Why Bitcoin crashed

[wormbog]

I read the OP's cited article. He predicted a crash was coming. Guess what? If you can't predict when something will happen, you're not making a prediction.

Now, let's say dismiss that and suppose his theory is correct. The recent crash was a test to see how much selling would be required to crash the market. The next step is to print billions of worthless fiat, drive the price of bitcoin through the roof, then crash it again spectacularly so destroy confidence in the market once and for all. Ha ha, Big Government wins!!!

I hope they go through with it. If that's the plan, the free currency enthusiasts among us will be able to cash out as millionaires. Once the crash comes, we pivot to a new currency. Only this time we've collectively got the cash and influence to do it better next time.

If the gov't has to pay us billions to destroy bitcoin, let's get on with it. There will always be another cryptocurrency ready to take the place of whatever they destroy.

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[rograz]

2011 called and wants its "Bitcoin is dead" article back

[legendster]

One name "bitcoinbillionaire" One site reddit.com and a couple hundred lucky bastards

[Noitev]

2011 called and wants its "Bitcoin is dead" article back

this...

This guy is insane and is just on his high horse he guessed it at the right time. saying that the government destroyed bitcoin with $13,000 dollars is a joke though. A friend of mine sold 50,000 dollars worth under $200 dollars. $13,000 dollars is practically nothing.

[BitcoinGirl325]

If it survives (and that's a GIGANTIC if), it's at least 5-10 years away from maturing

IMHO you're pretty pessimistic. We're at "peak coin" atm. We're at the beginning of a 4 year cycle until block reward halves. This means we're still in the middle of the bitcoin gold rush. Also recent developments showed how open to influence from the fiat currency economy the bitcoin market really is and one could argue this price escapade of the last month is due to the developments there  (Cyprus etc). When the financial market is shaking, bitcoin won't stay untouched.

Not bitcoin has to mature. Its the market and the users that have to. mt.gox, the "bitcoin central bank" offers poor service, so there'll be alternative soon. The trust issue can be easily dealt with if the exchanges are real companies with clearname people behind it who are actionable in case of misconduct.  The community adapts to the changed circumstances and in this we're much more flexible than established markets. If fact, bitcoin is more etablished than ever.

as for the "ruined credibility": some new users learned their lesson of "no you won't get rich fast" the hard way. many of us did. The wiser ones don't blame it on bitcoin but on their own stupidity. I truly recommend this approach.

Bitcoin is here to stay. Not only is it widely recognized and accepted in teh interwebs, but its also accepted by the criminal community and no matter how disconcerting this might be for the regular user, its actually a stabilizing factor.

I find it a bit ludicrously to declare the death of bitcoin every time such a bubble bursts. We knew that 200 bucks was an ridiculous exchange rate for this time.

Lots of real money was burned in the recent days. A harm to the poorly informed investors? Sure. A harm to bitcoin? No way.

I think I'm being realistic, not pessimistic. Unless Bitcoin can mature into something "real" and "dependable", then it will always be relegated to the "niche market" of technogeeks. It's been 4 years already, and it still hasn't matured. The entire Bitcoin market is basically controlled by some teenage kid running Mt. Gox on what is probably a computer in his bedroom. Does this sound like the future of currency to you? It's been 4 years already, and nobody is really using Bitcoin as a currency to buy anything real or do anything important. Where are the REAL currency exchanges, run by REAL businessmen? Bitcoin-24.com popped up momentarily as an alternative exchange, and then that got shut down immediately. People have lost real money (I lost money myself!), but because of Bitcoin's anonymous nature, nobody knows who is running off with whose money. Where are the REAL websites supporting a Bitcoin payment infrastructure, such as an eBay that only accepts Bitcoins or an Amazon that only accepts Bitcoins? I'm not being pessimistic, I just honestly can't see why anybody would choose Bitcoin for anything at this point, outside of 2 things:
1. Cheap international money transfers to people that you already know & trust (not anonymous transfers).
2. Criminal activity.
For everything else, we have Visa, Mastercard, and American Express.
I know that we're all big fans of the philosophy & ideology of Bitcoin, but if we look at this from a business point of view, Bitcoin is dead in the water. Ideologically, Bitcoin makes a lot of sense and is very exciting. But in the REAL WORLD of REAL PEOPLE, it fails miserably.

[Noitev]

If it survives (and that's a GIGANTIC if), it's at least 5-10 years away from maturing

IMHO you're pretty pessimistic. We're at "peak coin" atm. We're at the beginning of a 4 year cycle until block reward halves. This means we're still in the middle of the bitcoin gold rush. Also recent developments showed how open to influence from the fiat currency economy the bitcoin market really is and one could argue this price escapade of the last month is due to the developments there  (Cyprus etc). When the financial market is shaking, bitcoin won't stay untouched.

Not bitcoin has to mature. Its the market and the users that have to. mt.gox, the "bitcoin central bank" offers poor service, so there'll be alternative soon. The trust issue can be easily dealt with if the exchanges are real companies with clearname people behind it who are actionable in case of misconduct.  The community adapts to the changed circumstances and in this we're much more flexible than established markets. If fact, bitcoin is more etablished than ever.

as for the "ruined credibility": some new users learned their lesson of "no you won't get rich fast" the hard way. many of us did. The wiser ones don't blame it on bitcoin but on their own stupidity. I truly recommend this approach.

Bitcoin is here to stay. Not only is it widely recognized and accepted in teh interwebs, but its also accepted by the criminal community and no matter how disconcerting this might be for the regular user, its actually a stabilizing factor.

I find it a bit ludicrously to declare the death of bitcoin every time such a bubble bursts. We knew that 200 bucks was an ridiculous exchange rate for this time.

Lots of real money was burned in the recent days. A harm to the poorly informed investors? Sure. A harm to bitcoin? No way.

I think I'm being realistic, not pessimistic. Unless Bitcoin can mature into something "real" and "dependable", then it will always be relegated to the "niche market" of technogeeks. It's been 4 years already, and it still hasn't matured. The entire Bitcoin market is basically controlled by some teenage kid running Mt. Gox on what is probably a computer in his bedroom. Does this sound like the future of currency to you? It's been 4 years already, and nobody is really using Bitcoin as a currency to buy anything real or do anything important. Where are the REAL currency exchanges, run by REAL businessmen? Bitcoin-24.com popped up momentarily as an alternative exchange, and then that got shut down immediately. People have lost real money (I lost money myself!), but because of Bitcoin's anonymous nature, nobody knows who is running off with whose money. Where are the REAL websites supporting a Bitcoin payment infrastructure, such as an eBay that only accepts Bitcoins or an Amazon that only accepts Bitcoins? I'm not being pessimistic, I just honestly can't see why anybody would choose Bitcoin for anything at this point, outside of 2 things:
1. Cheap international money transfers to people that you already know & trust (not anonymous transfers).
2. Criminal activity.
For everything else, we have Visa, Mastercard, and American Express.
I know that we're all big fans of the philosophy & ideology of Bitcoin, but if we look at this from a business point of view, Bitcoin is dead in the water. Ideologically, Bitcoin makes a lot of sense and is very exciting. But in the REAL WORLD of REAL PEOPLE, it fails miserably.

You really are pessimistic. Even if it is only good for money transfer and buying drugs (which is basically money transfer), it does really well with it. Mtgox was just a household operation 3 years ago, now its evolved into an actual facility, like many small businesses it became bigger with its success. There are attempts to make bitcoin ebays or bitcoin amazons, but the main problem is that not many people use bitcoin. The real goal that I hope bitcoin will achieve is that it becomes more popular, not that it goes up in value. I would much rather have a bitcoin stuck at $10 forever than how it is now. these recent bubbles do hopefully help distribute bitcoins to more people and hopefully might start to stabilize, allowing people to accept it alongside their countries respective currencies without fear, it's just up to people to stop hoarding them.

[Nagle]

It's been 4 years already, and nobody is really using Bitcoin as a currency to buy anything real or do anything important. ...  Where are the REAL websites supporting a Bitcoin payment infrastructure, such as an eBay that only accepts Bitcoins or an Amazon that only accepts Bitcoins?

Nobody can price anything real in Bitcoins with this kind of volatility.  

[BitCoinLoft]

Excellent article on why Bitcoin's price crashed (and why it will likely continue to crash):
http://www.naturalnews.com/039865_bitcoin_crash_prediction_Mike_Adams.html

You know what? If you repeat something constantly, sometimes you can be right. Even the broken clock shows time correctly twice a day. Just give some time to Bitcoin and let's see what happens. The price is already going up. Yes, it's a bit bumpy but this is normal after such a big crash.

[BitcoinGirl325]

I think you guys are missing my point. It doesn't matter whether the price is going back up or whether it goes back down. The point is that there's a new Central Bank in town, and it's called Mt. Gox. But, unlike a real central bank, it's unreliable, it's randomly irresponsible, its precise location is unknown, and it's run by some anonymous teenager. Mt. Gox is Bitcoin's biggest problem right now.

[BitCoinLoft]

I think you guys are missing my point. It doesn't matter whether the price is going back up or whether it goes back down. The point is that there's a new Central Bank in town, and it's called Mt. Gox. But, unlike a real central bank, it's unreliable, it's randomly irresponsible, its precise location is unknown, and it's run by some anonymous teenager. Mt. Gox is Bitcoin's biggest problem right now.

Completely understand you. That's why I moved to Bitstamp. Smaller, but better. I hate MTGOX 

[BitcoinGirl325]

I think you guys are missing my point. It doesn't matter whether the price is going back up or whether it goes back down. The point is that there's a new Central Bank in town, and it's called Mt. Gox. But, unlike a real central bank, it's unreliable, it's randomly irresponsible, its precise location is unknown, and it's run by some anonymous teenager. Mt. Gox is Bitcoin's biggest problem right now.

Completely understand you. That's why I moved to Bitstamp. Smaller, but better. I hate MTGOX 

Have you had good luck with Bitstamp? I ask, because their Facebook page is filled with unanswered questions to Bitstamp customer service.

But yes, this is exactly what everybody needs to do... flee Mt. Gox and switch to a variety of better exchanges.

[nrgBitmagic]

As a noob who does believe in this system and is not going to bail, the volatility of this week is not the turn off. The turn off is the entry hurdle. My relationship in the last few weeks to bitcoin, has seen my genuine excitement turn to exhausted rage at how friggin hard it is to buy and keep the flippin things. I guarantee you the average person is not going to endure this.

Here is a quote from a Mike Adams article, "How the looming bitcoin crash will be exploited by globalists to outlaw decentralized crypto currencies", and I think it sums it up perfectly -

Frustratingly, perhaps 95% of the people who will comment on this article in social media websites have no understanding of high-level mathematics, no understanding of economics, no understanding of free markets, no understanding of greed vs. fear psychology and no historical context through which they might understand what’s happening with bitcoin. Almost no one buying bitcoins has any clue what they are. They don’t even understand the meaning of the phrase “decentralized peer-to-peer crypto currency” and they have absolutely no working knowledge of public / private key cryptography. They have no idea what they are buying and they have no qualifications whatsoever to even discuss the topic.

[LeTanque]

I think you guys are missing my point. It doesn't matter whether the price is going back up or whether it goes back down. The point is that there's a new Central Bank in town, and it's called Mt. Gox. But, unlike a real central bank, it's unreliable, it's randomly irresponsible, its precise location is unknown, and it's run by some anonymous teenager. Mt. Gox is Bitcoin's biggest problem right now.

Completely understand you. That's why I moved to Bitstamp. Smaller, but better. I hate MTGOX 

Have you had good luck with Bitstamp? I ask, because their Facebook page is filled with unanswered questions to Bitstamp customer service.

But yes, this is exactly what everybody needs to do... flee Mt. Gox and switch to a variety of better exchanges.

Ripple solves some of the inadequacies with mt gox.

[LorenzoMoney]

The reason why the price of Bitcoin took a dive is really simple and can be explain through psychology, or rather behavioral economics.

For those of you who like chemistry, the bitcoin market was like a supersaturated solution. At any point, some shock could cause the stuff in solution to crystalize.

For months, there was a slow steady rise in price. Then, as more people learned about bitcoin, the demand increased. Then as demand increases, price goes up, because everyone heard the stories about how if you had bought last summer when BTC was less than a dollar, and sold at $20 or $30 you would be rich. That is when more people see the price going up and then want in. Then it becomes a land rush, and the price goes up. Then more people want in and the market is super saturated and people who bought in over $140, $150, $200 want the price to go higher so they can make their fortunes. Then there is crowd behavior and bubble buying. Then, because so many new people are coming in to the market, the existing exchanges can't handle the load.

Then something happens, and there lag, and there is a problem with the largest exchange due to the new load. And with that comes panic.  And with panic comes herd behavior and the excitement goes away and the price drops.  It is really that simple.

But, this is the good news. The price is back to where it was just before the big price increase. Bitcoin didn't drop to $1. It didn't die. The blockchain upheld. Mining still went on. The smaller exchanges still exist.  Bitcoin didn't fail. It survived a natural stress test.

What happened is a natural effect of its adoption by more people and Bitcoin as a concept survived this minor crisis.

[bitbadger]

If it survives (and that's a GIGANTIC if), it's at least 5-10 years away from maturing

IMHO you're pretty pessimistic. We're at "peak coin" atm. We're at the beginning of a 4 year cycle until block reward halves. This means we're still in the middle of the bitcoin gold rush. Also recent developments showed how open to influence from the fiat currency economy the bitcoin market really is and one could argue this price escapade of the last month is due to the developments there  (Cyprus etc). When the financial market is shaking, bitcoin won't stay untouched.

Not bitcoin has to mature. Its the market and the users that have to. mt.gox, the "bitcoin central bank" offers poor service, so there'll be alternative soon. The trust issue can be easily dealt with if the exchanges are real companies with clearname people behind it who are actionable in case of misconduct.  The community adapts to the changed circumstances and in this we're much more flexible than established markets. If fact, bitcoin is more etablished than ever.

as for the "ruined credibility": some new users learned their lesson of "no you won't get rich fast" the hard way. many of us did. The wiser ones don't blame it on bitcoin but on their own stupidity. I truly recommend this approach.

Bitcoin is here to stay. Not only is it widely recognized and accepted in teh interwebs, but its also accepted by the criminal community and no matter how disconcerting this might be for the regular user, its actually a stabilizing factor.

I find it a bit ludicrously to declare the death of bitcoin every time such a bubble bursts. We knew that 200 bucks was an ridiculous exchange rate for this time.

Lots of real money was burned in the recent days. A harm to the poorly informed investors? Sure. A harm to bitcoin? No way.

I think I'm being realistic, not pessimistic. Unless Bitcoin can mature into something "real" and "dependable", then it will always be relegated to the "niche market" of technogeeks. It's been 4 years already, and it still hasn't matured. The entire Bitcoin market is basically controlled by some teenage kid running Mt. Gox on what is probably a computer in his bedroom. Does this sound like the future of currency to you? It's been 4 years already, and nobody is really using Bitcoin as a currency to buy anything real or do anything important. Where are the REAL currency exchanges, run by REAL businessmen? Bitcoin-24.com popped up momentarily as an alternative exchange, and then that got shut down immediately. People have lost real money (I lost money myself!), but because of Bitcoin's anonymous nature, nobody knows who is running off with whose money. Where are the REAL websites supporting a Bitcoin payment infrastructure, such as an eBay that only accepts Bitcoins or an Amazon that only accepts Bitcoins? I'm not being pessimistic, I just honestly can't see why anybody would choose Bitcoin for anything at this point, outside of 2 things:
1. Cheap international money transfers to people that you already know & trust (not anonymous transfers).
2. Criminal activity.
For everything else, we have Visa, Mastercard, and American Express.
I know that we're all big fans of the philosophy & ideology of Bitcoin, but if we look at this from a business point of view, Bitcoin is dead in the water. Ideologically, Bitcoin makes a lot of sense and is very exciting. But in the REAL WORLD of REAL PEOPLE, it fails miserably.

This is also how I see it. Bitcoin has big problems right now.  

None of these Bitcoin exchanges inspire any confidence. They're all amateurs and it's risky using any of them. Probably Mt.Gox is the least amateur of the amateurs at present but that isnt saying much.

The whole Bitcoin infrastructure leaves a lot to be desired. Despite all the talk by the geeks about it being safe, it's highly risky, there are wallet breakins and thefts all over. The address system is  cumbersome and a deterrent to the average person using it. The Bitcoin system is too complex for ordinary people.

The people most enthusiastic about Bitcoin seem to be either computer geeks or fringe libertarian oddballs.

I'm not saying all these drawbacks can't be overcome in future, but that is the state of things as I see it right now.