"Game over" scenario for Bitcoin

[barbarousrelic]

Now, I used Google only as an example, as I have no indication they actually have such plans.  The point is that the risk of such a scenario is not zero, and I reiterate my initial point that speculators may not be pricing it adequately.

You don't have any evidence to suggest the speculators are not pricing it properly except your feeling about the matters. If you're right, why don't you speculate?

Aside from selling one's bitcoins and buying them back later, is there a way to profit from a dropping value of Bitcoin?

[dannyjpw]

Maybe that's only because some people owe bitcoins to someone. I don't think the debt claim is true, but you don't show that by saying the price of a coin.

the bitcoin economy is too small, and includes too few humans to be sure what gives it value at this point. My view is that the current value is attributable to the same kind of speculative 'new economy' impulse that makes facebook worth 10 billion right now.

That's not to say the technical (crypto, not financial) fundamentals are not hugely valuable, I just think the final picture is a long way from being realized.

[dannyjpw]

Aside from selling one's bitcoins and buying them back later, is there a way to profit from a dropping value of Bitcoin?

why would you ask that?

[BitterTea]

Aside from selling one's bitcoins and buying them back later, is there a way to profit from a dropping value of Bitcoin?

You could offer call options to people who are speculating that the value will increase.

[dannyjpw]

You could offer call options to people who are speculating that the value will increase.

no you couldn't, because there is no market established to enforce such a contract denominated in bitcoins.

I guess you could try writing your own contract but it would be shaky ground.

[BitterTea]

You could offer call options to people who are speculating that the value will increase.

no you couldn't, because there is no market established to enforce such a contract denominated in bitcoins.

I guess you could try writing your own contract but it would be shaky ground.

No contract necessary...

http://wiki.bitcoin-otc.com/wiki/Option_orders

to be more clear, this is the scenario I am referring to:

   The seller creates an escrow account on ClearCoin and sends to that account BTC in the amount of the total contract size plus enough to accommodate the escrow service fee (there is an escrow fee of 1% on the amount that exceeds 100 BTC). The expiration option chosen must land on a day that is no earlier than the expiration day.
    The seller then sends notice to buyer and includes the link to the ClearCoin escrow account page to the buyer.
    The buyer verifies that the escrow account page shows the correct Bitcoin address then sends to the seller the non-refundable premium.
    The buyer may exercise the option by sending payment to seller in the amount of contract size times the strike price.
    The buyer then uses the link to the escrow page and submits the request that the Bitcoin be released. This can be performed at any time before 12:00 am PDT of the day following expiration.
    Once exercised, the contract settlement is T+2 (The contracted amount must be delivered to buyer's Bitcoin address within 2 business days after the option was exercised.)

[Anonymous]

If google started their own block chain would it become a sharemarket where a bitcoin = 1 share of the companies economy ?. Anyone could see how many shares have been issued in each case. Then walmart,microsoft and other large companies might start one .....   the value of each companies bitshares is dependent on the perceived security of their chain and the amount of shares already issued / mined. Then anyone could start a clearing house.

[dannyjpw]

from the same link:

Jen then sends $25.00 PPUSD to Bob's Paypal account and using the link to the escrow account, requests that the funds be released.

There is no legal basis for pursuing debt denominated in bitcoin. So if Jen defaults here Bob is hosed.

Possibly I'm wrong on the legals here, but if so I'd like to know why.

[BitterTea]

from the same link:

Jen then sends $25.00 PPUSD to Bob's Paypal account and using the link to the escrow account, requests that the funds be released.

There is no legal basis for pursuing debt denominated in bitcoin. So if Jen defaults here Bob is hosed.

Possibly I'm wrong on the legals here, but if so I'd like to know why.

Well, I think ostracism or the threat thereof is a reasonable deterrent, at least in a community this small.

Also, I think you might be misunderstanding how ClearCoin works. Let's say you want to offer me a call option for 100 BTC @ $1 with a $5 service fee, to be exercised on or before 2011-03-01.

You create a ClearCoin escrow account and fund it with 100 BTC, setting the expiration date to some date later than 2011-03-01. Then you send me the link intended for the other user. Once I verify that the account is funded, funds will be released to my address, and that the expiration date is correct, I send you the $5 fee. At any time before the expiration, I can send you $100 more and request that you release the Bitcoin. You can obviously not release, but that's going to hurt your reputation, and you will have to wait until the account expires to get your Bitcoin back. So, if the buyer does not trust the seller, they can request an expiration further in the future.

[we6jbo]

If there was a factor that would hurt Bitcoin (someway?) then Bitcoin would still have people like myself that are in it because of what Bitcoin is today and until Bitcoin gains popularity with the general people I think it will always be about Bitcoin and I think there will be Bitcoin services where you can buy things with Bitcoin and ways to make Bitcoin by doing things and a bunch of ideas that stem from Bitcoin. I think it would be no different than what Fidonet is which is still being used today and is quite useful by people that are into that technology. If on the other hand Bitcoin were to replace the dollar then that would be quite awesome but until that comes then I say keep using it, keep telling people about it because this technology is going to solve a lot of problems if there remains an interest.

[no to the gold cult]

I've seen the Google-monster threat mentioned before, but frankly, the likes of Google or Amazon or Microsoft or whoever have nothing to gain in launching an open-source decentralised peer-to-peer commodity/money-system like bitcoin. As mentioned already on this thread this kind of technology just does not fit the corporate model, there's nothing in it for them. Using it could fit the model but not inventing it, I'd like to see the R&D meeting where some pay-role dreamer tries to justify the time and money to develop an anarcho-currency.

In fact I don't see a system like bitcoin being produced by anyone other than people like Satoshi or the bitcoin/cipher community for the reasons that Satoshi or the bitcoin/cipher community produced and developed bitcoin. That is to say, as a matter of principal and as a labour of love. So why would anyone produce a rival to bitcoin? Egotism I suppose, there really does seem little point unless there was a substantial and qualitative improvement in terms of the technology itself, persued again as a labour of love/pleasure in the technical challenge. Even then so what, there's room for silver and gold.

[barbarousrelic]

Aside from selling one's bitcoins and buying them back later, is there a way to profit from a dropping value of Bitcoin?

why would you ask that?

Because I was responding to a post where someone challenged people who believe Bitcoin will drop in price to speculate on such an event, but to my knowledge, it isn't possible to do so.

And yeah, there is no way that someone can start writing puts options contracts - not enforceable in court, and it's too easy to start over with a new identity on here. Nobody here uses their real name anyway.

[jgarzik]

Aside from selling one's bitcoins and buying them back later, is there a way to profit from a dropping value of Bitcoin?

Sure, do a manual short:  borrow BTC from someone, sell the BTC, and buy back the BTC later on.

[we6jbo]

I've seen the Google-monster threat mentioned before, but frankly, the likes of Google or Amazon or Microsoft or whoever have nothing to gain in launching an open-source decentralised peer-to-peer commodity/money-system like bitcoin. As mentioned already on this thread this kind of technology just does not fit the corporate model, there's nothing in it for them. Using it could fit the model but not inventing it, I'd like to see the R&D meeting where some pay-role dreamer tries to justify the time and money to develop an anarcho-currency.

In fact I don't see a system like bitcoin being produced by anyone other than people like Satoshi or the bitcoin/cipher community for the reasons that Satoshi or the bitcoin/cipher community produced and developed bitcoin. That is to say, as a matter of principal and as a labour of love. So why would anyone produce a rival to bitcoin? Egotism I suppose, there really does seem little point unless there was a substantial and qualitative improvement in terms of the technology itself, persued again as a labour of love/pleasure in the technical challenge. Even then so what, there's room for silver and gold.

It may be possible if they can mix their brand in there. In fact right this moment they could be running their variation of Bitcoin on a private server generating "g-coins" and then when they have a big enough pool of g-coins they could open it up and say here's our new decentralized g-coin service. You can buy g-coins from us and spend them on g-coin services. I don't know if something like that would happen but then again you never know with big corporations. But I will know one thing if that happens and that is Bitcoin is a really good idea and just like Linux, free and open will always prevail.

[bitcool]

Aside from selling one's bitcoins and buying them back later, is there a way to profit from a dropping value of Bitcoin?

having seen so many smaller tech, resource companies that had been naked-shorted to death by those f*king banksters, not giving them those option shorting bitcoin is definitely a good thing.

[jgarzik]

It may be possible if they can mix their brand in there. In fact right this moment they could be running their variation of Bitcoin on a private server generating "g-coins" and then when they have a big enough pool of g-coins they could open it up and say here's our new decentralized g-coin service. You can buy g-coins from us and spend them on g-coin services. I don't know if something like that would happen but then again you never know with big corporations. But I will know one thing if that happens and that is Bitcoin is a really good idea and just like Linux, free and open will always prevail.

Anyone creating g-coins could simply allocate all 21M (or whatever) to themselves in the first block...  why generate if you control the network anyway?

[jgarzik]

having seen so many smaller tech, resource companies that had been naked-shorted to death by those f*king banksters, not giving them those option shorting bitcoin is definitely a good thing.

There is a big difference between shorting and naked shorting.  Normal shorting adds information to the market.  And I doubt the bitcoin community would be willing to create a vehicle for naked shorting.

[marcus_of_augustus]

It is conceivable that consortium of powerful banks and hedge funds who are not beholden to the current oligarchical monetary system, probably not mega-banks but mid-level up and coming like Saxobank, etc, start up something like bitcoin. They are just as sick of swallowing the costs of bailing out their bigger competiton and playing byu the shit rules coming down from on top.

P2P, using their own computational power, based in zones outside the FATF and KYC BS, and branding to bootstrap a fiat rival but keep it open source, etc with the same qualities as bitcoin but much better start-up public credibility ... wouldn't be the worst thing.

[bitcool]

It is conceivable that consortium of powerful banks and hedge funds who are not beholden to the current oligarchical monetary system, probably not mega-banks but mid-level up and coming like Saxobank, etc, start up something like bitcoin. They are just as sick of swallowing the costs of bailing out their bigger competiton and playing byu the shit rules coming down from on top.

P2P, using their own computational power, based in zones outside the FATF and KYC BS, and branding to bootstrap a fiat rival but keep it open source, etc with the same qualities as bitcoin but much better start-up public credibility ... wouldn't be the worst thing.

If it is P2P and open source, why is that a bad thing? just because I may lose a few hundreds/thousands dollars on current btc? ... no, the dollars will be worthless anyway.

But if they use their financial advantage to gain more than 50% computation power, we'll all know it's not real p2p currency, just another Q-coin.

[Timo Y]

Looking at the current valuation of Bitcoin against the dollar, I know I'm not the only one to find Bitcoin to be overpriced given the size of its economy. 

Overpriced?  Compared to what?

So what is the "correctly priced" value of Bitcoin?   Ball park?  $0.1 ?   $0.01 ?   $0.001 ? 

And why?

No matter which of these numbers you choose, aren't all of them somewhat arbitrary?



Currently, the value of Bitcoin is too low to make it a useful currency to buy just ONE house or apartment (approx. $200- $1000 k). The entire Bitcoin economy is worth as much as a handful of houses. That is still miniscule, given the fact that we probably have thousands of users.

So the price seems about right to me.