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.
I don't, the price was good and the amount was tiny. Sure it would have been better today but I needed it yesterday.
That wasn't the point though, the point is yes, you can buy stuff and it's simple. Apart from the hour it takes to confirm the transaction (this is done by the BitCoin network, nothing any user or particular party needs to do) it was much less of a hassle than paying with a credit card... at least if you already have the BitCoins.
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?
To enable hedging, someone would have to take a forward position in USD/BTC .. and at the moment, the market is in contango ( see http://en.wikipedia.org/wiki/Contango ) which means that the sentiment is that the price will continue to increase for the near term ... ie you'd have to be very brave indeed in order to put a limit on the expected BTC price.
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.
75% profit within few weeks seems EXTREMELY good to me. I can't really see the problem (yes, I know for a emotional point of view. Just think about 75% in a few weeks)
What happened in Cyprus will not happen in the US. It's far easier to just print a ton of money than it is to confiscate or force a bank collapse (and Cyprus didn't have that option because they don't have control over EUR)
In the short term you're probably right. In the very long term all fiat currencies collapse, so yeah it will happen here, eventually.
You have to have an engineers perspective. All manmade bridges collapse. That doesn't mean they're not useful, or its going to fall over tomorrow. But delusions of immortality are not realistic.
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.
Really? I wasn't my point. I was talking about make use of the bitcoin value as a statement. Of course I can charge in Yens and convert it on the fly to dollars or pounds, but that wasn't the point.
It's really to make Btc popular on a website when every refresh can bring you a new value. It's horrible for business. Btc right now is only useful for trade than for other low end business operations as paying one month of hosting or buying a toy.
This is a feature not a bug. Also its much more valuable for the endpoints to be dissimilar payment regimes because financial transfers have obscene fees at this time. You double the currency exchange cost while eliminating all transfer fees. Transfer fees to go from my employers NYC bank checking account to my local credit union checking account are pretty low. On the other hand hopping borders and using multiple payment processors adds up pretty quick and the rates are extremely high for small transactions.
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.
Anonymity is not really the selling feature of bitcoin - in fact it really only offers pseudo-anonymity.
The fact that no-one else can just "print" bitcoins, and that you can transfer funds at internet speed to anybody else anywhere in the world and that (after a short time), the transaction cannot be reversed are the main utilities.
Yes, I think it is possible, in the long run, to figure out who's behind a wallet, assuming that the Bitcoin use is frequent and convenient (meaning no-super-high-inconvenient-counter-measures are used, but a regular use of currency)
In that case, my concern is that I think it will be possible to determine ALL the transactions of that wallet. Making it even less anonymous than regular currencies.
I could be missing something, but if confirmed, that could be a problem for using Bitcoin as a regular currency
Yes, I understand that there are things that you can do. But, as those are in the way of convenience, we can assume that not everyone will take the extra effort to create constantly new wallets, etc.
So, in case someone can trace you to a wallet, that someone can know all your transactions (of course, only the transactions for that wallet), which is a huge potential privacy risk.
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.
Yes but there is nothing backing up the solving of the algorithm. The rock came from somewhere and can be put back to be picked up again. A bitcoin comes from nowhere and is a magnetic action away from being wiped into nothing.
Bitcoin is b<censored>t, a nonsense bubble waiting to burst. The emperor is wearing bitcoin.
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...
Whereas I've sent money between accounts in all sorts of countries for next to nothing. I think whoever organised your group buy screwed up, badly. And by the sounds of it so did you.
LOL content free post. It does bring up the interesting question of what is the cheapest way to transfer money internationally. Obviously my example won't set any (good) records. Neither side were willing to use paypal so that's off the table (does paypal even do business in .ch?). Silver coins in a postage envelope maybe? A fat stack of Postal IRC (international reply coupons)? I think its going to be pretty hard to transfer money cheaper than "basically free" like BTC.
I'm just pointing out that your convoluted example of the knife (which I've heard somewhere before...) isn't necessarily a typical experience. There are a variety of ways to transfer money around for a variety of fee structures.
For instance I used a company called moneycorp last year to transfer a few tens of thousands of dollars between Australia and the UK. They had a low conversion fee, used market exchange rates and there was no fee at all between them and the banks involved at either end. Painless and cheap.
BTC may be basically free if BTC are wanted at both ends, otherwise there are conversion fees there too, as well as a variety of delays. And there are transaction fees (though these are small).
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.
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.