Was Bitcoin actually just a Pump and Dump?

[capoeira]

what I don't understand is how it all started. noone would buy something that has no value (the first mined coins). so who bought the first coins? It might have started as a pump and dump, and once this caused a valorization it caused a chain reaction.

Noone designed it as a pump and dump scheme. It was designed as a digital currency (as were all the digital currencies from the early 90's).
It was obvious that an exchange was needed to determine a price for it, but even before one became available, the first transaction occurred when a miner offered 10000BTC for a couple of pizzas. No pizza shop accepted them, so an aspiring bitcoin user paid fiat for the pizzas and made the trade to obtain his bitcoins. That determined the first defined price (about .2 cents). Interestingly, it wasn't zero before that really...it was undefined.

so one guy bought BTCs because of something like a joke, but how did the market build itself? who started to buy coins, and why?

[harrymmmm]

what I don't understand is how it all started. noone would buy something that has no value (the first mined coins). so who bought the first coins? It might have started as a pump and dump, and once this caused a valorization it caused a chain reaction.

Noone designed it as a pump and dump scheme. It was designed as a digital currency (as were all the digital currencies from the early 90's).
It was obvious that an exchange was needed to determine a price for it, but even before one became available, the first transaction occurred when a miner offered 10000BTC for a couple of pizzas. No pizza shop accepted them, so an aspiring bitcoin user paid fiat for the pizzas and made the trade to obtain his bitcoins. That determined the first defined price (about .2 cents). Interestingly, it wasn't zero before that really...it was undefined.

so one guy bought BTCs because of something like a joke, but how did the market build itself? who started to buy coins, and why?

Hmm. It was fun, but I wouldn't call it a joke. The digital currency work all thru the 90's was very serious stuff.

I guess the answer to why it built itself was that people realized it had a future and wanted to be involved to learn about it. I bought into various digital currencies back as far as the early 90's just to be involved for the same reasons. Then exchanges came along...

[capoeira]

what I don't understand is how it all started. noone would buy something that has no value (the first mined coins). so who bought the first coins? It might have started as a pump and dump, and once this caused a valorization it caused a chain reaction.

Noone designed it as a pump and dump scheme. It was designed as a digital currency (as were all the digital currencies from the early 90's).
It was obvious that an exchange was needed to determine a price for it, but even before one became available, the first transaction occurred when a miner offered 10000BTC for a couple of pizzas. No pizza shop accepted them, so an aspiring bitcoin user paid fiat for the pizzas and made the trade to obtain his bitcoins. That determined the first defined price (about .2 cents). Interestingly, it wasn't zero before that really...it was undefined.

so one guy bought BTCs because of something like a joke, but how did the market build itself? who started to buy coins, and why?

Hmm. It was fun, but I wouldn't call it a joke. The digital currency work all thru the 90's was very serious stuff.

I guess the answer to why it built itself was that people realized it had a future and wanted to be involved to learn about it. I bought into various digital currencies back as far as the early 90's just to be involved for the same reasons. Then exchanges came along...

intresting, but I still don't understand how this could cause the initial "pump" (while I can perfectly understand all the following, once there was the first one)

[STT]

Bitcoin is a pump and dump just like gold is. This says it all.

Right well if it lasts thousands of years that will be quite a bubble.  Lets hope it really is the start of something that big

Satoshi probably passed away I reckon, if it was just one person I imagine it was just somebody who wanted to make a difference to the world

how did the market build itself?

I checked out bitcoin in 2011 and my quick impression it was tokens for web site builders and stuff like that.    If you look up Krugman who writes in NYT he goes into details of a babysitting club and this had a virtual currency, just tokens where you would spend when you go out to dinner and earn when others wanted you to look after their kids.    Its not money exactly, its exchange.    You could say btc came from people swapping their spare labour in this way with an interest between them and probably quite alot of goodwill and willingness to compromise on price

I dont really do html, mining gave errors on my gfx so I skipped - I could have been a contender   /o\

[harrymmmm]

what I don't understand is how it all started. noone would buy something that has no value (the first mined coins). so who bought the first coins? It might have started as a pump and dump, and once this caused a valorization it caused a chain reaction.

Noone designed it as a pump and dump scheme. It was designed as a digital currency (as were all the digital currencies from the early 90's).
It was obvious that an exchange was needed to determine a price for it, but even before one became available, the first transaction occurred when a miner offered 10000BTC for a couple of pizzas. No pizza shop accepted them, so an aspiring bitcoin user paid fiat for the pizzas and made the trade to obtain his bitcoins. That determined the first defined price (about .2 cents). Interestingly, it wasn't zero before that really...it was undefined.

so one guy bought BTCs because of something like a joke, but how did the market build itself? who started to buy coins, and why?

Hmm. It was fun, but I wouldn't call it a joke. The digital currency work all thru the 90's was very serious stuff.

I guess the answer to why it built itself was that people realized it had a future and wanted to be involved to learn about it. I bought into various digital currencies back as far as the early 90's just to be involved for the same reasons. Then exchanges came along...

intresting, but I still don't understand how this could cause the initial "pump" (while I can perfectly understand all the following, once there was the first one)

I'm not sure what 'initial pump' you're referring to. Remember it took two years before the USD price of a bitcoin reached 1USD. Interesting history is here: http://en.wikipedia.org/wiki/History_of_Bitcoin

[ninjaskip]

what I don't understand is how it all started. noone would buy something that has no value (the first mined coins). so who bought the first coins? It might have started as a pump and dump, and once this caused a valorization it caused a chain reaction.

Noone designed it as a pump and dump scheme. It was designed as a digital currency (as were all the digital currencies from the early 90's).
It was obvious that an exchange was needed to determine a price for it, but even before one became available, the first transaction occurred when a miner offered 10000BTC for a couple of pizzas. No pizza shop accepted them, so an aspiring bitcoin user paid fiat for the pizzas and made the trade to obtain his bitcoins. That determined the first defined price (about .2 cents). Interestingly, it wasn't zero before that really...it was undefined.

so one guy bought BTCs because of something like a joke, but how did the market build itself? who started to buy coins, and why?

Hmm. It was fun, but I wouldn't call it a joke. The digital currency work all thru the 90's was very serious stuff.

I guess the answer to why it built itself was that people realized it had a future and wanted to be involved to learn about it. I bought into various digital currencies back as far as the early 90's just to be involved for the same reasons. Then exchanges came along...

intresting, but I still don't understand how this could cause the initial "pump" (while I can perfectly understand all the following, once there was the first one)

The initial pump was created by bots(trading algorithms), that in combination with silkroad(long gone now) gave bitcoin a "fake" value really.
And i say fake because demand was never that big, but the bots were doing a great job.
For a few big investors with early adoption Bitcoin was a great opportunity to make billions, and they did.
How? Well, they got in Bitcoin when the value was just cents, bought loads, pumped the hell out of the price and then let it drop, nice and slowly like it has been happening this year.
Then they started with the altcoins, pump and dump, see ya!
This is what i think and some may agree, some don't.

[capoeira]

what I don't understand is how it all started. noone would buy something that has no value (the first mined coins). so who bought the first coins? It might have started as a pump and dump, and once this caused a valorization it caused a chain reaction.

Noone designed it as a pump and dump scheme. It was designed as a digital currency (as were all the digital currencies from the early 90's).
It was obvious that an exchange was needed to determine a price for it, but even before one became available, the first transaction occurred when a miner offered 10000BTC for a couple of pizzas. No pizza shop accepted them, so an aspiring bitcoin user paid fiat for the pizzas and made the trade to obtain his bitcoins. That determined the first defined price (about .2 cents). Interestingly, it wasn't zero before that really...it was undefined.

so one guy bought BTCs because of something like a joke, but how did the market build itself? who started to buy coins, and why?

Hmm. It was fun, but I wouldn't call it a joke. The digital currency work all thru the 90's was very serious stuff.

I guess the answer to why it built itself was that people realized it had a future and wanted to be involved to learn about it. I bought into various digital currencies back as far as the early 90's just to be involved for the same reasons. Then exchanges came along...

intresting, but I still don't understand how this could cause the initial "pump" (while I can perfectly understand all the following, once there was the first one)

I'm not sure what 'initial pump' you're referring to.

In five days, the price grew 1000%, rising from $0.008 to $0.08 for 1 bitcoin

thanks for the link by the way

[kolloh]

I do not think Bitcoin was designed as a pump and dump but certainly anything with money behind it is open to manipulation. The jump above $1k in such a short time frame definitely feels like a pump though.

[ninjaskip]

I do not think Bitcoin was designed as a pump and dump but certainly anything with money behind it is open to manipulation. The jump above $1k in such a short time frame definitely feels like a pump though.

Makes sense.

[cryptasm]

what about the "they generate their own coins to dump alot" theory, could actually be scary that you could just make coins and nobody has a idea...anyone who knows more about the tech on btc should answer=)

[Coin_Master]

what I don't understand is how it all started. noone would buy something that has no value (the first mined coins). so who bought the first coins? It might have started as a pump and dump, and once this caused a valorization it caused a chain reaction.

Hahaha you are asking a question that many economists still don't know the answer to.  The answer is simple, people place subjective value on things for many reasons including "because it was tuesday".  People collect all sorts of things like stamps and old coins that have no direct monetary value today, who wants an old used stamp, well in some cases they are selling for a lot of money.  Try to stop thinking of things as televisions and mobile phones, sometimes even a flower can be sold for something.  Freedom is priceless

[capoeira]

Hahaha you are asking a question that many economists still don't know the answer to.

like I always say: economists havent dicover the "heliocentrism" yet. lol

The answer is simple, people place subjective value on things for many reasons including "because it was tuesday".  People collect all sorts of things like stamps and old coins that have no direct monetary value today, who wants an old used stamp, well in some cases they are selling for a lot of money.  Try to stop thinking of things as televisions and mobile phones, sometimes even a flower can be sold for something.  Freedom is priceless

you simple anser doesn't convince me. stamps and old coins have a nostalgic value which can explain how they start to gain monetary value.

[ninjaskip]

The answer is simple, people place subjective value on things for many reasons including "because it was tuesday".  People collect all sorts of things like stamps and old coins that have no direct monetary value today, who wants an old used stamp, well in some cases they are selling for a lot of money.  Try to stop thinking of things as televisions and mobile phones, sometimes even a flower can be sold for something.  Freedom is priceless

you simple anser doesn't convince me. stamps and old coins have a nostalgic value which can explain how they start to gain monetary value.


[/quote]

Don't be surprised if Stamps and old coins will be digital in the near future ...

[HotHamHock]

what about the "they generate their own coins to dump alot" theory, could actually be scary that you could just make coins and nobody has a idea...anyone who knows more about the tech on btc should answer=)

Miners dumping coin for fiat en masse, if that is what you're asking, is a short term risk to bitcoin valuation, sure. The potential impact of such action is limiting over time as 1)the total sum of minted coins increase, 2)the block rewards halve, and ideally 3)adoption and demand grow, increasing volume and absorbing whatever miners are looking to dump.

what I don't understand is how it all started. noone would buy something that has no value (the first mined coins). so who bought the first coins? It might have started as a pump and dump, and once this caused a valorization it caused a chain reaction.

Who is to say the first mined coins didn't have value? With the exception of *intrinsic value, value itself is merely a belief, a subjectively defined, dynamic opinion with external conditions taken into consideration. Anyone that believed bitcoin had tremendous potential would naturally manifest a far greater value for a bitcoin than someone that didn't see a future for it.

Since obtaining bitcoin was relatively easy and cheap for the individuals that were aware of bitcoin in the earliest days, the actual monetary value was exceedingly low to nonexistent and lent little incentive for trading among miners, however, the first real attempt at pegging bitcoin to a usd valuation for the purpose of exchange was by new liberty standard that essentially calculated their costs in producing bitcoin. Their explanation here:

During 2009 my exchange rate was calculated by dividing $1.00 by the average amount of electricity required to run a computer with high CPU for a year, 1331.5 kWh, multiplied by the the average residential cost of electricity in the United States for the previous year, $0.1136, divided by 12 months divided by the number of bitcoins generated by my computer over the past 30 days.

*I define intrinsic value differently than most; namely, the necessities for life such as food, shelter, etc. Therefore, I do not include things such as gold, or products, or IP, etc.

[Fabrizio89]

Until we have a big enough market cap, Bitcon is a pump and dump (not that it was intended to be), we saw it in the past, we know it will happen again. We need more "distribution phases" if you like to call them that way and it will take some time. It is too easy to corner the market right now, and every trader wants to take advantage of that, they would be stupid not doing so, but if you don't know how to play along their rules you should just watch.

[pattu1]

Until we have a big enough market cap, Bitcon is a pump and dump (not that it was intended to be), we saw it in the past, we know it will happen again. We need more "distribution phases" if you like to call them that way and it will take some time. It is too easy to corner the market right now, and every trader wants to take advantage of that, they would be stupid not doing so, but if you don't know how to play along their rules you should just watch.

If bitcoin's market cap is not sufficiently high enough, what about the market cap of altcoins? 

[ninjaskip]

Until we have a big enough market cap, Bitcon is a pump and dump (not that it was intended to be), we saw it in the past, we know it will happen again. We need more "distribution phases" if you like to call them that way and it will take some time. It is too easy to corner the market right now, and every trader wants to take advantage of that, they would be stupid not doing so, but if you don't know how to play along their rules you should just watch.

If bitcoin's market cap is not sufficiently high enough, what about the market cap of altcoins? 

Big or not big still a pump and dump.

[Erdogan]

what I don't understand is how it all started. noone would buy something that has no value (the first mined coins). so who bought the first coins? It might have started as a pump and dump, and once this caused a valorization it caused a chain reaction.

Noone designed it as a pump and dump scheme. It was designed as a digital currency (as were all the digital currencies from the early 90's).
It was obvious that an exchange was needed to determine a price for it, but even before one became available, the first transaction occurred when a miner offered 10000BTC for a couple of pizzas. No pizza shop accepted them, so an aspiring bitcoin user paid fiat for the pizzas and made the trade to obtain his bitcoins. That determined the first defined price (about .2 cents). Interestingly, it wasn't zero before that really...it was undefined.

so one guy bought BTCs because of something like a joke, but how did the market build itself? who started to buy coins, and why?

Hmm. It was fun, but I wouldn't call it a joke. The digital currency work all thru the 90's was very serious stuff.

I guess the answer to why it built itself was that people realized it had a future and wanted to be involved to learn about it. I bought into various digital currencies back as far as the early 90's just to be involved for the same reasons. Then exchanges came along...

intresting, but I still don't understand how this could cause the initial "pump" (while I can perfectly understand all the following, once there was the first one)

You have found a fundamental value problem, which has been discussed here at length earlier. The fact that bitcoin has value, contradicts Mises' regression theorem, which basically states that the value must be based in part on yesterdays value, and ultimately, from the time deep in history, when some commodity got exchange value because it was the preferred commodity to hold for later. (Discounting debt as money, which could have existed before or after or at the same time).

Some believe that this means that bitcoin must have some value for direct use, in addition to it's money (exchange) value. I do not agree, I think the vision of the future usage of bitcoin as money, was enough to give it initial value, and that the regression theorem has to be shelved.

[capoeira]

so, i must repeat, like I always say: economists havent dicover the "heliocentrism" yet. lol

[Erdogan]

Bitcoin is just a pump, float to the surface, gently bob in the waves scheme.