How are people still actually using it to _buy_ things?
My problem with this rate of change is that it makes it harder to use it as a means of buying things.
If I see an item for sale for 2.5BTC then it can take me an hour to translate my GBP into BTC. Then I carry out the exchange, and then they have to transfer it back to their currency (if they want to spend it on most things).
If the value has gone up 15% in that time then what price should they be charging me?
Should a shopfront be updating its prices on an hourly basis?
I'm all for BTC being valuable, but it needs to have _some_ stability to be used as a method of value exchange.
I bought a domain at Namecheap. That sent me over to BitPay which I gave the current USD price in BitCoins and an hour later Namecheap had accepted the payment.
A currency which changes in value by around 40% in a 24 hour period is completely useless for the transactions I mostly deal with. We worry about a few percent change over weeks and insist on hedges.
Imagine saying to someone - I'll put 1000 BTC into your venture when you reach the next milestone in two months. What's that going to be? USD 100,000? USD 50,000? USD 1.50?
1) the market can stay irrational longer than you can stay solvent. (Keynes)
2) a bird in the hand is worth two in the bush. Bank your profits. It turns exponential gains into linear gains, throwing away a huge amount of potential profits. But a small amount of real profit is worth more than a huge amount of potential profit.
I'm sure they are not required and they are annoying even. Especially when the submission adds absolutely nothing. And as a bonus links to a page that is not valid few minutes after posting.
I'm surprised that someone hasn't started another Bitcoin yet. Is it harder than just changing some initial seed? Because the artificial scarcity of digital currency is what's allowing for these high prices.
Then all you need is intermediary parties that will exchange your V2 Bitcoins for V1 Bitcoins (which will currently have the highest acceptance for buying things). Over time, V2, V3 etc. may even become accepted directly by merchants, if they become big enough.
UPDATE: Thanks for the info on additional ones. This is getting really interesting. So my initial scarcity hypothesis was wrong, which means it's just pure herd mentality. Hopefully over time the availability of multiple currencies will lead to some sort of equilibrium though.
Not being fluent in the ins and outs of bitcoin: what is driving this? Is it pure speculation? Are more people trying to get in on the BTC wagon (riding the Cyprus wave)?
There doesn't seem to be any evidence that (in the world of BTC) the Cyprus situation has triggered anything other than rampant speculation by non-cypriot libertarians who already distrust central banks and now have a boogeyman to point at.
Nobody really knows. The common thought is that as more merchants start accepting BTC, it becomes more viable as a stand-alone currency and therefore more valuable. Facts seem to contradict this theory as 40% overnight growth cannot represent a 40% growth in the BTC economy. Thus either we undervalued BTC all along, or it is against bubble.
I cannot ----ing believe it. I thought there would be a bump when it hit $100, but not this much. It's just insane, I was calling it a bubble since $30, and it's doubled again and again..
I wonder how low the crash will go? I'm guessing it won't be below $30.
Depends how many people get badly burned by this I would have thought. It could pretty easily drop to almost nothing if confidence is completely bust, as the 'fundamentals' supporting the price of BTC are far from obvious.
My 2¢ is that it's gonna crash like it did a couple years back.
Then would be the best time to buy, since it will probably do this crazy business once again.
'Value' comes from people's perception. The fact(s) that they can't (until the crypto is broken) be counterfeited or double spent (within reason/time limits), and that there are a limited amount ever, and that transfer is decentralised and unregulated, these things give them value to some people.
The actual hashing work done is useful to provide the above features. IMHO it is not useful in and of itself.
Note that I'm not really an advocate of bitcoins either, but I have taken a bit of time to try and understand them. The limited quantity and decentralisation are not positive features of a currency (again, IMHO)
Value, be it in gold or silver or USD or EUR or bitcoin or cars or art, is a perceived phenomenon. Something has value because others are willing to trade it for goods and services (or for other forms of value). Gold and silver are trusted stores of value because they have been used in that capacity for centuries (and for a very long time, USD were silver certificates so there was real metal backing the paper)
The underlying value of BTC, IMO, is the anonymity feature (the ability to conduct commerce without a clear centralized record identifying you by name). Once that is compromised, it's not clear what value BTC will have.
I still don't understand how a piece of rock could be worth anything. No really. How do some carbon atoms translate into value?
Value is a transient concept, many things we assume to be inherently valuable are simply based on the assumption everyone else will continue to value them as much (or more) as they do now.
A year or two ago a group in .ch (which is not China, BTW) organized a group buy of Debian logo'd swiss army knives. I got in on the deal and unfortunately ended up paying well over 50% the cost of the knife in various transfer fees. So my "$25 knife" or whatever it was ended up costing me about $50. First I needed to convert from dollars to euros, then an international xfer, then into something kinda like a cross between what americans would call paypal and a checking account I believe it was the iban system where I basically sent money to a number almost exactly like paypal would send money to an email addrs. Nobody would do stuff like this unless they were desperate or crazy or just didn't care so the financial cartels tacked on incredible fees at each step. Oh if only we could have made a transaction with BTC. It takes about 5 minutes to make a BTC transaction so the currency risk is pretty minimal compared to the 50%+ fees from traditional currency changers. Given those numbers, even during an active crash its safer/cheaper to use BTC than traditional forms of transfer.
Anyway the value of a bitcoin solely due to transfers is (how much money the world is transferring across borders with BTC today) / (how many BTC are available for that kind of transfer/trading today) with a correction factor for velocity of money today. So if a billion bucks a day flows outta $dying_country and there's ten thousand BTC in the trading pool being used to transfer the money, and the velocity of money is the btc change hands a thousand times a day, then the price delta due to Cyprus/whatever would therefore be "about" $100 per individual BTC on top of whatever existing value due to other transfers and such. These numbers are pretty well made up but this is generally where very long term price estimates end up. So assuming BTC someday approaches 1% of paypals volume, then given paypals well known transfer volume stats, and some realistic estimates of the BTC trading pool size, the price per BTC would be...
Much like EE work this valuation benefits from a hydrologic comparison. So given hoover dam, how much does a gallon of water weigh? Well if you know how many pounds of water fell over the dam per day, and you know how many gallons of water fell over the dam per day, and one day's worth of water takes exactly one day to fall over the dam, then a gallon of water would seem to weigh x pounds...
I was thinking that as well, but it's actually the opposite. Germany experienced hyperinflation, where the value of the Mark decreased rapidly. This is the currency increasing in value, so "hyperdeflation" I guess.
[+] [-] AndrewDucker|13 years ago|reply
My problem with this rate of change is that it makes it harder to use it as a means of buying things.
If I see an item for sale for 2.5BTC then it can take me an hour to translate my GBP into BTC. Then I carry out the exchange, and then they have to transfer it back to their currency (if they want to spend it on most things).
If the value has gone up 15% in that time then what price should they be charging me?
Should a shopfront be updating its prices on an hourly basis?
I'm all for BTC being valuable, but it needs to have _some_ stability to be used as a method of value exchange.
[+] [-] swinglock|13 years ago|reply
[+] [-] Devilboy|13 years ago|reply
[+] [-] russellallen|13 years ago|reply
Imagine saying to someone - I'll put 1000 BTC into your venture when you reach the next milestone in two months. What's that going to be? USD 100,000? USD 50,000? USD 1.50?
[+] [-] niggler|13 years ago|reply
1. IIRC Silk road uses some average price rather than the spot price
2. Does anyone provide BTC hedging? Seems like a pretty useful and profitable service.
[+] [-] bryanlarsen|13 years ago|reply
1) the market can stay irrational longer than you can stay solvent. (Keynes)
2) a bird in the hand is worth two in the bush. Bank your profits. It turns exponential gains into linear gains, throwing away a huge amount of potential profits. But a small amount of real profit is worth more than a huge amount of potential profit.
[+] [-] codesuela|13 years ago|reply
[+] [-] jerguismi|13 years ago|reply
Are you implying that banks are safer way to store wealth then Bitcoin? #Cyprys ;)
[+] [-] Nursie|13 years ago|reply
[+] [-] pazimzadeh|13 years ago|reply
http://bitcoinity.org/markets.
I'm not sure that a new submission is required every day.
[+] [-] rplnt|13 years ago|reply
[+] [-] daveungerer|13 years ago|reply
Then all you need is intermediary parties that will exchange your V2 Bitcoins for V1 Bitcoins (which will currently have the highest acceptance for buying things). Over time, V2, V3 etc. may even become accepted directly by merchants, if they become big enough.
UPDATE: Thanks for the info on additional ones. This is getting really interesting. So my initial scarcity hypothesis was wrong, which means it's just pure herd mentality. Hopefully over time the availability of multiple currencies will lead to some sort of equilibrium though.
[+] [-] rheide|13 years ago|reply
[+] [-] nonpme|13 years ago|reply
Yesterday 2nd popular one, Litecoin (LTC) more than doubled its value.
[+] [-] rarestblog|13 years ago|reply
[+] [-] mkr-hn|13 years ago|reply
[+] [-] bluedevil2k|13 years ago|reply
[+] [-] rheide|13 years ago|reply
(..getting ready to eat my own words, real soon..)
[+] [-] freakyterrorist|13 years ago|reply
Also seriously regretting not buying it when it was "expensive" at <$5 :(
[+] [-] nkozyra|13 years ago|reply
[+] [-] crazytony|13 years ago|reply
[+] [-] Nursie|13 years ago|reply
There doesn't seem to be any evidence that (in the world of BTC) the Cyprus situation has triggered anything other than rampant speculation by non-cypriot libertarians who already distrust central banks and now have a boogeyman to point at.
[+] [-] IgorPartola|13 years ago|reply
[+] [-] Egregore|13 years ago|reply
[+] [-] gnu8|13 years ago|reply
[+] [-] meerita|13 years ago|reply
[+] [-] EarthLaunch|13 years ago|reply
[+] [-] Devilboy|13 years ago|reply
Didn't think of that idea did you?
[+] [-] polshaw|13 years ago|reply
I wonder how low the crash will go? I'm guessing it won't be below $30.
[+] [-] Nursie|13 years ago|reply
[+] [-] kmfrk|13 years ago|reply
https://www.casascius.com/
[+] [-] illuminate|13 years ago|reply
[+] [-] Matsta|13 years ago|reply
[+] [-] paulhodge|13 years ago|reply
[+] [-] kmfrk|13 years ago|reply
[+] [-] Yuioup|13 years ago|reply
[+] [-] Nursie|13 years ago|reply
'Value' comes from people's perception. The fact(s) that they can't (until the crypto is broken) be counterfeited or double spent (within reason/time limits), and that there are a limited amount ever, and that transfer is decentralised and unregulated, these things give them value to some people.
The actual hashing work done is useful to provide the above features. IMHO it is not useful in and of itself.
Note that I'm not really an advocate of bitcoins either, but I have taken a bit of time to try and understand them. The limited quantity and decentralisation are not positive features of a currency (again, IMHO)
[+] [-] niggler|13 years ago|reply
The underlying value of BTC, IMO, is the anonymity feature (the ability to conduct commerce without a clear centralized record identifying you by name). Once that is compromised, it's not clear what value BTC will have.
[+] [-] Ntrails|13 years ago|reply
Value is a transient concept, many things we assume to be inherently valuable are simply based on the assumption everyone else will continue to value them as much (or more) as they do now.
[+] [-] VLM|13 years ago|reply
Anyway the value of a bitcoin solely due to transfers is (how much money the world is transferring across borders with BTC today) / (how many BTC are available for that kind of transfer/trading today) with a correction factor for velocity of money today. So if a billion bucks a day flows outta $dying_country and there's ten thousand BTC in the trading pool being used to transfer the money, and the velocity of money is the btc change hands a thousand times a day, then the price delta due to Cyprus/whatever would therefore be "about" $100 per individual BTC on top of whatever existing value due to other transfers and such. These numbers are pretty well made up but this is generally where very long term price estimates end up. So assuming BTC someday approaches 1% of paypals volume, then given paypals well known transfer volume stats, and some realistic estimates of the BTC trading pool size, the price per BTC would be...
Much like EE work this valuation benefits from a hydrologic comparison. So given hoover dam, how much does a gallon of water weigh? Well if you know how many pounds of water fell over the dam per day, and you know how many gallons of water fell over the dam per day, and one day's worth of water takes exactly one day to fall over the dam, then a gallon of water would seem to weigh x pounds...
[+] [-] unknown|13 years ago|reply
[deleted]
[+] [-] nsns|13 years ago|reply
[+] [-] glennos|13 years ago|reply