Bitcoin Now Worth $1B

http://codinginmysleep.com/one-billion-dollars/

by enmaku • 13 years ago

50 80 13 years ago

xoail3• 13 years ago

Bitcoin definitely has potential. I doubt if it's in a bubble. Its a right mix of need and want for the global economy. It is also getting a lot of traction. As more enterprises adopt, the more its potential for disruption. [Disclaimer: I have bitcoins in my wallet]

cantankerous3• 13 years ago

The exchange rate in USD has quintupled since mid January. I can't see how this is not a bubble.

RickHull• 13 years ago

Bubbles will pop and tend to revert to mean. The question for Bitcoin is, what's the mean? $1B is small potatoes in today's global economy. If the total market value for BTC is closer to $100B or more, then this is only the beginning of the upslope.

xoail3• 13 years ago

At the same time I am seeing a lot of adoption. Especially in international markets.

oleganza4• 13 years ago

Bitcoin is not some promise of a future product. It is already here, it works, it survived hackers, viruses, bugs in core software, it is not attacked by anyone (FinCEN guidelines suggest you can do whatever you want with BTC unless you exchange for cash), number of services and merchants accepting BTC grows. Why shouldn't it grow exponentially after the fact it is proven to work?

Joeboy• 13 years ago

For what it's worth, I think bitcoin has potential and I also own a couple, but I think it's bubbly as hell right now.

citricsquid• 13 years ago

The thing that makes me apprehensive about Bitcoin is that the majority of people that are buying in are buying in as speculators (edit: the people I've seen discuss Bitcoin), they're buying in because they think in a year or so the coins will be worth $1,000 each and they'll get to cash out, reddit is full of people labelling themselves Bitcoin millionaires. There's a disincentive to spend Bitcoins at the moment while the price is rising so much, if I spent 1 Bitcoin today buying something that costs $90 and in a week Bitcoins are worth $150 each, haven't I just wasted earning potential?

I haven't seen a single discussion of Bitcoin as a currency, it's always an investment. I asked someone a few days ago about how much is actually being spent and they linked me to a list of transactions but they all seemed to be either SatoshiDice or really low amounts, are there any statistics on who is actually spending Bitcoins on products and/or services unrelated to Bitcoins? I saw reddit mentioned that the volume of Bitcoin transactions they have (on reddit gold) is so low they're losing money and that's a site that has a big community of Bitcoin users / supporters.

xoail3• 13 years ago

That is indeed an interesting look. Although I think as more merchants start accepting bitcoins (especially on international websites), a whole new wave of opportunity will open up.

tocomment2• 13 years ago

A lot of merchants are giving 25% or more discounts when paying with bitcoin. That's a way to factor the appreciation of the currency into the price and encourage spending.

ionwake• 13 years ago

I can't believe it's taken the HN community 3 years to take Bitcoin seriously. Makes me wonder about you guys.

niggler2• 13 years ago

its all fun and games until people really start cashing out.

oleganza4• 13 years ago

Or until people realise that many around them already have BTC or ready to accept it as payment. Then who needs dollars?

pdog• 13 years ago

This comment[1] from two weeks ago is insightful:

    I am very intrigued by Bitcoin.  It has all the signs.
    Paradigm shift, hackers love it, yet it's derided as
    a toy.  Just like microcomputers.

[1]: https://news.ycombinator.com/item?id=5402513

porter• 13 years ago

This will be a fun ride until governments ban it.

whackedspinach• 13 years ago

That worked out so well when they banned copyright infringement.

mtgx2• 13 years ago

Still awful for people getting caught, though, just like with copyright infringement. So I'd much rather they didn't do that.

knowaveragejoe8• 13 years ago

That's completely different though. Banning the conversion of btc into real currency would be a huge problem for btc, who is going to accept btc in exchange for a product or service performed if they can't turn that btc into money to exchange with other individuals/companies? There needs to be a much wider acceptance of bitcoins by companies providing services/products over a longer period of time before banning the conversion(at least legitimate conversion) would no longer phase bitcoin.

nullc• 13 years ago

An illicitly copied movie is still fun to watch— even if none of your friends watch illicitly copied movies.

Illicit money? Thats _far_ less useful. Money like goods get their value from being accepted as valuable by large numbers of people.

xyzzy123• 13 years ago

Yeah, asymptotically bitcoins are either worth a ridiculous amount or nothing... what I find interesting is that all indications point to the latter requiring heavy political intervention.

gamblor9564• 13 years ago

That's not how governments work. Governments prefer to tax things over banning them where possible (excluding activities with significant moral connotations, which are subject to different considerations).

This will be a fun ride until governments start auditing people for not reporting their bitcoin-denominated income.

Governments, especially governments with many international residents and companies, have long since passed foreign currency laws that require taxpayers to convert foreign currency transactions into the local currency for purposes of reporting income. Failure to report your bitcoin-denominated income can mean that the local tax authority (i.e., the IRS) has until the end of time to go after you for back taxes, penalties and interest, and even criminal sanctions (depending on the amount of underreporting).

nlh• 13 years ago

Holy cow. It was worth $60 last time I checked (last time a story was discussed on HN). I'm not one usually to play Chicken Little, but doesn't a 50% rise in a matter of a week or two seem a bit unsettling? Unless adoption has risen similarly, which I doubt -- it's not like Amazon just announced they'll be accepting BTC.

Enjoy the run, speculators. But don't get greedy -- remember the tulips...

celticninja2• 13 years ago

Cyprus just announced they would be taxing peoples bank accounts, the EU said that was a fair resolution for the banking crisis and other nations (greece, ireland, spain and italy) could see similar action to cope with the bank problems. Adoption as a currency has been ocurring for a while, reddit, mega, bitmit etc, adoption for investment has been ongoing, adoption out of fear of state controlled banks is another viable reasonf or adoption but harder to quantify. So there is a reason behind the price surge we are currently seeing but it is difficult to label because it is about individuals adopting it for use and not big corporations.

dmix• 13 years ago

That's the narrative of todays article on bitcoin on CNN:

http://money.cnn.com/2013/03/28/investing/bitcoin-cyprus/ind...

BTC is definitely finding a spectator audience outside of the tech world. The amount of PR it's been getting due to the price rise has to be playing a huge part in the recent wide-scale investment in it.

knowaveragejoe8• 13 years ago

Maybe this is a misinformed question, but isn't the reason anyone is adopting it at all due to the fact they can later convert it back into actual currency?

guard-of-terra4• 13 years ago

If bitcoin price is to crash, I'll be the first one buying.

Which probably means that the price is not speculative. Speculative like "I hoard" but not like "Ponzi".

knowaveragejoe8• 13 years ago

That's exactly why I don't foresee an immense crash unless several large holders cash out all at once. There's no doubt tons of people chomping at the bit for the price to drop any significant amount.

mootothemax• 13 years ago

If bitcoin price is to crash, I'll be the first one buying.

I get the impression plenty of people might buy if the price dropped to $35 or $30.

My question is: would you then sell if the price dropped a further $5 or $10?

illegalsmile• 13 years ago

After a few weeks ago reading that BTC was at $45/btc and thinking this has to drop drastically soon enough only to see it now at $90... Not saying this growth isn't possible but it's not sustainable this early on, unless I'm wrong?

celticninja2• 13 years ago

this chart shows the historic gold price over 36 years:

http://goldprice.org/gold-price-history.html#36_year_gold_pr...

A similar thing is ocurring with bitcoin now however it is much easier to buy and store btc for the layman than it is for them to buy and store gold.

Adoption due to technology is also faster, essentially gold has been $1600 an ounce for a while now, BTC has a way to go before it stabilises but after $200 a coin we will see less daily fluctuations because a $10 change in price is actually only 5% of the overall value

enmaku• 13 years ago

The price chart looks a lot like the transaction volume chart, which is usually how I make my guesses as to whether we're in a bubble or not - increase in price without similar increase in usage = bubble. That said, it's anyone's call.

ashray• 13 years ago

There's an interesting spike in bitcoin value everyday when Europe wakes up. This does look like a bubble but at the end of the day, as long as the rest of the world currencies keep people nervous, bitcoin will gain wider adoption.

noname1232• 13 years ago

Anyone know if there is a good bitcoin futures/options market with good liquidity?

The vol on this asset class is out of this world and given that it's so new, pricing on these things must be so out of wack that it'll be good to exploit.

Only if there's a good futures exchange like Mt.Gox that's very very authoritative.

And also important for the bitcoin infrastructure, that way merchants will take bitcoins for less risk since they can hedge it against dollar or euro's. A big money potential out there. Some one please take the idea and build one so everyone can profit.

JumpCrisscross• 13 years ago

Pre-requisite to derivatives is a functioning rates market, i.e. a forum for borrowing bitcoins.

cel• 13 years ago

ICBIT has futures trading. https://icbit.se/

Bitfinex allows margin trading and lending. https://bitfinex.com/

noname1232• 13 years ago

Ty for link ICBIT futures has no liquidity.

Bitfinex's current best lending rate is at 200% APY, or 0.54%/day with maximum lend-out window of 7 days. Making most futures and options delta-hedging trades, even if ICBIT had liquidity probably not profitable.

To compare, current US broker margin rate is 1.8% APY or 0.004%/day. Will stick to regular exchanges until this is fixed or if there is an ETF for BTC in regular exchanges.

mtgx2• 13 years ago

Come on Bitcoin-Central (or whoever) - hurry up and implement IBAN numbers so I can buy some in Europe!

tomp• 13 years ago

Use Bitstamp.

Risse• 13 years ago

I used Mt.Gox with SEPA transfer, it was a bit slow but otherwise worked flawlessly.

AdmiralBeotch2• 13 years ago

Get bitcoins from locals on LocalBitcoins.com

undershirt• 13 years ago

That's a lot of money. What is this $1 billion being used for? Is this money just circulating for the sake of making more money, or is it being used to buy goods and services?

jessriedel3• 13 years ago

Does anyone know if there's a good way to determine the fraction of bitcoin transaction that are food good and services rather than just other money?

guard-of-terra4• 13 years ago

It's called "bitcoin days destroyed", look it up.

AdmiralBeotch2• 13 years ago

Most is probably being used for savings as the potential for it to increase in value over years is ridiculously high. If bitcoin succeeds in taking over fractions of global markets, which is is poised to certainly do because of its efficiencies, then the market cap will be hundreds of billions, and valued above several thousand dollars each.

But, bitcoins are being used in commerce too. New merchants added every day. I know of at least 6 brick and mortar businesses in Las Vegas alone that have sprung up recently.

knowaveragejoe8• 13 years ago

The success of bitcoin in taking over fractions of global markets also depends on its learning curve, both in how to use them and how to keep your bitcoins safe(while still having access to them everywhere you need). Right now that's a pretty steep learning curve for non-technical folks.

mbreedlove• 13 years ago

More and more places are beginning to accept Bitcoins. I frequent r/bitcoin on Reddit and there are posts, daily, about businesses that are starting to accept Bitcoin. Many online VPN services are accepting bitcoin to add another factor of anononimity. bitcoinstore.com is growing as well, they sell a wide variety of electronics.

jamespitts• 13 years ago

By design, the supply of new bitcoins is slowing down. If there continues to be utility for people to use bitcoins, and this usage is increasing, the value of an individual bitcoin vs. other currencies will increase (averaging out speculative action).

This pattern will very likely continue until an alternative is found. Perhaps the alternative will simply be for holders to return to national currencies, perhaps it will be to adopt a new bitcoin rival for transactions and value storage.

In the short-run, there may be speculation, bubbles, and pops. That gets the attention. But look beyond that. In the long-run, the bitcoin economy may indeed "grow" to many times its current "size".

tatsuke953• 13 years ago

Increasing value of currency promotes hoarding, when in fact, bit coin should be promoting spending. If everyone's intention is to buy and hold bit coins,they are useless as currency and become a speculative asset.

oleganza4• 13 years ago

When everyone has hoarded some bitcoins they can trade them for goods any time they run out of fiat cash or fiat cash is stolen/diluted/frozen, or some arbitrary controls are imposed (e.g. sending money to another country is not easy or cheap). The instant mobility is the true value of "hoarded" bitcoins.

waterlesscloud2• 13 years ago

This is the popular wisdom, but I'm not sure it's the whole story.

There's been a fair amount of cashing out the last few weeks, which has the effect of transferring coins from pre-existing large hoards to new, smaller hoards. That's a good thing overall, I think.

The next step is to get those smaller hoards spending, that's the trick.

mitchi• 13 years ago

A radio station was giving away bitcoins if you only liked their facebook page not too long ago... I gave mine to a friend :( This is madness!

nym4• 13 years ago

If you're trying to figure out how to buy bitcoins, check this out:

http://howdoyoubuybitcoins.com/

I recommend Bitfloor at the moment because they offer free capitolone360 transfers as well as cash deposits at local banks for only 1%.

If you're an accreted investor, check out http://tradehill.com/

asciimo• 13 years ago

I only see Bank of America options for deposits to Bitfloor. That entails filling out a deposit slip to Bitfloor's account at a local branch.

UPDATE: PEBCAK. That's for the default "cash" tab in the UI. There are also "wire" and "CapitalOne 360 P2P" tabs. Thanks for the tip!

nym4• 13 years ago

Glad I could help you out!

waterlesscloud2• 13 years ago

There have been some strong signs of an inflection point in the last couple of weeks.

The FinCEN guidance was a major step forward for Bitcoin, allowing companies to start taking Bitcoin as a serious option.

For example, see this announcement today, from a company that processes payments for local governments. They plan to offer bitcoin acceptance to those governments for all sorts of online payments. You might soon be able to pay local taxes using bitcoin!

http://www2.egovlink.com/press-release-bitcoin.cfm

They directly state this is a result of FinCEN's statements. The floodgates may be opening.

gamblor9564• 13 years ago

You're not paying your taxes in bitcoin. You're paying an amount equal to your taxes, plus transaction fees, to the processor, who then converts your payment into the local currency and remits it to the government.

It's a subtle but important difference, because the use of non-local currencies in a transaction can trigger currency exchange gain/loss reporting requirements (in the US, at least).

tocomment2• 13 years ago

Does anyone know when we can start buying again on coinbase? I'm still getting error messages.

gamblor9564• 13 years ago

I can't help but think of all the people (in the US) who will owe back taxes for 2013 for unreported foreign currency exchange gain...or (in the event Bitcoin crashes again) all the people who won't realize that they have foreign currency exchange losses that could reduce their other taxable income...

cpursley• 13 years ago

The Diamond Age. Good by nation state, it was a good run.

jessriedel3• 13 years ago

I find bitcoin fascinating, but everyone who's bullish on it should understand the fundamental issue with its price stability, as pointed out by libertarian GMU economist Tyler Cowen (among others, presumably):

> It is a privately created fiat currency, bundled together with an anonymity scheme for transactions. The anonymity scheme means there is some reason to grant one-time seigniorage to the original currency issuers. Eventually the anonymity scheme, in some form or another, will be available without the fiat currency. At that point, or more likely before then, the fiat currency will fall to near-zero in value. Hold it at your own risk. The original issuers will have kept some of their initial gains.

http://marginalrevolution.com/marginalrevolution/2011/04/the...

Essentially, the value of a bitcoin is set by the value of all worldwide transactions desired which utilize bitcoin's advantages (anonymity, security from government intervention, etc) divided by the total number of bitcoins, which is capped. However, there is nothing to stop someone from starting a competitor (perhaps with some slight improvement) which duplicates all of bitcoin's functionality and essentially inflates away bitcoin's value. In fact, it might not be crazy to suppose governments would do this on purpose.

moe• 13 years ago

which duplicates all of bitcoin's functionality and essentially inflates away bitcoin's value

You mean like the Euro "inflates away" the USD, and vice versa?

Your idea doesn't make any sense.

Bitcoin Now Worth $1B

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