchanges? That's a 9% spread.

Makes no sense to me. Why would someone ever buy from coinbase if they charge almost $200 more? And bitfinex isn't even the cheapest exchange itself.

current price on bitfinex is $1948

https://www.bitfinex.com/stats

BTC/USD    1948.8         2401.9    -453.100000 -18.86%    

It is under $2000 right now but it depends on the exchange. The exchange prices are all over the place, there is $300+ spread between various exchanges. I don't understand why such a large spread should exist.

20 minutes after the above post, bitcoin moved around $100 lower on Bitfinex and Livecoin but only $60 on CEX.IO and $35 on Gemini, causing the spread to widen even further between exchanges.

CEX.IO    BTC/USD    $ 2,334.08
Gemini    BTC/USD    $ 2,250.02
Bitfinex    BTC/USD    $ 2,095.00
Livecoin    BTC/USD    $ 2,040.00
Huobi    BTC/USD    $ 1,807.05

Consider you owned the majority of hashing power in the network and you wanted to make more money. One way to make more money is to have higher fees.

There are quite a few things you can do to cause fees to increase and stay there. Can you think of any?

For international transfers, I use transferwise. For up to $300, it is $3 and you send in your local currency and they receive in their local (different) currency. You get the mid market rate as the exchange rate. Usually takes a day to do a transfer. I've used it to transfer to a number of different people in Eastern Europe and works well.

CEX.IO    BTC/USD    $ 2,391.14    

Gemini    BTC/USD    $ 2,285.17    

Bitfinex    BTC/USD    $ 2,194.80    

Livecoin    BTC/USD    $ 2,150.00    

Huobi    BTC/USD    $ 1,880.42    


A $500 spread? I could understand a huge spread between a large exchange and a smaller one but there appears to be a $100+ spread amongst even the largest exchanges as well. How is one supposed to know what exchange to use?

In the U.S. the currency is the dollar. Nobody keeps their money in dollars. Dollars are what things are priced in because dollars are the currency used in the United States. It is a means of exchange, it is not an investment.

Again, dollars are what things are priced in. That is the difference between a currency and an asset.

I live in the U.S. I do not have dollars. I have stocks, bonds, real estate, bank deposits, etc. None of those are dollars. They have a value that is priced in dollars. A house is not dollars. Many people in the U.S. are short dollars. They have borrowed dollars to buy a house, for example. They have a mortgage. They have bought an asset with dollars they don't have, they have borrowed those dollars, and they need to pay the dollars back over time. They hope their house will be priced more in dollars in the future.

Bitcoin is not a currency because things are not priced in bitcoins. If most things were priced in bitcoin, you could consider bitcoin a currency. When I look at buying a house, car or other item, I am not looking at a price in bitcoins. Bitcoin is an asset. When buying bitcoins, you are betting the current price of bitcoins will go up. The price put on bitcoin is based on the last price someone paid on an exchange. For bitcoin to rise in price, you must find buyers willing to pay those higher prices.  This is different from a currency. A currency does not require buyers to pay higher prices as it is what things are priced in. Market liquidity in bitcoins is determined by how many buyers are available.

One, when you buy something with a credit card, you aren't buying with your own money. You are borrowing money and spending it. At the end of the month, you can choose to pay the loan off or you can choose to roll most of it to the next month. You can't compare buying something with someone else's money to buying something with your own money.

Two, merchants do not have 2 different prices, one for credit cards and one for other methods of payment. Merchants like when people use credit card because people don't need money to buy things and the merchant still gets paid. If you are selling a $100 widget and people can just borrow money to buy it, you can make a lot more widget sales than if people need cash to buy it. Show me any large merchant that has different prices for debit cards vs. credit cards vs. cash vs. check. When I go to the store, it is the same price for any of them.

Three, there is no 10% charge to merchants. There is a fee they pay but the better position the merchant is in to negotiate with the banks, the lower fees the merchant pays. Amazon, for example, pays just about nothing to credit card merchants.

I had to pay someone from Eastern Europe last week. I wrote a check in the US to their US bank account. It cost me zero in fees. I bought something from EBay UK last week. I used a credit card. I paid no fees and, in fact, I got 3% cash back. The bank paid me to perform the transaction.

Now, you may say "but the vendor had to pay fees" when I used a credit card. Yes, that is true. But I don't see that fee, it is the same price whether I buy with credit card or some other payment system. I want to use the cheapest payment method so I use my credit card which pays me to make the transaction.

When I send people money in dollars that is transferred into their local currency, I use Transferwise. It costs me $3 to send any amount under $300 and I sent in my local currency and they get the money in their local currency (24 hour rate lock of mid market rate).

Now, I can send bitcoin to them with a lower bitcoin transfer fee but they can only use the bitcoin without fees if they use the bitcoin directly. If they don't use the bitcoin directly and want to convert it to local currency, they pay additional fees. Also, I don't get paid in bitcoin by my employer so to buy bitcoin in the first place, I incur purchasing fees. Looking at all the various fees, Transferwise is much cheaper and easier to use to send amounts like that internationally. Also, there is a legal trail to the transfer so if I get ripped off, I have proof of the transfer. If bitcoin was cheaper, I would use it. But it isn't cheaper for anything, including international payments.

Why would changing the code ruin bitcoin? Does anyone holding bitcoins care about the limit on the number of bitcoins or the fees the miners are making? All they care about is a price increase. Why should removing the limit on number cause the price to drop? Ethereum is an excellent example that shows that nobody cares about the mathematics of the coin, all they care about is if they think they can sell it to someone else at a higher price in the future.

In fact, you could make a good argument that removing the limit on the number of bitcoins would cause the price to go up as it makes the system more viable.

It is already a cashless world. I don't use cash for anything, I use credit cards for everything. All my dollars are digital. My bank balance is just a number in a computer, when I use my credit card the transaction is digital and my credit card balance is automatically paid from my bank account, each month, digitally. My deposits are digital. I never use paper cash. In the developed world, all currency has been digital for decades.

I buy groceries at a local store. A can of soup costs me $2 with tax. What fees to I pay to buy it?

Cash: I pay no transaction fee and the transaction is anonymous.

Check: I pay no fee.

Debit card: I pay no fee. The company I bought the soup from pays a small amount but I don't see it. Because I don't see it and it is priced the same regardless of how I pay for the item, there is no fee.

Credit card: I pay no fee. The company I bought the soup from pays a small amount but I don't see it. As the above, the price is the same regardless of payment. However, paying with credit card is different from the above because I am not using my money to make the purchase, I am borrowing the money from a bank to make the purchase. I can pay off the card at the end of the month and not incur a fee or I can pay interest to let the loan roll to the next month. I can also dispute the transaction if I have an issue with it unlike when I use the above methods of payment. And I can use a cash back credit card that pays me 2% or 3% back based on my purchases, effectively making the purchase 2% or 3% cheaper than any of the above options.

Credit cards are by far the cheapest option to purchase things either in person or online because things are priced the same regardless of payment. Banks charge fees to people who borrow money and maintain a loan balance on their credit cards and they charge vendors, they do not charge the person using the card.