drop in btc value

[breandan81]

anyone else notice that bitcoin has lost about 20% of it's value in the last couple hours?

[1715292567]

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[davout]

just correcting a bit

[ribuck]

It looks like it was just one big sale taking the price down. Check back in a day or two to see if there's any momentum behind the drop.

[kiba]

This is only on MtGox. If other markets follow, than the price drop is for real.

Otherwise, somebody happens to panic in a strong growth period of the bitcoin economy.

[malditonuke]

On mt gox, yup.

My assumption was that someone decided to cash in a lot of their chips, and some speculators got jittery.

[davout]

I think these drops are healthy things

[kiba]

I think these drops are healthy things

Having learned my lesson from the last crash, I am not surprised.

[Raulo]

This is only on MtGox. If other markets follow, than the price drop is for real.

Bitcoin Central followed and other markets are negligible.

I think anybody who wants a long-term success of Bitcoin should welcome price drops. There was nothing healthy in the rush to parity. The Bitcoin economy should grow by increase in the number of transaction and the value of items and services exchanged and not by price speculation.   

[theGECK]

This is only on MtGox. If other markets follow, than the price drop is for real.

Bitcoin Central followed and other markets are negligible.

I think anybody who wants a long-term success of Bitcoin should welcome price drops. There was nothing healthy in the rush to parity. The Bitcoin economy should grow by increase in the number of transaction and the value of items and services exchanged and not by price speculation.   

The exchange of things of value, whether tangible or not, in the economy is the real measure of how healthy the currency is, speculation just leads to instability. If Bitcoins end up being a speculator's plaything, I don't think adoption of BTC will ever take off in a meaningful way.

[davout]

Bitcoin Central followed and other markets are negligible.

[kiba]

The exchange of things of value, whether tangible or not, in the economy is the real measure of how healthy the currency is, speculation just leads to instability. If Bitcoins end up being a speculator's plaything, I don't think adoption of BTC will ever take off in a meaningful way.

An assertion that must be backed up with logical reasoning.

[theGECK]

The exchange of things of value, whether tangible or not, in the economy is the real measure of how healthy the currency is, speculation just leads to instability. If Bitcoins end up being a speculator's plaything, I don't think adoption of BTC will ever take off in a meaningful way.

An assertion that must be backed up with logical reasoning.

If bitcoins are primarily used by speculators, it will lead to wild swings in the price of bitcoins as they buy and sell, resulting in a fear by the average person of getting into the bitcoin market. There will be rushes where the price goes way up, and drops where speculators are trying to sell them before losing more money/buy them cheaply before it goes up. Many commodities that are heavily speculated with/against/[whatever the right term here is] do the same thing now, and it hinders using them as a currency. Not that they don't make fine currencies, but that the wild swings in what people are willing to trade for it (it's market value) scare people away.

[kiba]

If bitcoins are primarily used by speculators, it will lead to wild swings in the price of bitcoins as they buy and sell, resulting in a fear by the average person of getting into the bitcoin market. There will be rushes where the price goes way up, and drops where speculators are trying to sell them before losing more money/buy them cheaply before it goes up. Many commodities that are heavily speculated with/against/[whatever the right term here is] do the same thing now, and it hinders using them as a currency. Not that they don't make fine currencies, but that the wild swings in what people are willing to trade for it (it's market value) scare people away.

Still an assertion.

1. Speculation.
2.
3. Wild swing.

[Mythoranium]

Well, but you can never get rid of speculators - wherever there is something that some people expect to rise in value, there will be speculators. Be it BitCoins, Dollars, Euros, Gold, Real Estate, food or anything. People just really like the opportunity to get more valuable stuff for doing nothing, just waiting a bit.
So I think speculators are a vital thing to any and every economy, unless that economy, unless that economy somehow guarantees that the value of things and any currency stays exactly the same at all times.

On the matter, I like watching the graphs and these oscillations - right now it is back up at 0.978

[theGECK]

The assertation of speculation=wild swings is proven in the commodities market, which is notoriously volatile because of all the speculation that goes on in those markets. To do statistical analysis is above my economic abilities, but I have never met anybody who believes that speculation stabilizes a market.

And I don't think that speculation should leave a market. As you said, where there's value, there is speculation. I'm just saying that we, as a community, need to be careful of relying heavily on the current USD/BTC ratio to see how much Bitcoin is worth. The value to those who own BTC as a currency is not contained in that, but within what products and services they can trade for it.

[Mythoranium]

Well, yes, you are absolutely right - people should get BitCoins to spend them on goods/services, instead of just buying them for some amount of USD just to later sell them back for another (or maybe the same) amount of USD.

[kiba]

The assertation of speculation=wild swings is proven in the commodities market, which is notoriously volatile because of all the speculation that goes on in those markets. To do statistical analysis is above my economic abilities, but I have never met anybody who believes that speculation stabilizes a market.

You can say it's "proven" but that doesn't mean anything. I can say it's proven that free markets work, but nobody should believe my conclusion because I didn't provide any evidence.

[ronaldmaustin]

LOL.  I used to be this guy.  I'm confident enough to admit that now.

[FreeMoney]

The assertation of speculation=wild swings is proven in the commodities market, which is notoriously volatile because of all the speculation that goes on in those markets. To do statistical analysis is above my economic abilities, but I have never met anybody who believes that speculation stabilizes a market.

And I don't think that speculation should leave a market. As you said, where there's value, there is speculation. I'm just saying that we, as a community, need to be careful of relying heavily on the current USD/BTC ratio to see how much Bitcoin is worth. The value to those who own BTC as a currency is not contained in that, but within what products and services they can trade for it.

Hi, I think speculation stabilizes markets.

[theGECK]

The assertation of speculation=wild swings is proven in the commodities market, which is notoriously volatile because of all the speculation that goes on in those markets. To do statistical analysis is above my economic abilities, but I have never met anybody who believes that speculation stabilizes a market.

And I don't think that speculation should leave a market. As you said, where there's value, there is speculation. I'm just saying that we, as a community, need to be careful of relying heavily on the current USD/BTC ratio to see how much Bitcoin is worth. The value to those who own BTC as a currency is not contained in that, but within what products and services they can trade for it.

Hi, I think speculation stabilizes markets.

I was waiting for this

[kiba]

Hi, I think speculation stabilizes markets.

I was waiting for this

It is no good that the other side decide to be lazy about it, but you're still not off the hook for making a claim without backing it up.

[malditonuke]

This is only on MtGox. If other markets follow, than the price drop is for real.

Bitcoin Central followed and other markets are negligible.

I think anybody who wants a long-term success of Bitcoin should welcome price drops. There was nothing healthy in the rush to parity. The Bitcoin economy should grow by increase in the number of transaction and the value of items and services exchanged and not by price speculation.   

The exchange of things of value, whether tangible or not, in the economy is the real measure of how healthy the currency is, speculation just leads to instability. If Bitcoins end up being a speculator's plaything, I don't think adoption of BTC will ever take off in a meaningful way.

Meh, value is demonstrated by exchange, even in the case of speculation.  And the only difference between an investor and speculator is that the investor performs a risk assessment.

Market volatility, like savings, is due to uncertainty about the future.  That is the real enemy.

[bitcool]

Speculation is good, it brings liquidity to the markets. Let speculators lose sleep over these price swings, worry about big picture.


The problem is that we do not have enough speculators.

+1
I am for more speculators -- as long as they are using their own money, and there's no Fed or COMEX to bail them out if they loses their shirts.

[slush]

The problem is that we do not have enough speculators.

+1. More speculators = better liquidity, smaller spread.

[kiba]

Time to get assertions out of the way: http://mises.org/daily/320

Speculators, in essence, absorb the risks of trying to prices commodity, and gave us a more stable price for commodities.

Let put it this way: In time of plenty, the speculator save up food.  In time of famine, the speculator sell food to the starving populace. If he make mistakes in the prediction of the future, he will be punished for it. If he make successful prediction, he will be more wealthy. Thus, we can see how prices are smoothed throughout time.

[theGECK]

As I said earlier, it is above my abilities/current knowledge to know for sure or even do a good job at any analysis. But, here's my best shot at giving sources. I'll even give both sides!

Speculation does not increase stabilization of a market:
http://home.maryknoll.org/index.php?module=MKArticles&func=display&id=1365&office=alert - Speculators pay fewer taxes on a given good than the producers of that good. Also caused a large spike/drop when funds were pulled out.
http://www-personal.umich.edu/~alandear/glossary/d.html#DestabilizingSpeculation
http://michaelguth.com/economist/chap1.htm - how speculation can cause instability, and how to profit from it.

Speculation does increase stabilization of a market:
http://www.informaworld.com/smpp/content~db=all~content=a713761642~frm=abslink
http://www-personal.umich.edu/~alandear/glossary/s.html#StabilizingSpeculation
http://mjperry.blogspot.com/2008/05/quote-of-day-friedman-on-speculators.html - in the comments they talk about how short-term speculation can cause destabilization of a market.

Argues Both Points:
http://www.islamic-world.net/economics/speculation_and_gambling.htm
http://en.wikipedia.org/wiki/Foreign_exchange_market#Speculation
http://en.wikipedia.org/wiki/Speculation - a tax on speculating may stabilize a currency

From what I've read while doing this fast research, speculating may lend stability to markets that are thinly traded or small (which would include bitcoin at the moment), but when the speculating makes up a large percentage (an "excess level" which varies depending on time, product, liquidity, etc) then stabilization quickly goes the other way. The speculators soak up the risk, but when they soak up too much of the market then they are just trading amongst themselves and the wide and quick swings happen.

Obviously, I haven't had the ability to read through all of these, and am still researching it. It seems that I've been reading more pop culture than I assumed, so I'd appreciate others. But please don't just say that you're right because we can quote sources that say speculation stabilizes, it's clearly a debated field. Unless you have credentials in economic theory (which I definitely don't have), perhaps we should just table the discussion.

[kiba]

perhaps we should just table the discussion.

You're welcome to discuss it in the economic forum. I was merely trying to get people to think about their position more carefully, not winning debates.

[marcus_of_augustus]

moa:

February 16, 2011, 03:56 am
   Reply with quote Edit message Delete message  #19
The bitcoin tech. analysis guy is saying an ascending wedge (triangle) forming around 1.05 btc/$ ... I'm seeing a descending flag, either way something is gonna give and the timeframe is around the time of the next jump in difficulty.

So the miners/supply and the demand are both aware of this point in time as when they make their next decision and are susceptible to changing their expectations around then. The miners/supply have come down from above, 1.10, and sold down to 1.05, the demand has come from less than 1.00 and bought up to 1.05 .... myself I feel like a revisit of the 0.80 region is on the cards but it will be brief and then it is off up above the 1.10 to who knows where ... still some confidence issues to work through though it seems.

Anybody who feels they benefitted from the above call and would like more such analysis can send BTC to  : 1N7fbp5MsprSmTWgZvdD9G9UdHebH4dYcX

(Been doing this for over 15 years in gold and commodities market.)

[Mahkul]

Good time to be buying. 

[schnak]

were i to guess id say its the backend of the slashdot and twit effects. someone sells a decent amount of BTC, those that entered it for kicks decided they were bored with it and cashed in before a major drop, thereby causing a >20 point drop. that brought a few extras in deeper because of crazy low prices (in compairson) and its leveling off at a net 7point slide. would expect to see a few more of these following a fad issued surge.

like mahkul said, good time to buy.

better to start offering services or merchandise.

[kiba]

For the love of Eris, stop proposing causes about things you don't know!

[breandan81]

We really need more users, and I'm a bit worried that the people who have huge amounts of bitcoin squirreled away from when it was easy to generate can, even inadvertently, cause huge fluctuations.  If bitcoin is going to acheive mainstream acceptance as an online currency the value needs to be somewhat stable, at least to the point that people are confident that if they are only using it for online transactions that they can trade back to their currency of choice without a large loss in value. 

[Nefario]

We really need more users, and I'm a bit worried that the people who have huge amounts of bitcoin squirreled away from when it was easy to generate can, even inadvertently, cause huge fluctuations.  If bitcoin is going to acheive mainstream acceptance as an online currency the value needs to be somewhat stable, at least to the point that people are confident that if they are only using it for online transactions that they can trade back to their currency of choice without a large loss in value. 

I doubt if someone who has a big stash of bitcoins is going to dump the whole lot in one go, surely if they do have a large amount then they think it's valuable. Therefor they will hold on to as much as they can, and will spend or exchange only when they need to, which will be in smaller amounts.

I speculate that such a person is more likely to trade with their bitcoins than exchange them. Unless you hsve a high constant income in bitcoins exchanging them for a little cash seems.... a waste, especially if they are the users savings. I would also speculate that these people are more likely to invest their bitcoins than just spend them on goods or services.

[rebuilder]

I doubt if someone who has a big stash of bitcoins is going to dump the whole lot in one go, surely if they do have a large amount then they think it's valuable.

They will sell if they get antsy or simply believe the price is as high as it is likely to go for a while. Or if they need the cash. It's pretty hard to predict what people do.

[mcdett]

I doubt if someone who has a big stash of bitcoins is going to dump the whole lot in one go, surely if they do have a large amount then they think it's valuable.

They will sell if they get antsy or simply believe the price is as high as it is likely to go for a while. Or if they need the cash. It's pretty hard to predict what people do.

If you could predict what people did you could make BILLIONS of dollars.

I thought about trying to time the bitcoin market.  Theoretically I could have sold at $1.10 and bought back in at $0.75, and my hindsight clearly sees that as a winner!

[Raulo]

Anybody who claims to know what will happen on the market is either a fool or tries to pump the value of his holdings (that's why there is consistent bullish bias everywhere on the stock market). Or both.

[amwt]

Volume is a good thing.

[unclescrooge]

This is only on MtGox. If other markets follow, than the price drop is for real.

Bitcoin Central followed and other markets are negligible.

I think anybody who wants a long-term success of Bitcoin should welcome price drops. There was nothing healthy in the rush to parity. The Bitcoin economy should grow by increase in the number of transaction and the value of items and services exchanged and not by price speculation.   

agreed

[Bruce Wagner]

I will listen to anyone's opinions on this.....  EXCEPT those who have...

credentials in economic theory

....because they are like film and theater critics:   (1) full of themselves, and (2) almost always wrong.

[Nefario]

I will listen to anyone's opinions on this.....  EXCEPT those who have...

credentials in economic theory

....because they are like film and theater critics:   (1) full of themselves, and (2) almost always wrong.

+1

These are the "experts" running Ireland and Greece into the ground, the ones who said everything was fine in the economy even after it had gone over the edge and have been wrong on EVERYTHING.

Sadly these are also the people who seem to be in charge, which is one very important reason to get control of our money(and anything else we can) off them.

[Bruce Wagner]

The MtGox Orderbook, according to Bitcoin Charts ( http://bitcoincharts.com/markets/mtgoxUSD.html ), leads me to understand that it would only take ONE SINGLE PURCHASE of $40,864.....  to wipe out ALL standing sell orders up to $5.00 per Bitcoin.

A single purchase of more that $251,908   would get Bitcoin selling at $1,500.00 per Bitcoin.

As you can see, it would only take ONE SINGLE ARAB SHEIK to make ONE SINGLE PURCHASE of Bitcoins.... to make the Last Price fluctuate like a roller-coaster.

The same is true of one major sale.

When someone I know bought a large quantity of Bitcoins, we could see clearly the huge jump in price it caused on MtGox.   That's one guy.  One purchase.

So, you see, the economy is still very small.  

It would take ONLY ONE big big player....  Like a rich sheik...   or a big time global money player...   to try to use Bitcoin to transfer money.    He would have to make a big purchase...   Then, I would expect, he'll try to make a large sale on the other end.     This is going to push the price of Bitcoin up up Up UP UP UP!

MY PREDICTION:

(1)  As the price continues to go up rapidly....

(2)  The number of buyers will grow rapidly...  causing...

(3)  The price to grow exponentially....  causing...

(4)  The number of buyers to increase exponentially....   causing...

(5)  An ever-increasing price....  Yet.....  Much more stability in the price....   (more upward growth with fewer downward swings--due to so many more players)  And....

(6)  As the so-called Bitcoin Economy (the total value of all Bitcoins in circulation) explodes up off the top of the charts...

(7)  The online merchants will run, tripping over themselves, to get a piece of that pie...  and will all accept Bitcoin....   And then...

( 8 )  The brick & mortar merchants, having seen Bitcoin's success online, will also run to accept Bitcoin as well....   And then...

(9)  Bitcoin will eventually be used globally by even more users than use Google or Facebook....   That's when...

(10)  Bitcoin will have come of age.

As I tell my friends and loved ones:    

"We are NOT on the ground floor of this thing.   We are in the basement....  one step up the stairs.    Buying Bitcoin TODAY is like buying Google stock when it was first launched in the very beginning.   You will remember this day....    whether with gratitude....for listening to me....   or with regret.... for not listening to me."  

Since I have already been contacted by many many people wanting to know how to BUY Bitcoins...   including ONE GUY what wants to buy approximately $50,000 PER MONTH of Bitcoin....  

When Bitcoin was about $0.20, I predicted that it would be at $1 parity within the year.   Friends laughed at me....  and said, "Maybe within a couple of years."   Of course, I was wrong.  It only took a couple of WEEKS to reach $1.

NOW  My Prediction:    Bitcoin will be at $1000 per Bitcoin before the end of this year.

( I might be wrong.  It might reach $1000 a Bitcoin much faster than that. )

Also...   The growing value of Bitcoin will NOT deter people from using it in commerce.  No one has ever been afraid to ACCEPT something when its value is ever-increasing!   No one is afraid of being paid in Gold.

EVERYONE will happily want to accept Bitcoin!   They can see that its value will grow --- even in the short time they might hold onto it.

There will be NO shortage of merchants -- both online and brick & mortar -- who will ACCEPT Bitcoin.    The only question is:   Will anyone be willing to SPEND them?  

[Littleshop]

EVERYONE will happily want to accept Bitcoin!   They can see that its value will grow --- even in the short time they might hold onto it.

There will be NO shortage of merchants -- both online and brick & mortar -- who will ACCEPT Bitcoin.    The only question is:   Will anyone be willing to SPEND them?  

Well that last part is the problem.  If a bunch of merchants set up shop (at some kind of expense) and very few people part with coins it will make it very unlikely that the process will continue.   For bitcoins to become a working currency they need to be mobile and fluid.  Rapid bitcoin deflation (bitcoins becoming worth more) will kill that. 

[Garrett Burgwardt]

EVERYONE will happily want to accept Bitcoin!   They can see that its value will grow --- even in the short time they might hold onto it.

There will be NO shortage of merchants -- both online and brick & mortar -- who will ACCEPT Bitcoin.    The only question is:   Will anyone be willing to SPEND them?  

Well that last part is the problem.  If a bunch of merchants set up shop (at some kind of expense) and very few people part with coins it will make it very unlikely that the process will continue.   For bitcoins to become a working currency they need to be mobile and fluid.  Rapid bitcoin deflation (bitcoins becoming worth more) will kill that. 

Possibly slow it down, until sellers realize that if they offer things in bitcoin very cheaply, they will grow in value quite quickly as well.

[casascius]

A single purchase of more that $251,908   would get Bitcoin selling at $1,500.00 per Bitcoin.

As you can see, it would only take ONE SINGLE ARAB SHEIK to make ONE SINGLE PURCHASE of Bitcoins.... to make the Last Price fluctuate like a roller-coaster.

If that happened, I would sell off mine.  I could probably part with the 167 bitcoins it would take to pocket $250k at that rate.  Maybe I could part with 1000 BTC and pocket $1,500,000.  It would be great!  The $1.5M would come out of nowhere on a direct flight from fantasy to reality.

The same is true of one major sale.

When someone I know bought a large quantity of Bitcoins, we could see clearly the huge jump in price it caused on MtGox.   That's one guy.  One purchase.

There are over 5 million BTC out there, and only one or two percent of that on the market.

When you throw a nickel between two mirrors facing each other, the resulting row of nickels looks like a dollar.  But twenty people can't come along and each claim a nickel.  One gets a nickel, the rest get nothing.

It would take ONLY ONE big big player....  Like a rich sheik...   or a big time global money player...   to try to use Bitcoin to transfer money.    He would have to make a big purchase...   Then, I would expect, he'll try to make a large sale on the other end.     This is going to push the price of Bitcoin up up Up UP UP UP!

What would motivate this big player to do this?  Where's the money going to come from?

Imagine you and four friends are playing poker, and you each brought $100 to the table.  So, there's $500 at a table.

I'm mister Moneybags, and I have a million dollars.  Would I ever sit down and plunk a million dollars at your table?  The most I stand to leave with is a 1.0005 million.  So, why in my right mind would I ever want to do this?

Consider all the participants in Bitcoins... we "say" Bitcoins have a $5 million market value, but we only arrived there with maybe 1% of that in cash inflow.

Consider the "shiek" example above: if a $250k buy resulted in a $1500/BTC price, the current Bitcoin economy would suddenly be worth 8 billion dollars by that same calculation.  Doesn't anyone see what's wrong with that?  Who's anus does the 8 billion come from?  That is an illusion, no different than what you'd see if you put $250k on a table between two mirrors.

[Bruce Wagner]

Partly an illusion...  Partly real.

Just like the so-called "value" of anything.

Including US dollars.

Or Toyota Camry's.

If everyone on Earth who owned a Toyota Camry.... decided to sell it at the same time... then, I doubt very many of them would get "the blue book value" for it.  

Nevertheless, we have to have some barometer of the value of things.   And one of the best baramoters.... is "what has an identical item been selling for most recently".

This is true of Apartments in Midtown Manhattan....   and of Toyota Camrys....    and of US dollars....    and of Bitcoins.

It's all an illusion.    But at the same time, if I can sell one for $x... then there's also some truth to it too.

[casascius]

Right now, a good way to acquire Bitcoins is to just go build a mining rig and start mining.  So that would be very limiting on the price.

Why would any shiek spend $250k on 43000 Bitcoins at MtGox when if you spent $250k on mining equipment you would have 200 MHash/sec (conservative) and instantly make thousands of BTC per day, you'd have 43000 BTC in a week or two, plus ten or hundreds of times that within months.

The only thing propping up the price of BTC is its artificial scarcity, but even that can't go much higher than the cost of mining.  If a BTC is worth $1500, that means that someone is willing to pay me $75,000 to run my computer to solve a block.  That's about as realistic as Santa Claus calling me for my address so he can bring me a sleigh full of of gold.

I also can't help but notice that the recent "market crash" was caused by someone dumping less than the total BTC that miners create in just one or two days.

[casascius]

MY PREDICTION:

(1)  As the price continues to go up rapidly....

(2)  The number of buyers will grow rapidly...  causing...

(3)  The price to grow exponentially....  causing...

(4)  The number of buyers to increase exponentially....   causing...

This relies on an unlimited supply of buyers with an unlimited supply of money burning a hole in their pocket, that haven't recently been burned in a bubble.  Wealth can only be created by the production of goods and services.

(5)  An ever-increasing price....  Yet.....  Much more stability in the price....   (more upward growth with fewer downward swings--due to so many more players)  And....

It depends on how you define stability.  If the number of potential participants is infinity, then yes sure, stability.  Unfortunately, this is not so on planet Earth.  The only place this would actually be true is in paradise as depicted on Jehovah's Witness pamphlets - you know - the kind where people and lions and tigers sit down together and eat vegetables for dinner.

(6)  As the so-called Bitcoin Economy (the total value of all Bitcoins in circulation) explodes up off the top of the charts...

Of course, I think we agree that this number is pure fantasy.  It would be different if a Bitcoin had intrinisic value like a Toyota Camry, like if it could get you around town.

(7)  The online merchants will run, tripping over themselves, to get a piece of that pie...  and will all accept Bitcoin....   And then...

( 8 )  The brick & mortar merchants, having seen Bitcoin's success online, will also run to accept Bitcoin as well....   And then...

To a certain extent, I believe in this, except for the "tripping" part.  Nobody is going to be "tripping" to accept Bitcoin as a get-rich-quick scheme, any more than the local supermarket is tripping on its way to carry Amway.

Unfortunately, other than for Libertarian-like merchants, and the very few people holding substantial Bitcoins and wanting them to appreciate, the appeal isn't quite there.  On the other hand, there is plenty of appeal to gangs and drug dealers.  I would be willing to bet they will be more responsible for Bitcoin's success and notoriety.  Want to see Bitcoin move forward?  Go post about it in some marijuana forums.

(9)  Bitcoin will eventually be used globally by even more users than use Google or Facebook....   That's when...

(10)  Bitcoin will have come of age.

Gold has been "of age" for tens of thousands of years, and yet I can't even get a babysitter for it - even if I have a piece that's small enough to represent the value of the babysitting.

NOW  My Prediction:    Bitcoin will be at $1000 per Bitcoin before the end of this year.

( I might be wrong.  It might reach $1000 a Bitcoin much faster than that. )

What will be the mining difficulty by then?  Do you mean that I'll be able to buy a new SUV if I solve a block?

Also...   The growing value of Bitcoin will NOT deter people from using it in commerce.  No one has ever been afraid to ACCEPT something when its value is ever-increasing!   No one is afraid of being paid in Gold.

NOt even the 16-year old who babysits my kids?  She will wonder what to do with her gold.

EVERYONE will happily want to accept Bitcoin!   They can see that its value will grow --- even in the short time they might hold onto it.

There will be NO shortage of merchants -- both online and brick & mortar -- who will ACCEPT Bitcoin.    The only question is:   Will anyone be willing to SPEND them?   

Isn't that a bit of a contradiction?  that merchants will be tripping over themselves to accept a method of payment no one is willing to use?

[no to the gold cult]

MY PREDICTION:

(1)  As the price continues to go up rapidly....

(2)  The number of buyers will grow rapidly...  causing...

(3)  The price to grow exponentially....  causing...

(4)  The number of buyers to increase exponentially....   causing...

This relies on an unlimited supply of buyers with an unlimited supply of money burning a hole in their pocket, that haven't recently been burned in a bubble.  Wealth can only be created by the production of goods and services.

(5)  An ever-increasing price....  Yet.....  Much more stability in the price....   (more upward growth with fewer downward swings--due to so many more players)  And....

It depends on how you define stability.  If the number of potential participants is infinity, then yes sure, stability.  Unfortunately, this is not so on planet Earth.  The only place this would actually be true is in paradise as depicted on Jehovah's Witness pamphlets - you know - the kind where people and lions and tigers sit down together and eat vegetables for dinner.

(6)  As the so-called Bitcoin Economy (the total value of all Bitcoins in circulation) explodes up off the top of the charts...

Of course, I think we agree that this number is pure fantasy.  It would be different if a Bitcoin had intrinisic value like a Toyota Camry, like if it could get you around town.

(7)  The online merchants will run, tripping over themselves, to get a piece of that pie...  and will all accept Bitcoin....   And then...

( 8 )  The brick & mortar merchants, having seen Bitcoin's success online, will also run to accept Bitcoin as well....   And then...

To a certain extent, I believe in this, except for the "tripping" part.  Nobody is going to be "tripping" to accept Bitcoin as a get-rich-quick scheme, any more than the local supermarket is tripping on its way to carry Amway.

Unfortunately, other than for Libertarian-like merchants, and the very few people holding substantial Bitcoins and wanting them to appreciate, the appeal isn't quite there.  On the other hand, there is plenty of appeal to gangs and drug dealers.  I would be willing to bet they will be more responsible for Bitcoin's success and notoriety.  Want to see Bitcoin move forward?  Go post about it in some marijuana forums.

(9)  Bitcoin will eventually be used globally by even more users than use Google or Facebook....   That's when...

(10)  Bitcoin will have come of age.

Gold has been "of age" for tens of thousands of years, and yet I can't even get a babysitter for it - even if I have a piece that's small enough to represent the value of the babysitting.

NOW  My Prediction:    Bitcoin will be at $1000 per Bitcoin before the end of this year.

( I might be wrong.  It might reach $1000 a Bitcoin much faster than that. )

What will be the mining difficulty by then?  Do you mean that I'll be able to buy a new SUV if I solve a block?

Also...   The growing value of Bitcoin will NOT deter people from using it in commerce.  No one has ever been afraid to ACCEPT something when its value is ever-increasing!   No one is afraid of being paid in Gold.

NOt even the 16-year old who babysits my kids?  She will wonder what to do with her gold.

EVERYONE will happily want to accept Bitcoin!   They can see that its value will grow --- even in the short time they might hold onto it.

There will be NO shortage of merchants -- both online and brick & mortar -- who will ACCEPT Bitcoin.    The only question is:   Will anyone be willing to SPEND them?  

Isn't that a bit of a contradiction?  that merchants will be tripping over themselves to accept a method of payment no one is willing to use?

Thanks for that, if something sounds too good to be true it probably is. I don't want bitcoins to be too good to be true. Cooler heads prevail and all that.

Still, fun to frenzy-up the speculators some, remember the dotcom boom...

[Bimmerhead]

While Bruce's prediction seems wildly optimistic, almost anything could happen given the very small float of btc that are out there.  The virality of the web can cause astounding things to happen.

Forget a shiek.  If just one medium-sized virtual goods company, or a tipping company like Flattr or Kachingle, or a second-tier social network like Friendster or Hi5 started using bitcoin who knows where the price could go.

Or if bitcoin suddenly caught the attention of some forex traders on one of the forums, or if a mildly wealthy retiree who was fascinated by the technology started telling his mildly wealthy buddies, or better yet if we got an article in Wired, Fast Company, BusinessWeek or other mainstream publication... any of these reasonable possibilities could send it skyward.

On the other hand, if a sizeable player like Zynga liked what they saw but instead of adopting bitcoin forked the project... I think that could be the end of this bitcoin.

Another monkey wrench could be a credit collapse.  At that point people will sell everything, even gold and bitcoin, to pay their debts.

[jgarzik]

While Bruce's prediction seems wildly optimistic, almost anything could happen given the very small float of btc that are out there.  The virality of the web can cause astounding things to happen.

Forget a shiek.  If just one medium-sized virtual goods company, or a tipping company like Flattr or Kachingle, or a second-tier social network like Friendster or Hi5 started using bitcoin who knows where the price could go.

Quite true, though I really wonder now if bitcoin will ever be used for micro-transactions or in-game / in-network simple currency.  If bitcoin becomes remotely popular, you're looking at amounts such as 0.0001 BTC.

I imagine that people will create their own micro-currencies (like Microsoft or Facebook Points) backed by bitcoin, rather than directly using bitcoin, simply for user interface issues such as presenting "400.00 points" rather than "0.00000385 BTC".

[marcus_of_augustus]

Bitcoins major problem right now is the market is highly illiquid and getting in and out of BTC to other currencies is a slow, difficult and expensive process. While this is the case the market price will swing wildly, relative to other currencies, making it less attractive to merchants to peg a fixed BTC price on their goods. However, as the exchange process becomes more efficient a solid clearing of BTCs and other currencies should bring the spreads much tighter.

As bottom end reference (lower bound), the current production costs of bitcoins is running around about 5 to 10 UScents per bitcoin.

There are currently 546 trillion satoshis in existence (100 million satoshi = 1 bitcoin), the smallest denomination.

[Dude65535]

I assume for your lower bound production cost you would be talking about an enthusiast miner who bought his gpu for other reasons and has his pc on 24/7 anyway. So the only cost is the difference in gpu power consumption between idle and full use. That's about the only way I can see to get costs that low.

[mcdett]

As bottom end reference (lower bound), the current production costs of bitcoins is running around about 5 to 10 UScents per bitcoin.

@moa How did you come up with that?

[marcus_of_augustus]

Several of the miners with high-end, efficient rigs have stated that at 1 USD= 1 BTC, for mining to become unprofitable difficulty would have to increase 20-fold.

Alternately, 0.05 USD = 1 BTC would also be the limit on profitable at current difficulty, i.e. the current cost of electricity hardware amortisation, admin overheads, etc. I think it is probably around 0.1 USD = 1 BTC since these guys are putting in a lot of unpaid "geek" hours for their pleasure that probably don't get accounted for in costs.

[casascius]

Several of the miners with high-end, efficient rigs have stated that at 1 USD= 1 BTC, for mining to become unprofitable difficulty would have to increase 20-fold.

Alternately, 0.05 USD = 1 BTC would also be the limit on profitable at current difficulty, i.e. the current cost of electricity hardware amortisation, admin overheads, etc. I think it is probably around 0.1 USD = 1 BTC since these guys are putting in a lot of unpaid "geek" hours for their pleasure that probably don't get accounted for in costs.

I too originally bought some BTC, and then sold most of it at a small profit.  I formed the opinion (as you can probably tell) that BTC are presently way overpriced and I went and sunk that same money into some modest mining gear.  I am betting that I will end up with more BTC in the long run - and either way, I have some perfectly good computer equipment if I don't.  Right now, BTC's are way undermined.

Here is another way to look at it.  For $10,000, you can own 0.2% of all the Bitcoins out there.  Or you can go buy sixteen ATI 5970's and own over 3% of the present total hash power of the network, with an overwhelming probability that the equipment will half pay for itself within 4 weeks (even including a 30% rise in difficulty every 2016 blocks), completely pay for itself in three months, and continue to produce some sort of meaningful gravy thereafter.  (And after all that, you still own perfectly good graphics cards that, if eBay is any help - USED ones are selling for over $500 and sometimes $600 USD nowadays - are still likely going to be worth at least half of what was paid for them).

[mcdett]

Several of the miners with high-end, efficient rigs have stated that at 1 USD= 1 BTC, for mining to become unprofitable difficulty would have to increase 20-fold.

Alternately, 0.05 USD = 1 BTC would also be the limit on profitable at current difficulty, i.e. the current cost of electricity hardware amortisation, admin overheads, etc. I think it is probably around 0.1 USD = 1 BTC since these guys are putting in a lot of unpaid "geek" hours for their pleasure that probably don't get accounted for in costs.

then obviously you would short this market?  RIGHT?  Your money where your mouth is?

[marcus_of_augustus]

then obviously you would short this market?  RIGHT?  Your money where your mouth is?

Not necessarily, I'm just stating where I think the absolute floor is in the BTC/USD market, i.e. cost of production.

The range of intangible premiums, over and above cost of production, that people may place on BTC are innumerable. Uniqueness as private, simple electronic exchange medium will likely have a huge premium placed on BTC in the current world of authoritarian monetary authorities jealously guarding their legislated monopoly on money issuance. These kinds of value estimations are fickle perceptions, much of it confidence based, and as impossible to predict as where a stampeding herd will run.

So, no not short, yet.

[bitcool]

I too originally bought some BTC, and then sold most of it at a small profit.  I formed the opinion (as you can probably tell) that BTC are presently way overpriced and I went and sunk that same money into some modest mining gear.  I am betting that I will end up with more BTC in the long run - and either way, I have some perfectly good computer equipment if I don't.  Right now, BTC's are way undermined.

Here is another way to look at it.  For $10,000, you can own 0.2% of all the Bitcoins out there.  Or you can go buy sixteen ATI 5970's and own over 3% of the present total hash power of the network, with an overwhelming probability that the equipment will half pay for itself within 4 weeks (even including a 30% rise in difficulty every 2016 blocks), completely pay for itself in three months, and continue to produce some sort of meaningful gravy thereafter.  (And after all that, you still own perfectly good graphics cards that, if eBay is any help - USED ones are selling for over $500 and sometimes $600 USD nowadays - are still likely going to be worth at least half of what was paid for them).

I think your estimate on mining prospect is a bit too optimistic. Currently the cheapest in-stock 5970 you can find are around $750, even used one cost $600 on ebay. Just having 16 cards won't give you those hashing power either, you have to add 50%~100% extra cost on MOBO/CPU/PSU/Case/etc.

I have been a miner for a few weeks now but yet made profit by any calculation. I happen to think now it's better time buying BTC than mining rigs. I am actually considering exchange my 5970s for BTC at the moment.

[casascius]

I think your estimate on mining prospect is a bit too optimistic. Currently the cheapest in-stock 5970 you can find are around $750, even used one cost $600 on ebay. Just having 16 cards won't give you those hashing power either, you have to add 50%~100% extra cost on MOBO/CPU/PSU/Case/etc.

I have been a miner for a few weeks now but yet made profit by any calculation. I happen to think now it's better time buying BTC than mining rigs. I am actually considering exchange my 5970s for BTC at the moment.

How much do you want for them, how many, and where are you at?  The last one I bought brand new cost me just over $600.  I bought it from Provantage.com, drop shipped.

[Garrett Burgwardt]

I just bought one for 415 on craigslist, check around. Good deals hide everywhere

[bitcool]

How much do you want for them, how many, and where are you at?  The last one I bought brand new cost me just over $600.  I bought it from Provantage.com, drop shipped.

on Provantage.com those cheaper 5970s (under $650) are marked as "special order" which may take 3~4 weeks to deliver.

if you are interested, I have 4 XFX that have only been used for a few weeks, 695 BTC/each, roughly $625 equivalent per mtgox. US shipping included.  Hey it may only cost you $69.5 if a BTC drops to 0.1USD according to some analysis

[ribuck]

... or if a mildly wealthy retiree who was fascinated by the technology started telling his mildly wealthy buddies ...

This reminds me of a few months ago when the total value of the generated bitcoins first passed $1 million. Some guy commented that even his uncle's house was worth more than $1 million.

The total value is now $5 million. I guess that guy's uncle's house might even be worth $5 million. It just shows how tiny the whole bitcoin economy is, relative to its potential. It has a long way to go yet.

I think the biggest boost to Bitcoin's value will come when inflation starts to skyrocket and the "man in the street" gets scared for his financial future.

[no to the gold cult]

I think the biggest boost to Bitcoin's value will come when inflation starts to skyrocket and the "man in the street" gets scared for his financial future.

I disagree. A lot fewer people will invest in an untried novel new technology when they're worried about making that months critical payments.

[kiba]

It seem that the market prices are not following each other for a while now.

[bitcool]

I disagree. A lot fewer people will invest in an untried novel new technology when they're worried about making that months critical payments.

people may get scared but they are not stupid. what causes the inflation, and what is a better store of value, they will seek out.
if bitcoin can prove itself by then, that will be an opportunity for a critical transition.

[bitcool]

For the longer term, I think the network hash rate, difficulty, btc exchange rate should all move in tandem.
http://bitcoin.sipa.be/speed-lin.png
unless I see a significant drop of interest in bitcoin, which should be reflected on the hash rate, current value drop feels artificial.

[Anonymous]

I commented to my partner that I was considering selling our house for bitcoins. I can tell you bitcoin is very wife unfriendly at the moment . 

[mpkomara]

There was a point in Autumn 2010 where CPU miners realized that it was too difficult (read: expensive) to generate bitcoins.  I stopped in September. Our alternative was to unclick Generate Coins and go to MtGox to buy them with USD or start selling goods for Bitcoins.  This was an important boost to BTC value relative to the dollar.  A fraudster at MtGox and a slashdot mention later, and bitcoins were trading .40.

I mention this history because certain GPU miners will soon start realizing that it will be too difficult to generate bitcoins.  And if these miners still want bitcoins, then they will have to go to the marketplace and try to buy them or earn them.  This will lead to a boost in BTC value, just as when the CPU miners stopped their machines last year.  Only GPU miners with the most efficient machines in the coldest parts of the world sucking energy from Danish windmills will be left generating bitcoins for a profit.

[ribuck]

GPU miners will soon start realizing that it will be too difficult to generate bitcoins.  And if these miners still want bitcoins, then they will have to go to the marketplace and try to buy them or earn them.  This will lead to a boost in BTC value...

...which will make it more profitable to generate bitcoins again, so round and round we go.

[ribuck]

I can tell you bitcoin is very wife unfriendly at the moment . 

Hahaha!

I did manage to persuade my wife that we should buy some bitcoins as an investment, but I'm sure she wouldn't consider selling the house (or even the car) for bitcoins.

[Anonymous]

I can tell you bitcoin is very wife unfriendly at the moment . 

Hahaha!

I did manage to persuade my wife that we should buy some bitcoins as an investment, but I'm sure she wouldn't consider selling the house (or even the car) for bitcoins.

Did you bribe her with chocolate ?

[ribuck]

Did you bribe her with chocolate ?

She's un-bribeable. And I'm the chocolate addict in this house anyway.

Even if I had offered to make sure I got pink bitcoins, that wouldn't have swung the deal.

[marcus_of_augustus]

Funny thread drift but has a kernel of relevancy here, female acceptance of bitcoins will be essential.

Many females hold the purse strings and they were the first adopters en masse to on-line shopping and e-commerce; clothes, shoes, books, food, etc. In fact, it is well known that females make the majority of decisions for purchases and household spending.

Some wise guy once said,
"You want to know why women are more powerful than men? They got half the money and all the pussy."

!Crude but element of truth.

We need to get that pink bitcoin logo doing the rounds more.

[no to the gold cult]

Funny thread drift but has a kernel of relevancy here, female acceptance of bitcoins will be essential.

Many females hold the purse strings and they were the first adopters en masse to on-line shopping and e-commerce; clothes, shoes, books, food, etc. In fact, it is well known that females make the majority of decisions for purchases and household spending.

Some wise guy once said,
"You want to know why women are more powerful than men? They got half the money and all the pussy."

!Crude but element of truth.

We need to get that pink bitcoin logo doing the rounds more.

I think the whole 'pink bitcoin' thing is entirely unecessary and in fact patronising. It's important to make bitcoin accessable to women, I think a good start is to stop talking about them like we're something out of the series Mad Men. As geeks it can be hard to figure out how to talk to non-geeks. Women tend to be non-geeks, that's really all there is to it.

Well, that and the fact that women tend to be more socially orientated. More emphasis on "social depth" or "social context" might be helpful, don't ask me how to do that as I'm barely not-autistic as it is, but I understand the principal (in theory) of relating to people and being interested in them.

[marcus_of_augustus]

I think the whole 'pink bitcoin' thing is entirely unecessary and in fact patronising.

Okay, so pink bitcoins are patronising, my bad ... gold is good then eh? Has always had a special attraction for the fairer sex.

[BioMike]

WOW! Someone sold a shitload of btc on BC! LRUSD and LREUR are down to 0.1 and 0.02.

[jgarzik]

WOW! Someone sold a shitload of btc on BC! LRUSD and LREUR are down to 0.1 and 0.02.

Gotta wonder why they were willing to dump BTC, no matter what the price, huh?

[mico]

Someone's idea on this forum that they are trying to manipulate the market - drop the value buy selling with this low value and then buy cheap bitcoins.

[davout]

Someone's idea on this forum that they are trying to manipulate the market - drop the value buy selling with this low value and then buy cheap bitcoins.

Probably

[bitcool]

The rate has been stabilized between 0.91 and 0.94 for quite some time now.

I think bitcoin had been promoted and now it's enjoying presidential ESF treatment
http://en.wikipedia.org/wiki/Exchange_Stabilization_Fund

[breandan81]

I've noticed the stability as well.  I'm quite happy about it, widespread use as a payment method will only happen if people can count on the price staying stable for at least a few days until they can get it out of bitcoin.  I'm a bit worried about the state of the exchanges for a few reasons, not the least of which is that they seem to be mostly dependent on LR staying good, and the thread about LR possibly going to hell has me worried.  There  is still bitcoin-otc, and bitcoin2cc, and bitcoin4cash, but all of those services seem like it might be difficult to use for even medium sized businesses.  It would be nice if ExchangeZone would add bitcoin to the currencies they support.

[BitterTea]

they seem to be mostly dependent on LR staying good

You can do a wire transfer or ACH payment to MtGox...

[S3052]

Agree.

There is some misconception that MtGox is extremely dependent on LR, which is not the case.

It is possible to do wire transfers (ACH in the US, standard bank wire (if you have a bank account in Europe, etc). All this works very well.

[theGECK]

they seem to be mostly dependent on LR staying good

You can do a wire transfer or ACH payment to MtGox...

The only way I've found to do this is by emailing Jed. Is there a way to do a wire transfer/ACH from the website?

[S3052]

No, Jed should typically respond to you timely and then activate the transfer quickly.

[theGECK]

No, Jed should typically respond to you timely and then activate the transfer quickly.

Ok, that was my experience. One thing I couldn't puzzle through was that Jed said I just needed to email the account name and amount to transfer. If I knew somebody else's account name, couldn't I use that to empty their account? Or is there more verification that happens?

/thread hijack

[slush]

I've noticed the stability as well. 

I don't think it is stability. It is just lack of interest. Look at the volume...

Price is going sideways in the channel, but it will become wild market again. It just need one large trade to make other panicking.

[Dobry Den]

I've noticed the stability as well. 

I don't think it is stability. It is just lack of interest. Look at the volume...

Price is going sideways in the channel, but it will become wild market again. It just need one large trade to make other panicking.

Also, USD parity is always a sort of mental barrier for speculators, which are the only people driving the market.

[slush]

Also, USD parity is always a sort of mental barrier for speculators, which are the only people driving the market.

Sorry for offtopic, but are you Czech/Slovak or is your nickname just a coincidence like this facebook profile? :-)

[Dobry Den]

Also, USD parity is always a sort of mental barrier for speculators, which are the only people driving the market.

Sorry for offtopic, but are you Czech/Slovak or is your nickname just a coincidence like this facebook profile? :-)

I studied abroad in Prague for half a year and it was such a life-changing experience that it even influenced the way I choose internet aliases.