Bitcoin Reaches All Time High Market Capitalization

https://bitcointalk.org/index.php?topic=141465.0

by mrb • 13 years ago

91 51 13 years ago

bitcointalk.org

steeve• 13 years ago

Am I the only one here who feels like they're missing out on something with Bitcoin?

agorabinary• 13 years ago

You'll feel like that even more once it hits $1B capitalization.

paulgb2• 13 years ago

Yeah, but I felt the same way watching the US housing bubble from the sidelines.

(I'm assuming you meant missing out on an investment. If you are interested in the technology, it's worth checking out bitcoin.)

csdreamer7• 13 years ago

I still feel the majority of the money that is being put into bitcoin is speculative(as opposed to having hard data). I think if you buy bitcoins now you lose money at the end of the bull's run. That could easily change if Amazon or Steam start accepting them and the money from actual uses drowns out the speculators (and therefore any growth in the value of the coin has real use backing instead of easily spooked speculators).

jerguismi• 13 years ago

Amazon or steam hardly matters if the international drug/gun trade adopts them. However that might also mean regulatory problems.

stch2• 13 years ago

I have a question about bitcoin -- let's assume that it actually starts becoming popular. What stops any country that's adopting it from simply forking their own version? Specifically, why is everyone investing in this particular instance of bitcoin?

betterunix8• 13 years ago

Why would any country want to adopt Bitcoin? What incentive does any country have to do such a thing?

A country would be more likely to introduce a Chaum-style digital cash system, where the government would act as an issuing authority for digital cash tokens.

adrianbg• 13 years ago

They might adopt it if it's more stable than their currency, like how Ecuador uses the US dollar.

MacsHeadroom3• 13 years ago

Relevant: The Royal Canadian Mint recently invented MintChip, a fully digital crypto-currency where private keys are stored in integrated circuit chips in micro sd cards (for smartphones/tablets) and USB dongles (for computers).

They say it is able to be exchanged online AND offline fully anonymously. The details on that are yet to be released.

This makes Canada the first country in the world to explore a fully electronic currency.

http://mintchipchallenge.com/

http://en.wikipedia.org/wiki/MintChip

tytyty2• 13 years ago

Nothing. There is no reason not to fork it. There are papers on using blockchains to pass on titles and ownership of physical goods.

It's just one market, that happens to currently be worth over $200,000,000 though.

sliverstorm• 13 years ago

Nothing stops them from doing that. It's already been done a few times, in fact.

What generally prevents tons of fracturing is the same thing that always has for currencies with no backing- perceived value of the currency. Your bitcoins are only worth what other people think they are worth.

betterunix8• 13 years ago

"What generally prevents tons of fracturing is the same thing that always has- perceived value of the currency."

Except that "perceived value" is not what prevents fiat currencies from fracturing. A government could, at any time, issue a new currency that competes with or replaces its old one. The reason governments almost never do this is that it amounts to defaulting on a loan, at a fundamental level.

To put it another way, if a government decides to issue some new, incompatible currency, and whatever currency you had previously lost some or all of its value, would you trust that the new currency would not also be replaced by yet another currency later on?

Money does not just magically get its value; the "perception" that money has value is, like the perception that anything else has value, based on supply and demand. We are all familiar with the money supply; money demand is generally driven by the legal structure that surrounds that money. Money demand comes from things like tax codes, debt/bankruptcy laws, torts (which often deal in monetary terms when speaking of damages), civil fines, etc. Another way to look at it is that laws allow you to use money to cancel debts of some kind, and thus the demand for money can be traced to the need people have to cancel various debts (and thus people with no debt can trade money for the goods or services of people who must cancel some debt).

Bitcoin is unique in having no legal structure surrounding it, and its demand comes principally from technical features (primarily one feature, which is secure online payments). Unsurprisingly, this demand does little to help Bitcoin survive on its own, hence the overwhelming important of Bitcoin exchanges (were these to vanish, Bitcoin would die overnight; on the other hand, the Ruble had some value in Russia even during the period of time when it lacked easy convertibility with other currencies).

Zigurd• 13 years ago

"What stops any country that's adopting it from simply forking their own version?"

Nothing. Anyone could start their own bitcoin2. But new instances of a digital currency cannot debase other instances. So that isn't a viable way for a government to capture bitcoin, or to debase the value of the original bitcoin.

In fact, were I running a banana republic with a worthless currency, I'd be tempted to try using a new "bitcoin-space" as a currency with strong protections against being debased. But that has plusses and minuses if you are a government.

The reasons people are using this particular instance of bitcoin is that it was launched successfully enough for people to have sufficient confidence. The mining mechanism is one key element.

jessaustin• 13 years ago

I expect we'll eventually see a new bitcoin instance for items and gold in an MMORPG. Actually it seems to me that bitcoin could govern more than that: basically any random event ("you made a wooden shield") could go into the blockchain.

weavejester• 13 years ago

People have mentioned perceived value; i.e. a fork of bitcoin would only be worth something if people generally agreed it was. However, there's also another reason, and that is that the security of bitcoin is directly related to how many people are using it. In order to double-spend, you need 50% of the CPU of the system, so the more CPU power you have on the network, the more secure you are from double-spending.

tytyty2• 13 years ago

I'm quite ecstatic about this. I invested in bitcoin early on when it was around $1-3 a coin. I try to buy goods with it at legitimate places like bitcoinstore when it's up, and buy more when it's down. I just, you know, actually believe it's a great alternative and want to see it succeed.

I do have concerns about it scaling to handle massive amounts of transactions, and what will happen with transaction fees and mining rigs as the mining reward is reduced, but it's step in the right direction for currencies.

betterunix8• 13 years ago

"I do have concerns about it scaling to handle massive amounts of transactions,"

Relevant:

https://dl.acm.org/citation.cfm?id=1754992

Of course, Bitcoin does not really have offline transactions, so this may not be all that relevant (though lacking offline transactions is a pretty serious limitation).

nazgulnarsil• 13 years ago

A bitcoin is just a signature, a string that you use to demonstrate ability to transfer it. You can hand someone a physical copy of a bitcoin signature. Of course you won't be able to verify the transaction yourself, but trusted third parties are using things like scratch off holograms to access them.

jerfelix• 13 years ago

Correct me if I am wrong, but the prevailing thought when that article was written (1992) was that digital currency would resemble more of a transferred digital coin, with signatures representing each transaction. So if I had coin #12345, and I transferred it to you, I would digitally sign it to you giving your private key the spend capability.

With those architectures, a central authority would be required to prevent the double-spend. And with those architectures, the coins grow with each spend.

The difference with Bitcoin (which I think is totally misnamed) is that it's not a coin architecture, it's a ledger architecture. So no matter how many times the amount 1BTC is transferred, each transfer could be just the same length - the sender's address, the recipient's address, and an appropriate signature. Even 50 years from now and ten thousand transfers of that "coin" later, the "coin" doesn't get larger.

The ledger gets larger, but the coin does not (since really there's no such thing as a "bit COIN" - really what you have is a series of account numbers in the giant shared ledger.)

javert• 13 years ago

I would expect transactions to simply become expensive.

Then, people would go through trusted third parties (e.g. online wallets) for small transfers, and only use the blockchain for large transfers.

The small transfers would just be adding or subtracting "virtual" bitcoins between different users' accounts.

Clearly, such a system would optionally allow for fractional reserve banking.

I view bitcoin more as "digital gold" than "digital cash," for the above reasons.

nym• 13 years ago

If you want to find out how to buy bitcoins (it's hard to mine them now), there are a set of online guides at:

http://howdoyoubuybitcoins.com/

tl;dr use coinbase (just like paypal / 1%) or bitme (chase deposits / 0.75%)

MacsHeadroom3• 13 years ago

coinbase.com is actually a Ycombinator start-up!

So if you have problems with them, you know just were to bitch about it. I kid. I kid.

Joking aside, I've only had great experiences with the folks over at Coinbase.

ianpurton• 13 years ago

The guide is good but doesn't include Bitcoinary https://www.bitcoinary.com/

With Bitcoinary you buy from bitcoin miners and traders directly. More currencies, more ways to trade and deal directly with real people.

eof• 13 years ago

I have been following bitcoin since they were less than a penny each, and got my first coins at about .20 each. I have written articles (really the only thing I have ever written that has been widely read) about bitcoin, and I want to see it succeed, both because it will change my financial situation and because I believe central bank issued currency that flows through the hands of banks is a mechanism for control over people.

All that being said, I think we are in the middle of the next big bitcoin surge, and I don't want to see "bitcoin reaches all time high xxxx" posts everyday.

mrb• 13 years ago

I made the HN submission; and you know what? I agree with you. On a second thought I would have rather not posted it. I much prefer a slow and steady increase of value, instead of another Bitcoin valuation bubble made even more rapid by publicizing it all the time.

betterunix8• 13 years ago

"I believe central bank issued currency that flows through the hands of banks is a mechanism for control over people."

Only to the extent that laws are a mechanism for controlling people. I have argued elsewhere that laws are what give money its value, and that Bitcoin still requires the existence of fiat currencies to be useful to anyone (put simply, most people still have taxes to pay and debts to settle, and so they only accept Bitcoin because they believe they can exchange it for another currency; even you speak of Bitcoin in terms of another currency).

I would argue, though, that laws and fiat money are not necessarily ways to control people, but that they are necessary tools for any large society. Sometimes people disagree and require a third party to settle their dispute. Laws help give third parties (also known as judges) legitimacy in their judgments -- they can point to laws that were written before the dispute, so that there are fewer questions about bias or personal sentiments affecting the verdict. When people fail to use laws and court systems to settle their disputes, they turn to their weapons and civil wars ensue.

At the very least, the operation of a court must be paid for. A person whose job is to mediate disputes all day -- and even a society with only a few thousand people will require such a person -- is not producing food or maintaining infrastructure. We would not be satisfied with a system where the parties in some dispute were directly paying the judge. At the very least, some sort of tax system is needed to pay for a court system, and humans discovered that using animals or crops as taxes does not really satisfy the needs of society. Currency makes taxation fair (do judges need wheat, or do they need cattle?) and reduces the expense of collecting taxes (tax collectors no longer need to decide if one cow is of the same quality as another).

Of course, the moment you introduce a tax law that requires people to make payments with money, you have created a fiat currency: you have created a law that fuels demand for money (and thus gives money value), and it makes no difference whether that money is made of clay, gold, paper, or even if that money is nothing more than information stored on computers.

So while I can understand the dissatisfaction with what today's banks and governments do with money, I do not think fiat money itself is the problem. Fiat money is a consequence of any appreciably large human society; without it, we would be living in tiny groups in the wilderness, jabbing each other with spears whenever we had a disagreement, or we would be trying to convince government officials that our sheep are of high enough quality to be accepted as a tax payment.

damian2000• 13 years ago

History of bitcoin:

- slow start

- exponential rise

- exponential fall

- exponential rise

- ??

MacsHeadroom3• 13 years ago

More like:

- constant exponential climb

http://bitcoincharts.com/charts/mtgoxUSD#igWeeklyza1gEMAzm1g... (note the Log scale)

That minor "fall" in 2011 was an over-hyped blip. Minor boom and bust cycles are normal.

arethuza• 13 years ago

I would agree that the underlying trend looks exponential - but that "blip" takes up about a quarter of that chart (about 7 months or so).

JumpCrisscross3• 13 years ago

I investigated launching a Bitcoin exchange traded product (ETP) about a year ago. One of the issues was the market cap of BTC - an ETP would not be profitable with under $25 million under management. That is still 10% of the market cap.

More pressing is float, i.e. volume being traded or sitting on the sidelines able to be traded. The concern is that BTC is like the diamond or Facebook private stock markets - a tiny float, bid up by a few zealots, unable to sustain a broader liquidation event without a significantly impairing its price.

BTC is still of tremendous interest, e.g. practically uncorrelated with the U.S. money markets, though that will get eroded as it plugs into the financial system. But the complexity of the BTC microstructure is holding back the development of deeper, more sophisticated markets.

dfc2• 13 years ago

I like the idea of bitcoins but I do not understand what the purpose of a btc ETP would be? It seems that an ETP would have all the risk associated with buying BTC but none of the benefits. I'm a finance noob so this is not criticism, I'm curious.

JumpCrisscross3• 13 years ago

It offers liquid BTC exposure on a trusted platform.

There are more investors and market makers with deeper pockets on stock than Bitcoin exchanges. They prefer trading there because of there is a lower chance of one's balance vaporising at JPMorgan than at Mt Gox.

gbhn• 13 years ago

So how would one short bitcoin?

AndrewDucker• 13 years ago

With a contract to supply it at a future date, paid immediately.

betterunix8• 13 years ago

So what would you do if the counterparty failed to deliver on that contract?

synctext• 13 years ago

Bubble Warning

That is the more fitting word, instead of 'all time high market cap'. See our before-it-was-famous academic debunking of Bitcoin: http://www.pds.ewi.tudelft.nl/~victor/bitcoin.html

Highlights: - scalability to Visa/Mastercast number-of-transactions is architecturally not possible currently - as many have said: it's not anonymous - security has numerous widely discussed issues

gst• 13 years ago

Your last paragraph on the link says it all: "BitTorrent is technologically complicated, infrastructure-wise inefficient, much less usable than a regular Web download, etc. But it got popular anyway, mostly because of unreasonable greed and paranoia of incumbent oligopolistic players."

After reading this (I started with reading the conclusion) I'm glad that I didn't waste my time with the remainder of the article. This doesn't seem to be an objective article, but just subjective ranting.

k2enemy• 13 years ago

The fact that people talk about the "market capitalization" of bitcoins suggests that they treat it as a speculative investment and not a currency. Maybe it is unavoidable in the adoption phase of its life (supply relatively fixed and demand fluctuating), but the price swings relative to other established currencies detract from its usefulness as a currency.

Bitcoin Reaches All Time High Market Capitalization

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