Speculation rocks! (thanks for the price drop|please don't destroy it!)

[neptop]

Whoever started this recession: Thanks!

It's way easier to make money buying cheap BTCs and sell them at higher prices than it is setting up new rigs. I don't even have to leave the desk!

There is also the nice side effect of lowering the difficulty. It's like a stock exchange, buy cheap, sell at high price and become rich only that it is way cheaper, easier and less restrictive than on a real stock market. It feels like an easy computer game.

I don't even have to add to this, because all the inexperienced people here are overly nervous and paranoid. So it is a great chance for people who have been using BC for a while now (and like me sold them at a low price, because they have been paranoid about the graphs) to use their experience and become rich.

Also, is the bottom reached? I want to invest even more money, but not at once, so I have been splitting it up to lower levels. Half of it has already been used, but this price drop doesn't appear to be over now.  Is there a good reading on this topic or some common practices on how low the buy-price should be?

I read some stuff, but I'm not sure about Bitcoin, because there are quite a few factors which aren't relevant when it comes to the Bitcoin market.

Oh and don't worry! I am not that rich, so I won't be able to buy everything. There are lots of inexperienced kids, so I think there should be enough cheap Bitcoins for all of us.

EDIT: To all others. Please don't destroy it! Don't offer too much money. I know you can make loads of it if you are fast, but we can keep this low prices for a bit longer!

The golden rule for making money: Rely on the stupidity of the masses, it will always pay off!

[1714154716]

1714154716

[hugolp]

Whoever started this recession: Thanks!

I just want to point out that the exchange of btc-usd going down is not a recession, its just the exchange of btc-usd going down. Prices change, its normal and positive, not a recession.

[Cluster2k]

There is also the nice side effect of lowering the difficulty. It's like a stock exchange, buy cheap, sell at high price and become rich only that it is way cheaper, easier and less restrictive than on a real stock market. It feels like an easy computer game.

Looking at http://bitcoincharts.com/markets/, the estimated next difficulty level is going up, not down.  It was 720,000 a couple of days ago when BTCs were worth almost $30.  Now it's 791,000 with BTC at $22.  The value of each BTC is likely to follow the difficulty curve, but there is absolutely no certainty that this has to be the case.  Just because it has in the past, doesn't mean it will do so in the future.  Everyone is aware of this fact, and should logically be hoarding BTC until they're worth many hundreds of dollars each (possibly thousands).

Is that likely to ever happen?  I wager it will not.  There are far too many existing BTC users who purchased their BTCs at less than a dollar each, or generated dozens per day last year.  These users will sell up.  How many investments yield 100x returns within a few months and are not a scam?

[neptop]

I think Bitcoins can be compared with gold, because gold is mainly used for training and mining gets harder, because it is finite and the density is lowering. That's why I opened another thread to compare it with gold. Price drops usually appear after peaks. That's what peaks are all about. What we see here for this reason is just a peak we reached.

[newunit16]

I think Bitcoins can be compared with gold, because gold is mainly used for training and mining gets harder

ok i had to register for this. its getting old people comparing BTC to gold. wtf? gold is traded based on its "value" and its "value" is derived from something physical. it makes great jewelry and decoration. that has always been its value, since the beginning. it makes a half decent conductor as well, but aside from that its value=people's desire for jewelry.

saying BTC is like gold is saying BTC is for decoration only. do you get a stiffy when you see your large wallet? no. you intend to spend your BTC for either A)currency exchange or B)goods and services.

the big spike in BTC was due to people wanting to exchange them for goods/services (see gawker article lol ) people are currently realizing that its a bit more difficult than expected. also, plenty of people seeing the spike have obviously invested as well.

honestly, if BTC is to REMAIN viable and hold a "value" it has to be accepted for goods/services or be exchanged. people are not going to keep trading it if it holds no real use outside of an exchange.

imagine if amazon started accepting BTC. what would the "value" be? plenty more than it is now. that is going to be the long haul. waiting for good penetration into the useful market. not trading it "because its like gold".

and please, dont go on to say that "BTC will hold value because mining costs $$$ in electricity and is difficult". this will only keep the miners from selling at a huge loss IF the currency is still a viable currency. if nobody accepts BTC for any transaction, and someone is willing to exchange their USD for their "useless" BTC, the smart cookies will cut their losses early.

[Cluster2k]

Another question is how merchants are supposed to offer goods and services denominated in BTC when the exchange rate to USD$ swings so wildly.  A few days ago someone was offering a 1989 BMW for 100BTC on this forum.  They would have got US$3000 back then, but only US$2100 today.  Do we expect merchants to adjust their prices daily?  What if the exchange rate swings so widely that the product's price is lower than its cost to the merchant?  That may happen over a period of months with a government backed currency (extreme examples omitted), but in only a matter of hours with BTC.

[Grant]

Another question is how merchants are supposed to offer goods and services denominated in BTC when the exchange rate to USD$ swings so wildly.  A few days ago someone was offering a 1989 BMW for 100BTC on this forum.  They would have got US$3000 back then, but only US$2100 today.  Do we expect merchants to adjust their prices daily?  What if the exchange rate swings so widely that the product's price is lower than its cost to the merchant?  That may happen over a period of months with a government backed currency (extreme examples omitted), but in only a matter of hours with BTC.

I believe in the long run the swings will be lower. But either way any merchant can do what many farmers do in RL: sell short futures/options, in the case of BTC that would be sell short long term options on BTC.

[newunit16]

Another question is how merchants are supposed to offer goods and services denominated in BTC when the exchange rate to USD$ swings so wildly. 

just tonight i seen a guy on "pawn stars" sell his 31 lincoln (believe it was a 31) for about 95kUSD then bought gold (because he was not legally able to sell the car for gold). gold has been going UP in price as the dollar has been going down.

but aside from that, the value of the USD fluctuates often. why then do people allow you to pay your rent with USD?

in an ideal and usable market, BTC will remain steady with hopefully (and likely) a small increase in value over time. if you ask me, i would consider the gawker article, and all the ensuing popularity of BTC after that, as BTC's "IPO". its not uncommon for a stock to vary wildly after its IPO.

[newunit16]

OP, I find it ironic that you keep talking about inexperienced kids, yet sound so much like one yourself.  Please report back when you've lost all your money.

Here's a tip from a real trader: any time you think you've found a guaranteed, easy source of money, you're one step away from disaster.

I think Bitcoins can be compared with gold, because gold is mainly used for training and mining gets harder

ok i had to register for this. its getting old people comparing BTC to gold. wtf? gold is traded based on its "value" and its "value" is derived from something physical. it makes great jewelry and decoration. that has always been its value, since the beginning. it makes a half decent conductor as well, but aside from that its value=people's desire for jewelry.

That is completely untrue.  Gold is as much of a speculative instrument as BTC.  Physical demand alone for gold for yield a price that was fractions of fractions of what it is now.


Gee... look at that, I guess demand for jewelry went WAAAYYY up, even though we're in the midst of a huge recession:

when i see that graph, i turn it upside down in my head and change the title to "USD Value"
if gold were useless, we may as well trade pictures of UFO's.
gold's usefulness secures its value.
if gold is expensive, your currency is cheap.

gold has seen such a large, out of line with inflation, rise not just due to our cheap USD but has been compounded by people's faith that gold is a more secure investment. gold's usefulness remains pretty constant, which is one reason people like it. it has a use, and the demand for the things it's used for doesnt vary wildly.

[neptop]

I think Bitcoins can be compared with gold, because gold is mainly used for training and mining gets harder

ok i had to register for this. its getting old people comparing BTC to gold. wtf? gold is traded based on its "value" and its "value" is derived from something physical. it makes great jewelry and decoration. that has always been its value, since the beginning. it makes a half decent conductor as well, but aside from that its value=people's desire for jewelry.

saying BTC is like gold is saying BTC is for decoration only. do you get a stiffy when you see your large wallet? no. you intend to spend your BTC for either A)currency exchange or B)goods and services.

[SARCASM]Yeah, I know people and banks decorate their safes with gold bars in them and of course gold is just that expensive, because it looks nice.  

And of course it is not because it is a hard to get, limited resource that people therefor trust[/SARCASM]

I know it is used for lots of stuff, like jewelery and electronics. It's just that's its still mostly used as a store of value, even in form of jewelery. It's in peoples safes most of the time. You've got a few grams (at most) of it in electronics and decorative stuff. In most jewelery it isn't pure gold anyway. Also gold on it's  looking that nice. which is a highly subjective anyways, so nothing to justify the price. It also isn't as important as it was a long time ago, when it was maybe the most important status symbol. These days you aren't looking like an important person, because you wear gold.

I know the comparison isn't perfect, but I think it is at least as good as the comparison with a regular currency is. It is limited and it becomes harder to get. It can be used for stuff like Namecoin and maybe someone finds a way to make it look aesthetic.

[AyeYo]

when i see that graph, i turn it upside down in my head and change the title to "USD Value"
if gold were useless, we may as well trade pictures of UFO's.

Then you're admitting that it has absolutely nothing to do with the demand for jewelry.

As already stated, gold is intrinsically worth only a fraction of a fraction of what its current value is.  It's all speculation.  People are pulled to it not because it has any real intrinsic worth, but because of it's magical appeal as the "real" currency.  This comes from its history of being wanted and used as currency, which has now falsely lead the ignorant masses to believe that it has high intrinsic value.  In a true SHTF scenario, gold will be worthless - you cannot eat it, drink it, hunt with it, or defend yourself with it.

[newunit16]

i agree, it is mostly used as a representation of value.
if people stopped buying gold rings tomorrow, and threw them all away in the garbage. would you be digging through the trash to get those pretty rocks? i wouldn't. because nobody would want them, thus they are worthless.

if people have no use for an object, it is worthless. else rare, hard to get, useless objects would be valuable. kind of like pictures of UFO's.

[hugolp]

I think Bitcoins can be compared with gold, because gold is mainly used for training and mining gets harder

ok i had to register for this. its getting old people comparing BTC to gold. wtf? gold is traded based on its "value" and its "value" is derived from something physical. it makes great jewelry and decoration. that has always been its value, since the beginning. it makes a half decent conductor as well, but aside from that its value=people's desire for jewelry.

I think you are wrong.

First of all, bitcoins are physical too. Electric and magnetic fields are physical.

Second, the current valuation of gold is far far away from its utility as conductor or jewlery. The current price of gold is only explained by its monetary use. If gold stopped being used as money its price would probably drop by more than 90%. Is that so different from bitcoins? Yes if bitcoins stopped being money its value would drop 100%, but if you loose 90+% of your wealth its still a fucking disaster. So not so different gold from bitcoins.

The fact that originally gold started being used as money because people valued it as jewlery, and bitcoin was orignally valued by enterpreneurs with a vission is quite meaningless. Both gold and bitcons had an original value.

saying BTC is like gold is saying BTC is for decoration only. do you get a stiffy when you see your large wallet? no. you intend to spend your BTC for either A)currency exchange or B)goods and services.

the big spike in BTC was due to people wanting to exchange them for goods/services (see gawker article lol ) people are currently realizing that its a bit more difficult than expected. also, plenty of people seeing the spike have obviously invested as well.

honestly, if BTC is to REMAIN viable and hold a "value" it has to be accepted for goods/services or be exchanged. people are not going to keep trading it if it holds no real use outside of an exchange.

You are 100% correct in this one and it is very important for the Bitcoin community to start promotng itcons around merchants.

imagine if amazon started accepting BTC. what would the "value" be? plenty more than it is now. that is going to be the long haul. waiting for good penetration into the useful market. not trading it "because its like gold".

and please, dont go on to say that "BTC will hold value because mining costs $$$ in electricity and is difficult". this will only keep the miners from selling at a huge loss IF the currency is still a viable currency. if nobody accepts BTC for any transaction, and someone is willing to exchange their USD for their "useless" BTC, the smart cookies will cut their losses early.

100% correct again.

[newunit16]

BTC is physical like gold, but has less real world use.

gold's value in jewelry is two-fold. it's pretty, and has always fascinated humans, and it is valuable. currently BTC is not that fascinating to look at, or rather to spend for goods or services, but it is value.

though i do not think the current price of BTC reflects its real world value.
i also think that if BTC were able to be spent at various large online outlets, then its current value is FAR under what it would be.


also, the price of gold is 100% on par with the market demand for jewelry. buying gold jewelry is no different than buying gold bars. typically you pay MORE for a gold ring, even. if the price of gold was not in line with the price of gold jewelry, then id be buying cheap ass gold rings, melting them down, and selling it for more USD. sorry if i didnt make myself clear, but i did not mean the price of gold is directly related to the jewelry and conductor market. but those things sustain the objects viability.

[hugolp]

BTC is physical like gold, but has less real world use.

gold's value in jewelry is two-fold. it's pretty, and has always fascinated humans, and it is valuable. currently BTC is not that fascinating to look at, or rather to spend for goods or services, but it is value.

though i do not think the current price of BTC reflects its real world value.
i also think that if BTC were able to be spent at various large online outlets, then its current value is FAR under what it would be.


also, the price of gold is 100% on par with the market demand for jewelry. buying gold jewelry is no different than buying gold bars. typically you pay MORE for a gold ring, even. if the price of gold was not in line with the price of gold jewelry, then id be buying cheap ass gold rings, melting them down, and selling it for more USD. sorry if i didnt make myself clear, but i did not mean the price of gold is directly related to the jewelry and conductor market. but those things sustain the objects viability.

We kind of agree, but I dont think gold as jewlery sustains gold at these prices. Its monetary use is what sustains gold. Do you really believe that a drop of 90+% of its price would really not be a big deal? The real advantage of gold in this issue against bitcoin is centuries and centuries of tradition.

[AyeYo]

^You hit the nail on the head.  It's tradition and historical demand (based on absolutely nothing, really) that drive gold these days.

Gold is no more useful than the USD or any other fiat currency.  In fact, at least you burn dollars to stay warm and cook food.  You can't even do that with gold.

also, the price of gold is 100% on par with the market demand for jewelry. buying gold jewelry is no different than buying gold bars. typically you pay MORE for a gold ring, even. if the price of gold was not in line with the price of gold jewelry, then id be buying cheap ass gold rings, melting them down, and selling it for more USD. sorry if i didnt make myself clear, but i did not mean the price of gold is directly related to the jewelry and conductor market. but those things sustain the objects viability.

Allow me to bitch slap you with facts...


As gold price has soared through the roof, demand for gold in jewelry use has been on a steady decline:





And that's even using a chart from an ultra-biased gold pumping site.  Actual speculative demand for non-physical gold is what's driving the price though the roof.

[hugolp]

^You hit the nail on the head.  It's tradition and historical demand (based on absolutely nothing, really) that drive gold these days.

Gold is no more useful than the USD or any other fiat currency.  In fact, at least you burn dollars to stay warm and cook food.  You can't even do that with gold.

No. Gold is useful as money. Its a very important role to play, because money is essential to coordinate the production of people that dont even know each other and allows human progress. How is that not important? How is that "based on nothing"?

Gold has some nice qualities that make it suitable for money. That is a very important role. And so does Bitcoin.

Allow me to bitch slap you with facts...


As gold price has soared through the roof, demand for gold in jewelry use has been on a steady decline:





And that's even using a chart from an ultra-biased gold pumping site.  Actual speculative demand for non-physical gold is what's driving the price though the roof.

And you are wrong again. Your chart proves that people is using gold as money, and it makes sense since the governments and their banking cartels are trying to pay off their unpayable debts by printing the pieces of paper (or electronic accounts) that they force us to use as money.

[AyeYo]

^You hit the nail on the head.  It's tradition and historical demand (based on absolutely nothing, really) that drive gold these days.

Gold is no more useful than the USD or any other fiat currency.  In fact, at least you burn dollars to stay warm and cook food.  You can't even do that with gold.

No. Gold is useful as money. Its a very important role to play, because money is essential to coordinate the production of people that dont even know each other and allows human progress. How is that not important? How is that "based on nothing"?

Because the value of gold is based on the fact that people think it's valuable, nothing more.  It has some small, declining value for use in jewelry, and miniscule value for use in industrial applications, but otherwise, the majority of it's value is based solely on the fact that people assign it that value.  This is not different than any fiat currency.  The value of the USD is not based on anything intrinsic, but simply on the fact that people assign it a value.

Can't understand that?  Think of a true SHTF situtation.  You're shipwrecked on a deserted island.  How valuable is your gold then?  Do you think people are going to sell you their food or weapons for gold?  Of course not.


You can make anything into a currency, and Bitcoin is proof of this.  Gold makes no better of a currency than iron, rocks, ivory, toe nail clippings, etc.  Anything with a finite supply (which is everything) that doesn't decompose quickly can be used as a currency.  People have simply gravitated to gold historically (because "oooohh shiny" back in the caveman days), and it has maintained that appeal until this day because that's how it's always been.

[evoorhees]

Because the value of gold is based on the fact that people think it's valuable, nothing more. 

False.

I've posted this before and will post it again... "It's extremely important to understand why gold is valuable if one is to understand why Bitcoin may be even better. Gold's value comes from its physical properties - it's divisibility, durability, homogeneity, scarcity, etc.  Think of all things out there in nature... few offer all the same attributes as gold. Iron is divisible and durable, but it's not scarce enough. Wooden sticks are divisible, but not able to be recombined. Food can be used as money, but it spoils when saved and two pounds of food are not identical - not homogeneous. Cows make a poor money because dividing one in half would kill it. Gold, and other precious metals, are the only things mankind has found that work extremely well as a money. Anything CAN be used as a money, but some things are much better than others for this purpose. We use fiat paper now, of course, only because governments backed with violence and guns have forced us to do so."

The value of gold is based on the fact that it's properties make it useful as money. Not because everyone just "arbitrarily" assigns value to it.

[tehcodez]

A Real Gold Mine?
Principally used in jewelry, gold (chemical symbol Au) is also used generally in manufacturing (and by the electronics and computer industries in particular) due to its excellent thermal and electrical conductivity, resistance to oxidation, and inalterability. The computer industry uses several hundred tons (318 tons in 2003, for example) of the element every year.
The precious metal is found in almost all computer components--processors, motherboards, extension cards, memory...

- From http://www.tomshardware.com/picturestory/550-gold-motherboard-chemistry.html

318 * 2000 * 16 * ~$1500 > $15B/yr.