bubble imminent

[Stephen Gornick]

Something weird at bitcoin-central for sure.

The numbers I saw show 885 BTC traded at an average price sold about $0.76 per BTC.  That's about $0.10 per BTC lower than the highest available bids on other markets.

https://spreadsheets.google.com/pub?hl=en&hl=en&key=0AmcTCtjBoRWUdDdfVndrRkhNMzFIQXJjbnFNcDVJTlE&output=html

Those trades chewed up each and every piece of LRUSD and LREUR that was bid.  It is almost as if the seller didn't care that the trade wasn't rational ... like what would happen if the seller wasn't the true owner of the bitcoins being sold.  I'm speculating here, but I cannot think of any other reason to sell at a price so far below market rates.

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[S3052]

a simple explaination is that the person wanted to get the market price down without harming the overall sale (this is what you see in the average price of 0.72: this person has driven the market to 0.1 and still got an average price of 0.72 $

these things are always happening in financial markets. big players = big banks do that all the time.

I am not saying this is good, it's just reality.

[jgarzik]

I'm sorry but bitcoin has zero intrinsic value. Just like fiat. The only thing that makes it valuable is the supporting economy of goods and services that can be traded for bitcoin. Growing a bubble is not going to strengthen it. And there is a lot of bubble mentality on this forum. Like this post:
http://bitcointalk.org/index.php?topic=3713.msg52668#msg52668

If bitcoin continues to go up in value without the bitcoin economy following, it will finally crash. And if the mass market learns that bitcoin is another "beanie babies", it will never become a global medium of exchange. It will remain a toy for geeks.

Agreed.  And that's almost become one of my mantras:  it's not about mining.

This most recent wave of slashdotting (and Security Now'ing) has brought a lot of mining activity and interest in mining, but I've been disappointed that forum posts about interesting new bitcoin businesses were notably absent.  In the past, we would see a flurry of new posts to the We Accept Bitcoins thread (now en.bitcoin.it/wiki/Trade) and the Marketplace forum.  Not as much activity.

If bitcoin is to survive, it needs a wealth of goods and services available, in multiple countries.  Bitcoin cannot exist without the bitcoin economy.

[caveden]

I'm sorry but bitcoin has zero intrinsic value. Just like fiat.

Just like everything else. "Intrinsic value" is a contradiction in terms, like "squared circle".
http://www.thefreemanonline.org/featured/the-fallacy-of-quotintrinsic-valuequot/

It will remain a toy for geeks.

Even if it happens - and I don't think it will -, fine enough. It will remain a good way to protect your savings against inflation, like precious metals, only better.

[ShadowOfHarbringer]

I'm sorry but bitcoin has zero intrinsic value. Just like fiat.

Dollar/Euro has value ONLY because government says so.
Bitcoin/gold/silver etc have value, because people believe so.

That is nothing like fiat.

[Raulo]

Dollar/Euro has value ONLY because government says so.
Bitcoin/gold/silver etc have value, because people believe so.

That is nothing like fiat.

No. US government can claim anything about US dollar in the USA. They can force you to anything. But abroad, US dollar is valuable because there is an economy that supports it and indeed people believe it's valuable.

[Raulo]

I'm sorry but bitcoin has zero intrinsic value. Just like fiat.

Why dont you put your money where your mouth is and short BTC on mtgox? Let us know how it goes. 

Says someone who effectively shorts BTC by selling mining contracts instead of mining on his own. You believe in bitcoin so much that you'd rather have payment upfront with fixed prices. Oh, irony.

By the way, care to explain how to short BTC on mtgox? Without having them?

[ShadowOfHarbringer]

Dollar/Euro has value ONLY because government says so.
Bitcoin/gold/silver etc have value, because people believe so.

That is nothing like fiat.

No. US government can claim anything about US dollar in the USA. They can force you to anything. But abroad, US dollar is valuable because there is an economy that supports it and indeed people believe it's valuable.

No. You are missing what is cause and what is effect here.

People believe that dollar is valuable, because other people believe that it is valuable, because other people in the past believed that it is valuable, because in the past, government said so.

So the chain is belief/psychology <= belief (now) <= belief (past) <= government says so (past).
It all holds on the government's statement that it is valuable from the past. If we remove that from the equation, whole thing falls down like a house of cards.

Fiat currencies are "legal tender" bullshit. Bitcoin is not.

[Raulo]

Ever heard about hedging? Why do you think I do not mine on my own too? Saying that I am shorting bitcoins is about the same as saying that wheat farmers are shorting wheat.

Of course you are mining on your own because there is no better way to utilize your spare capacity. But you wouldn't set up this whole business if it was just for hedging.

I admit that without ability to borrow BTC's shorting them is easier said than done.

Shorting such an illiquid market is a stupid idea unless you are large enough to manipulate it. One single idiot with not too much money can force a big fat margin call on you. And also market can be irrational longer than you can stay solvent.

Don't all of you get me wrong.  I wish Bitcoin success. It's a clever idea. But pumping the BTC price is not a way of achieving it. We'd better have relatively stable BTC prices and growing bitcoin economy than a crazy bitcoin gold rush and later bubble burst.

[genjix]

Too much emotional investment here. Try to be more objective.

[jtimon]

I think BTC is going to rise its value if it's denominated in USD. If it's denominated for example, in gold, probably it's going to drop in value.
I believe neither Bitcoins, dollars or gold have any "intrisic value". I think that none of them are well suited to be money. BTC and gold are deflationary (better for the saver) while national currencies (I'm including the euro here) are inflationary. In the past, gold didn't has to be deflationary if the production of gold was greater than the "economic growth". None of them can reach price stability.
The three of them, are scarce and that leads to interest, which is the worst a monetary system can have.
Gesell suppresses the interest with demurrage. It also have another benefit: the velocity of circulation becomes higher and the prices more controllable by the central banker. The flaw in Gesell's design is that you need a government to issue the money.
That is the advantage of BTC and gold (or precious metals in general). Owning gold makes you more vulnerable against a government than owning bitcoins.
LETS and Ripple avoid the interest by removing scarcity. The stability of prices in this case depends on the unit of account. They don't need a government but are vulnerable to them. Ripple could be less vulnerable if it's software successfully emulates bitcoin.
I want bitcoin to succeed because it's a step forward (away from the government) unlike going back to gold which is the more likely outcome when national currencies eventually crash in cascade.
I've invested all my savings (note that I'm not rich) like this:

172.54€ in BTC
914€ in Silver

I'm sorry for this weird post.

[kiba]

I think BTC is going to rise its value if it's denominated in USD. If it's denominated for example, in gold, probably it's going to drop in value.
I believe neither Bitcoins, dollars or gold have any "intrisic value". I think that none of them are well suited to be money. BTC and gold are deflationary (better for the saver) while national currencies (I'm including the euro here) are inflationary. In the past, gold didn't has to be deflationary if the production of gold was greater than the "economic growth". None of them can reach price stability.

Would you want a "price stable" currency versus a deflationary currency? How would you achieve this stability of price? How do you determine if there is too much of a supply or there should be increase in the supply?

[jtimon]

I think BTC is going to rise its value if it's denominated in USD. If it's denominated for example, in gold, probably it's going to drop in value.
I believe neither Bitcoins, dollars or gold have any "intrisic value". I think that none of them are well suited to be money. BTC and gold are deflationary (better for the saver) while national currencies (I'm including the euro here) are inflationary. In the past, gold didn't has to be deflationary if the production of gold was greater than the "economic growth". None of them can reach price stability.

Would you want a "price stable" currency versus a deflationary currency? How would you achieve this stability of price? How do you determine if there is too much of a supply or there should be increase in the supply?

With Ripple (and LETS), there's no limit to supply. The stable prices just depend on the unit of account in transactions. There are other claims for currencies that allow price stability.

1) Gesell said that central banks can't achieve stable prices because they can't control the velocity of circulation. He said it can be controlled (and stimulate it) using demurrage. Then it would be easier to for the central bank to correct the changes in prices by issuing more money (giving them debt free to the government) or by letting it disappear with the demurrage. I can't recall it, but maybe the government was responsible to give money back to the central bank for destruction in deflationary times.

2) The terra (http://www.terratrc.org/) has demurrage too and is backed by a basket of commodities.

3) In a Ripple-like system you could create a currency dependent of the price of a basket of commodities. Since ripple doesn't need to store the commodities to "back the debts" and the currency is just a unit, the basket can be composed of any number of different commodities. However you measure inflation, you can use that to define a currency in a Ripple or LETS system.

I personally like the third solution.

[kiba]

With Ripple (and LETS), there's no limit to supply. The stable prices just depend on the unit of account in transactions. There are other claims for currencies that allow price stability.

1) Gesell said that central banks can't achieve stable prices because they can't control the velocity of circulation. He said it can be controlled (and stimulate it) using demurrage. Then it would be easier to for the central bank to correct the changes in prices by issuing more money (giving them debt free to the government) or by letting it disappear with the demurrage. I can't recall it, but maybe the government was responsible to give money back to the central bank for destruction in deflationary times.

2) The terra (http://www.terratrc.org/) has demurrage too and is backed by a basket of commodities.

3) In a Ripple-like system you could create a currency dependent of the price of a basket of commodities. Since ripple doesn't need to store the commodities to "back the debts" and the currency is just a unit, the basket can be composed of any number of different commodities. However you measure inflation, you can use that to define a currency in a Ripple or LETS system.

I personally like the third solution.

Um. I am drawing a blank.

[jtimon]

Um. I am drawing a blank.

Maybe a few more links can help with that:

http://en.wikipedia.org/wiki/Silvio_Gesell

http://en.wikipedia.org/wiki/Freigeld

http://en.wikipedia.org/wiki/Terra_(currency)

http://en.wikipedia.org/wiki/Bernard_Lietaer

http://en.wikipedia.org/wiki/LETS

http://en.wikipedia.org/wiki/Ripple_monetary_system

[0x6763]

Please define "stable prices" and then prove that "stable prices" are even possible when there is more than one person and more than two goods in existence.

[freeman]

If bitcoin is to survive, it needs a wealth of goods and services available, in multiple countries.  Bitcoin cannot exist without the bitcoin economy.

It needs miners too though doesn't it?  If (when  ) bitcoin starts to catch on as an alternative to Paypal then it's going to grow like mad.  For small payments for Internet provided services bitcoin is just so much better.  If it does gain that kind of interest then there needs to be sufficient processing power underpinning the system to prevent powerful agents from doing monkey business. All in all, I think the whole system is developing very nicely.  I'm not sure it was all planned but it quite amazing to behold.

[bytemaster]

Please define "stable prices" and then prove that "stable prices" are even possible when there is more than one person and more than two goods in existence.

There is another name for "price stability", it is called "price controls".  If prices are stable, it is a coincidence and only possible of there are no new developments in any industry, people are born and die at the same rate, and do the same thing tomorrow that they did today and yesterday.

I do not care what you do with a currency it is not possible to maintain stable prices between any other pair of goods.  And if you accept that principle, then trying to maintain a price ratio between the currency and the average of all other goods is down right foolish! 

[dannyjpw]

Bytemaster speaks the truth!

[jtimon]

Please define "stable prices" and then prove that "stable prices" are even possible when there is more than one person and more than two goods in existence.

There is another name for "price stability", it is called "price controls".  If prices are stable, it is a coincidence and only possible of there are no new developments in any industry, people are born and die at the same rate, and do the same thing tomorrow that they did today and yesterday.

I do not care what you do with a currency it is not possible to maintain stable prices between any other pair of goods.  And if you accept that principle, then trying to maintain a price ratio between the currency and the average of all other goods is down right foolish! 

Ok, then I should define price stability as "abscence of inflation and deflation".