Wait, people have been handing over their bitcoins to some guy on the Internet who promises large returns on their investments?  This is going to end well...  I guess some people need to learn the lessons of history anew.

Mmm, like I thought, there's nothing real behind this rally.  Skyrocketing to $9.50, then instantly plunging to $7.60.  Yeah, that's rational.  The last time we saw action like this was someone playing with stolen bitcoins.  Bitconica got cleaned out (again) recently, so who knows?  This forum being inaccessible for a few hours during the market turmoil also seems a little too convenient.

Don't let the excitement of $9+ get to your heads, we could be in the low $7s in an instant.  Don't let the bid 'walls' fool you either.

I am astounded by this morning's price action.  $8.86 currently, in a few hours of mad trading with massive orders.  Whoever is responsible, I say bravo.  Good show.  Is there any tangible news behind the current rise?  Not just 'new bitcoin service coming, people buying up' or something equally flimsy.  Anything real behind the rally or the more usual 'I'm buying because the market is going up'?

People sell and move the cash back to a bank as they may believe the current price is as good as it gets for a while.  I sold a reasonable number of bitcoins last year between $15 and $25 each when the forums were jumping with speculation of $100 by the end of 2011.

Why move the money?  One word: Bitcoinica.  A business that manages to get hacked after a previous hack closed down the business and web site is quite possibly a world first.  I don't intend to leave my money sitting around anywhere, including MtGox.  My bank is backed by thousands of employees.  If someone screws up my account will be made whole, by the bank or government.  If someone screws up in a bitcoin institution it seems not even the police are troubled by a phone call.

You would be surprised how many speculators and investors don't know this obvious information.  They see an exponential price rise and their only conclusion is to jump on board quick as it's going even higher. 

Is $7+ a bubble?  Probably not, but it's the point where we saw a previous sell off all the way back to the mid $4 range.  I'm a bit surprised we're still sitting well over $6 however, as I thought we'd be back to the low $5 range by now after the hype cycle surrounding Greece died down.  Still, watching my bitcoin fortune grow by doing nothing is very pleasing.

Too many people bought bitcoins on the way up from $5 because of:

- Hopes for a Greek exit from the Euro
- The Spanish hitting unsustainable bond rates and being forced out too
- The US Federal Reserve hitting the Print button on its computers

None of the three happened so it's natural there's going to be a sell off.  Probably back to the mid $5 range, unless Europe turns pear shaped.  Could happen any day, or not happen at all.  People will take easy profits off the table in the meantime.

If you know what a bitcoin is, can generate one, and know what to do with it, you're by definition richer than 80, probably 90% of all humanity.

Ask the average person on the street if they think gold is valuable (could be almost any country).  I bet you get a pretty much 100% strike rate.  Now ask them if bitcoins are also valuable?  If you get more than 1 in 100 people actually knowing what a bitcoin is and why someone should want one, I'll give you a cookie.

Just because something is rare and/or of limited quantity doesn't mean it should skyrocket in value.  But you already know that.

Not to mention the fraud the Greek government committed with American banking help to hide Greece's debt and squeak into the Euro.  Anyone been prosecuted for that fraud yet?  Any jail terms handed out?  Nope.  It's all 'we didn't know! who couldn't have known!' as the politicians responsible all suddenly get amnesia and play morons.

"The big news now is that the new Bitcoin rally will likely be even stronger than the first rally from April 2010 to June 2011"

Okay, sounds great.  How much will it go up by?

"This first rally led to a 10,630-fold increase from 0.003 $ to 31.89 $. In the hottest phase from March to June 2011, investors and traders entered a race to put funds into exchanges and buy Bitcoins."

So this rally will be even better, they claim?  Let's see.  $6.40 * 10630 as a minimum.  Wow, $68,032 per bitcoin.  I wonder what the site's author was thinking.  Maybe they were thinking in simple dollar terms, so they think we'll see at least $38/btc quite soon.  Still one heck of an ask.

The author also neglected to mention that although were was a race to put funds into exchange to buy bitcoins between March and June 2011, there was one heck of a stampede to take profits and limit losses on the way down too.


The current rally is a classic selling the sizzle, not the sausage rally.  Thousands of traders are expecting Greeks, Spaniards, and maybe others to seek shelter in bitcoin from currency controls.  Therefore, why not buy in now before desperate people pour millions of Euros into bitcoin?  Should that not happen however I'd expect we'll be trading in the mid to low $5 range quite soon.  There is also no evidence of the average Greek looking towards bitcoins as a safe haven.  I bet most have never even heard of bitcoin.  Try explaining how bitcoin works to the random worker on the street, and then get them to buy some.  Not a simple task.

That's good for the merchant, but not the customer.  I have had to issue charge backs against a handfull of merchants over the years who took the money and ran.  Easy and pretty simple process.  Who do I contact to get my bitcoins back?  We can't assume that every merchant who deals in bitcoins is completely trustworthy.  If an intermediary is used (like Mastercard/Visa/et al) but for Bitcoins, they'll no doubt add their own service charges in for every transaction.  Which brings me to my second point...


Every time I've had to send bitcoins to MtGox I've paid a transaction fee.  For who are most transactions free of charge, and how much can be transfered?  I send relatively small amounts (5 to 10btc) to MtGox and get charged over 1% in fees by the network.  The BTC client declares the transaction is complex and I must pay up to support the network, or not transfer BTC at all.

Or any of the other currencies MtGox supports, unless the suggestion is MtGox isn't paying all currencies, rather than just USD.

In the short term it is bullish for bitcoin if MtGox can't meet its obligations, but longer term it's quite damaging.

Rumours of MtGox not paying USD?  Any evidence of that?  If true, seems like a reason to get money out of MtGox any way possible, rather than convert it to bitcoin.

Governments have nothing to gain from bitcoin.  There is no being left behind here.

Outlawing bitcoin is actually quite easy: show examples of drug dealers/pedophiles/terrorists using it (real or not), write a law, pass it, ban bitcoin use by citizens of the country where the government governs.  This would automatically prevent that nation's banks from dealing with bitcoin exchanges, thus frustrating most ordinary users' ability to use bitcoin.  No need to block actual bitcoin use.  Just threaten users with penalties similar to money laundering.

Bitcoin isn't very useful to most people without free and open ability to transfer money to/from exchanges and the subsequent funds to/from banks.  Try to sell 10000 bitcoins for USD$ on the internet without using an exchange to see how difficult it can be.

Here comes the bull trap.  Watch it work.  Enjoy.

Remember early last year when he suggested everyone go out and buy silver because it was about to boom?  Bring down the big banks holding the price down?  Didn't work out so well.  I used the mini bubble and reports such as his as indicators to sell.  Did rather well.

He seems to have a thing for silver.  No country on the planet is going to link its currency to a commodity that can't be arbitrarily created.  Governments aren't that stupid. 

That's probably the biggest problem with this crisis.  After the Greece problem is solved (by booting them out of the Euro or throwing billions more towards them) the market will sharpen its knives again and go after the other low hanging fruit: Portugal, Spain, and to a lesser extent, Belgium, Italy. 

In a related matter, it seems like either memories are short or people think they can get out before the next bubble collapses and leave someone else holding the bag.  Iceland is blowing a brand new property bubble:  http://www.bloomberg.com/news/2012-05-29/iceland-property-bubble-grows-with-currency-controls-mortgages.html

This time it seems foreign investors can't get their money out of Iceland, so they're blowing more bubbles instead.  Bitcoin isn't nearly big enough to smuggle the stranded cash out of the country.

Maybe Greece can follow Russia's 1998 example when things get a bit tight:

http://news.bbc.co.uk/2/hi/uk_news/education/177421.stm

"Teachers in part of western Siberia are being paid in bottles of vodka, because the authorities have no money to meet their wages bill."

"The teachers in the most populous Maima district of the Altai republic are getting 15 bottles each. They have not been paid their proper salaries since February or March. "

Talk about liquid assets!  And if the price of vodka tanks you can at least have a very good time.  Maybe the Greeks can try this with Ouzo.

It's an interesting question that I have in the past grappled with.  I sold mined bitcoins for between $7 and $24 in 2011.  At the time this forum was full of proclamations that bitcoin's value would continue to soar.  One post claimed if the price of a BTC wasn't $100 by the end of 2011 he would be "amazed".  Yet, I sold anyway, knowing full well that there is a limited supply of bitcoins.

The key point here is, new bitcoins can become scarce.  But scarce things aren't valuable if lots of people don't want them.  I can sign my name to a drawing.  There's only one in the world.  Yet it's not automatically worth a million dollars because no one wants it.  Same with bitcoin.  Its value will only go up if many more people want to use it, regardless of its designed scarcity.

No backups.  I guess this explains why the whole process of officially acknowledging the hack (via the bitcoinica web site) and the claims process has been so slow.