I am very interested in the possibility of trading traditional markets via BTC, but here’s my concern:

What if Bitcoin rallies a lot and increases in value by say, ten times in a few weeks? Since you sell the Bitcoins, you are essentially short, if I understand correctly, and would have to purchase them much more expensively if I wanted to withdraw my Bitcoins.

Do you have a way to hedge that? If yes, how?

Let’s see if you will recognize the Bitcoin top for a change.

Sounds like an accurate description.

@Vladimir
If it was such a no-brainer, then why did it take weeks for the price to rise? Clearly we were in the minority here.

I disagree with this lending bubble thing because my impression is that the large borrowers/lenders are diversified well enough if they have exposure to pirate, so, in my view, there will be no masses of huge defaults on bitcoin loans for that reason. A few, yes, but nothing huge. It might happen because of an extreme price ramp, though. In contrary, a pirate default might actually be a short term bearish event considering how much of the BTC community seems to be invested. There would be lots of lost trust, just like with the MtGox hack.

If you look at the lending section, it will become apparent that people treat the pirate investment differently, especially when people ask if the other party has any exposure to pirate.

I have been predicting this since it was clear that Bitcoinica had no database backups. It took quite a a while, but it was destined to happen.

Edit: wow, look at my post count.

Poor Bitcoinica.

They will say gold is shiny, is used for jewelry and in computers. Oh, and that it has couple millenias of history.

Hundreds of thousands? Come on 'doc. If that were true, we would be seeing entirely different price levels.

Slush, every time I close and re-load the feed, it will introduce a 15 minute long gap with no trades. Is this possible to fix?

Currently, over time, the data becomes more and more corrupted so that I have to regularly delete and download the whole history again to limit it to only one 15 min gap.

Damn you. Only 20 BTC here in my spending wallet after I recently transferred away 60. I don’t like having a heavy windows wallet.

"In total there are 33 users online :: 1 registered, 0 hidden and 32 guests"

Looks dead to me. The guests are probably mostly some google crawlers.

That’s hilarious, man.

Excellent guide, concise and clearly well-researched. Thanks.

"Store of value" is one feature of a currency. People around here want to tell me Bitcoin is a currency.

Here is a meaningful chart. BTC/USD all-time on logscale with volume in USD.



Look how well Bitcoins performed for the people who actually poured money into it last year.

The biggest transfer of wealth occured right at the 32 top with the highest volume spike ever. Do you think these people would have maybe preferred staying in Euros instead of losing ~82% to date?

I agree with terrytibbs, this is very dishonest.

Most people (no, not me, before someone calles me butthurt. The purchases I made were in Feb and Mar 2011 at parity or below) bought in during May and June, also July and August 2011, and all of them got raped. How do you think they will take this up?

Only a few geeks bought Bitcoins in Jan 2011. The rest had to give up 50-95% of their money and until now they haven’t seen any positive returns. Stop trying to hide that fact.

If there was any truth to this, we would be witnessing a disaster now with Bitcoinica gone for weeks because the merchants can’t hedge via that bucket shop.

Instead, noone except a few gamblers even cares. Nothing really happened, so nothing of value was lost.

I agree that we need a good vehicle to go short Bitcoin though.

I just withdrew an amount in the region of ~50 BTC and received it in a few mins.

From Nefario I know GLBSE has traditionally had a relatively small hot wallet which needs to be manually topped up for larger transfers or when it dries out. So when noone is here to do it manually, this is to be expected.

If you think about what happened twice to Bitcoinica, you should probably value the security of your coins over this inconvenience.

@ninjarobot

This is my thought as well. MtGox has never been good at PR. I am willing to wait this one out.

However, I agree they could be a bit more forthcoming in alleviating our (not unfounded) fears.

But in turn, without shorts, a rally can extend further.