Gotta love volatility

[nyan.kitty1024]

Back at 41.9 now, from 34.

[str4wm4n]

that shit cray

[Cluster2k]

Traders and speculators love it.  MtGox loves it too.  Imagine how much they made in trading fees over the last few hours.

Everyone else should hate it.  A 30% crash and bounce back within a matter of hours?  Not good at all for anyone looking to seriously use bitcoin to run their business.  What if next time the price crashes 50% and there is no rebound?  How is a business meant to price their goods in bitcoins with risk like that?

[TheKoziTwo]

Traders and speculators love it.  MtGox loves it too.  Imagine how much they made in trading fees over the last few hours.

Everyone else should hate it.  A 30% crash and bounce back within a matter of hours?  Not good at all for anyone looking to seriously use bitcoin to run their business.  What if next time the price crashes 50% and there is no rebound?  How is a business meant to price their goods in bitcoins with risk like that?

If they don't want to hoard they could immediatly convert the incoming bitcoins to dollar using bitpay for instance. No risk.

[Cluster2k]

Traders and speculators love it.  MtGox loves it too.  Imagine how much they made in trading fees over the last few hours.

Everyone else should hate it.  A 30% crash and bounce back within a matter of hours?  Not good at all for anyone looking to seriously use bitcoin to run their business.  What if next time the price crashes 50% and there is no rebound?  How is a business meant to price their goods in bitcoins with risk like that?

If they don't want to hoard they could immediatly convert the incoming bitcoins to dollar using bitpay for instance. No risk.

The risk is always there unless the business carries no stock and it has price lists that can be updated every few minutes for when the price lurches one way or the other. 

[anu]

Traders and speculators love it.  MtGox loves it too.  Imagine how much they made in trading fees over the last few hours.

Everyone else should hate it.  A 30% crash and bounce back within a matter of hours?  Not good at all for anyone looking to seriously use bitcoin to run their business.  What if next time the price crashes 50% and there is no rebound?  How is a business meant to price their goods in bitcoins with risk like that?

If they don't want to hoard they could immediatly convert the incoming bitcoins to dollar using bitpay for instance. No risk.

This carries huge TX costs.

[justusranvier]

This carries huge TX costs.

Huge compared to what?

[whitenight639]

I'll "always" bounce back look at the fundamentals, unless you know something we don't?
even if it fell to $10 each everyone that uses or is interested in bitcoin would be buying

[Stephen Gornick]

How is a business meant to price their goods in bitcoins with risk like that?

Volatility is not good for a currency, certainly.

One thing contributing to this situation is the lack of good methods to short bitcoin.  Of course these moves over the past weeks have been frothy, and many buyers were simply in it for the momentum --- with itchy trigger fingers.    If there were good methods to short bitcoin, those buyers would not have pushed the exchange rate so quickly.   And during a selloff, those short sellers would become buyers hoping to lock in their gains.

ICBIT.se provides a BTC/USD futures contract that might give a way to short bitcoins.  Others are coming, including CoinSetter and Kraken.

Those will provide liquidity that should help lessen the volatility when they start to gain traction.

[urwhatuknow]

How is a business meant to price their goods in bitcoins with risk like that?

Volatility is not good for a currency, certainly.

One thing contributing to this situation is the lack of good methods to short bitcoin.  Of course these moves over the past weeks have been frothy, and many buyers were simply in it for the momentum --- with itchy trigger fingers.    If there were good methods to short bitcoin, those buyers would not have pushed the exchange rate so quickly.   And during a selloff, those short sellers would become buyers hoping to lock in their gains.

ICBIT.se provides a BTC/USD futures contract that might give a way to short bitcoins.  Others are coming, including CoinSetter and Kraken.

Those will provide liquidity that should help lessen the volatility when they start to gain traction.

Bitfinex allows shorting BTC.
And the interest rates are also very low if you need to borrow BTC for a short operation.
The cherry on top of that is that once you short sell the BTC's you can then lend out the money for other people that want to go long BTC on leverage (using margin accounts) and make very good interest on it (about 100% APY on average)

[Puppet]

This carries huge TX costs.

Huge compared to what?

huge even compared to accepting credit cards.
1% commission + 2% to convert btc to dollars/euros in your account =3%.
Thats actually more than large merchants pay to Visa/mastercard.

[cbeast]

Competition will drive the price up. Right now speculators are only able to buy and sell large orders, there is no way to short large orders. That would have a strong stabilizing effect on price, but really that isn't absolutely necessary. There are people looking to acquire large caches of bitcoins and are using trade strategies to cause panic sells to buy up cheap. They are driving the price up because they want more bitcoins, but are careful not to cause panic buying. These big fish will eventually be out-traded by bigger fish using similar tactics. There will be more FUD shenanigans to cause panic selling and we must all be careful to secure our business wallets to avoid scandal.

Volatility is fine in the short term. It will attract HFTs with competing algorithmic strategies that balance each other out. This will cause upward pressure in line with adoption.

[blablahblah]

Traders and speculators love it.  MtGox loves it too.  Imagine how much they made in trading fees over the last few hours.

Everyone else should hate it.  A 30% crash and bounce back within a matter of hours?  Not good at all for anyone looking to seriously use bitcoin to run their business...

Let's not forget that 'real' businesses also increase market depth and provide diverse arbitrage opportunities.

BTC/USD exchange rate price spikes up?
-Keep the price of your merchandise somewhat "sticky" instead of tying it to the dollar. Call it a "sale" and dump extra profits onto the exchanges.

BTC price tumbles on one particular exchange?
-Restock cheaply, if possible.
-Call it a "sale" even though you've been forced to increase the sticker price (maybe keep it somewhat sticky to stay competitive). When customers are enticed by the sale prices, what do they do have to do? -- Obtain more coins!


Thus I think it's a "chicken and egg" situation. If there were more businesses, they would drive down BTC volatility.

[Endgame]

It would be good to see some bitcoin shorting platforms become popular again. Not sure if its going to happen though. People are understandably pretty wary of them after the whole bitcoinica debacle.

[justusranvier]

huge even compared to accepting credit cards.
1% commission + 2% to convert btc to dollars/euros in your account =3%.
Thats actually more than large merchants pay to Visa/mastercard.

How many of the merchants that BitPay is servicing are able to get rates below 3% for card not present transactions?

[Puppet]

huge even compared to accepting credit cards.
1% commission + 2% to convert btc to dollars/euros in your account =3%.
Thats actually more than large merchants pay to Visa/mastercard.

How many of the merchants that BitPay is servicing are able to get rates below 3% for card not present transactions?

Im guessing most. What I read, average  fees are between 1.95 and 2.5%.
http://www.cardfellow.com/blog/average-fees-for-credit-card-processing/
If you have data that suggests otherwise, id love to see it, but afaict, using bitpay you lose one of bitcoins key selling points for merchants.

Now I understand bitpay have to make a living too and those prices will come down over time if adoption increases, but today it still is what it is and its kinda hard to make the point to a retailer that accepting bitcoin is both cheap and easy. Its one or the other.

[urwhatuknow]

It would be good to see some bitcoin shorting platforms become popular again. Not sure if its going to happen though. People are understandably pretty wary of them after the whole bitcoinica debacle.

There is one.
Go to www.bitfinex.com

Cheers