Bitcoin Price Touches $1,000 Again as Overstock Sales Hit $130,000

[jval]

This is just ridiculous. If Overstock is the biggest retailer in the world accepting Bitcoin, and on their opening day they only manage $130,000 in sales (130 BTC), what does that tell you about the volume of Bitcoin actually being used in trade and commerce rather than speculation?

There are 12.5 Million BTC in circulation. I don't doubt that Bitcoin will become a revolutionary system of payments and money storage down the track, but the price of coins is outrageously inflated at the moment.

[olalonde]

It's not as small as you think. This is what Overstock's CEO had to say about it on Twitter: "#Bitcoin's first full day on @overstock.com was a huge success: 840 orders, $130,000 in sales. Almost all new customers. #stunned". https://twitter.com/OverstockCEO/statuses/421754592427139072

130 BTC is 0.001% (130/12.5M) of all Bitcoin spent in one day at Overstock. Does Overstock typically receive 0.001% of all the USD money supply in one day (~30M$)? My math is probably a bit off but my point is that before calling 130 BTC ridiculous, you have to put it in perspective with regards to other currencies.

[RoboTeddy]

> I don't doubt that Bitcoin will become a revolutionary system of payments and money storage down the track, but the price of coins is outrageously inflated at the moment.

Prices rise immediately in anticipation of positive future events.

[drewblaisdell]

> the price of coins is outrageously inflated at the moment.

I would love to listen to you justify this statement, or rather, explain how any store of value without intrinsic value can be over/undervalued.

In attempting to do this, you will find that there are gaps in your understanding of how currencies work.

[mrb]

You fail to realize that Overstock represents a tiny fraction of all the commerce done in bitcoins.

Bitpay alone is seeing an exponential growth of Bitcoin transactions: they appear to be doing about $20-30 million/month at their current rate: http://blog.bitpay.com/2013/12/bitpay-drives-explosive-growt... and http://blog.bitpay.com/2013/12/bitpay-exceeds-100000000-in-b...

[CamperBob2]

Why would I want to spend Bitcoins that are increasing in value? I'll spend them on the way down, not up.

[aaronpeck]

Yeah, a currency that has no transactional cost from a third party thus offering a 2-4% discount to either buyer, seller or split by both, that maintains one value globally, and isn't controlled buy a particular nations government, probably is of no interest to the retailers of the world and likely just inflated bits that will never become an actual system of payments down the road. If you believe that, I have a plethora of REAL investments to sale you.

[baddox]

Or perhaps not that many Bitcoin holders need an area rug right now?

Most of my wealth is in USD, and yet in my entire life I've never bought anything from Overstock. I suspect there are millions of USD holders that can say the same. I don't think that says anything bad about the USD.

[1qaz2wsx3edc]

On the value of bitcoins:

There was another discussion on hacker news, where I commented on the fact that bitcoins should have a higher value due to lost coins: https://news.ycombinator.com/item?id=6859991

In that thread, @nl provides the most interesting look at bitcoins from the perspective of bitcoins as a part of GDP: https://news.ycombinator.com/item?id=6860024

Anywho, the value is largely speculative, but most indications seem to point to a long term growth.

[notdang]

It makes sense to buy from Overstock if you are in US, otherwise the shipping prices are ridiculously high. I assume that the majority of orders came from US, but Bitcoin is used all over the world.

[fragsworth]

Your implied assumption that Overstock is the only thing influencing the price isn't right.

[greyman]

Why do you think the price is inflated? The whole market cap is only $11B.

[ye]

It tells you bitcoin is at the adoption stage. People are just finding out about it.

Plus Overstock isn't exactly a hot retailer. If Amazon does this, it will be HUGE.

[notdrunkatall]

It's the first day.

[kolev]

I feel sorry for those buying bitcoins at prices $900+, seriously! China has two more weeks until the shut down - so far Huobi and a couple of other exchanges still allow bank transfers into the exchanges and the Chinese are making their last profits. When Yuan stops flowing into the exchanges (or becomes much harder), the only Yuans you can get to buy is when you sell. I'm sure people will figure out to buy via friends from outside the country, but you can't really do the current level of speculation not having quick transfers in and out. Keep in mind most of the trade volume is in China! Mt.Gox has ridiculously low volume, yet, both Bitstamp and BTC-e follow it although they have much more volume now. Remember on the 14th the Taobao restriction also kicks in. Also, hearings won't be very positive this time as it looks. Anyway, November was a great month, but not every month in November! Also, the initial excitement about Overstock will quickly subside. It just can't get any better than this.

[uniclaude]

Don't feel sorry for those people, exchanges exist for a reason. If people feel like they do not want to hold on their cryptocurrencies anymore, they can still sell them. Moreover, as long as there are enough people willing to buy those coins at a higher price, it can only keep rising.

I'm not a bitcoin booster or super believer or whatever the term is (even though I have some), but even if we are to follow your arguments, and assume that Chinese traders got the price that high, we can say that with a market cap as low as $10B, China hadn't likely injected as much money as Wall Street would if they entered the market. My point is that even if the price crashes because of some bad news in China, it still has a chance to rise again when Wall Street comes (if we are to believe that those companies still want to enter).

It really looks like speculation is what keeps the btc/usd pair rising, but with such good news coming, I can't think of a lot of reasons why people would stop speculating. Keep in mind that there is no short supply of people who want to get rich with little work.

[VexXtreme]

> It just can't get any better than this.

People were saying this in 2010 when it reached dollar parity, in 2011 when it was $20 a pop and they keep saying it now. It really means nothing.

Also, you're getting downvoted because you're making these hard and fast predictions without substantiating them with anything but pure speculation. If you really believe BTC is about to drop then why don't you put your money where your mouth is and short it? There's a fortune to be made if your predictions turn out to be correct.

[kolev]

Thanks for downvoting without giving a reason why!

[jds375]

I think this really helps justify Bitcoin as a viable currency to the public. Seeing relatively large sales being done with Bitcoin at a well-known retailer is a big confidence booster.

[rgbrenner]

Seeing relatively large sales

For comparison, overstock sold 1.1B in 2012.. which is 2.6M in 21 hours vs 124K in 21 hours

[quasque]

I don't see how it's anywhere near a viable currency for general use. The wildly fluctuating exchange rate, the fact that it's run on a public ledger (and the privacy loss implications of this), the relative difficulty of use compared to cash or debit/credit cards, and its uncertain legal status are all still problems in that regard.

[t0]

The press must know by now Mtgox is an inflated price, but they still continue to reference it as the price of bitcoin.

[lukeqsee]

Perhaps it's moderately inflated, but it is still the most well-known exchange among the populace; therefore, they're going to go with it. It's sort of like real currencies. Yes, on the spot market they're worth X, but when you're on the street trying to exchange it, it'll be worth X * 0.9.

[zquestz]

Agreed, no one should be quoting Mtgox price these days.

[nazgulnarsil]

Worth noting that BitStamp has double the volume of gox recently. And Stamp actually acts like a liquid company, getting people their money without fuss.

[samsnelling]

Not only is it inflated, but it has more volatility. I no longer own any bitcoins, but if I were going to invest or purchase from an exchange, it would not by MtGox because of all the HFT that happens there.

[lisp-and-seo]

Why not? Anyone with a free account can sell at this this price.

[kudu]

> The price of bitcoin reached $1,000 again today on Japan-based bitcoin exchange Mt. Gox

The headline is misleading. I would expect CoinDesk to use their own Bitcoin Price Index or at least a regular exchange like Bitstamp as a reference rather than an exchange from which no one can withdraw money in a reasonable time.

[coin]

MtGox is a poor indicator for going rate of Bitcoin. Because it's so difficult to withdrawal USD from MtGox, their exchange rate is always higher than the going rate. Example, MtGox is currently $992/btc, where as both bitpay and bitstamp are $887/btc.

[AngrySkillzz]

I wonder if anyone will ever write an article about Bitcoin that doesn't quote some crackpot who thinks the Federal Reserve is destroying our money.

[azernik]

Well, in this case the crackpot in question is the CEO of Overstock, so it's kind of relevant.

I think the real issue is that in a disproportionate number of the big cases of Bitcoin being used in actual transactions, one or the other of the participants is a crackpot who thinks the Federal Reserve is destroying our money, despite the dollar's impressive record of price stability.

[minimax]

How is adoption of bitcoin as a payment technology a bullish indicator for bitcoin as an investment? The prices on Overstock are still in dollars and bitcoin as a payment technology works equally well whether bitcoin is priced at $1,000,000 or $0.01.

[nofi3939]

If you believe that overstock will lead to increased demand for BTC (perhaps not due solely to overstock but a wave of merchants who follow suit) and that the demand outpaces BTC's inflation (i.e. the ~3600BTC mined into existence each day), then BTC's value will rise as a consequence.

[barkingcat]

I sure hope Overstock's opsec people are securing their bitcoin wallets. Worst news to hear would be that someone took their bitcoins out of their wallets the next day.

[tadfisher]

Overstock isn't accepting BTC, they are accepting USD from Coinbase, who in turn accept BTC. Coinbase bears the security risk.

[kaa2102]

There was a lot of volatility in a short span of time from the China announcement to Overstock adoption.

[kolev]

Yes, lots of trading bots at play, too!