Bitcoin broke $700 ($750 at this moment)

http://bitcoin.clarkmoody.com/?blah

by was_hellbanned • 13 years ago

69 171 13 years ago

bitcoin.clarkmoody.com

BenderV• 13 years ago

Whenever I look at the evolution of Bitcoin's price, I feel oblige to think about the internet bubble...

But I was too young to care about that then.

Could someone explain to me the similarities and differences between those two events ? How Bitcoin could avoid the "too-early" bubble ?

dragontamer4• 13 years ago

Bitcoin is designed to be deflationary in nature. Many people here will see BTC's dramatic rise in price as a feature, not a bug. I personally am more concerned about the difficulties of BTC -> USD conversion... with exchanges going down and others getting hacked.

Speculators obviously love BTC's volatility. But surely, this is not a sign of a healthy "currency".

rsynnott12• 13 years ago

Bitcoin is indeed designed to be inherently deflationary, but the volatility is far too great to be explained by that; it's likely in a speculative bubble.

Hermel2• 13 years ago

Here is what drove the Internet bubble: during the whole nineties, the stock market went upwards. People thought we had entered a New Economy without recessions. There were plenty of good reasons to believe this. For example, due to the end of the cold war, we could allocate resources to much more productive areas and gain a lot through globalization and increased international trade. This effect was also known as the peace dividend. Furthermore, the Internet promised to bring enormous productivity increases. The sentiment was that everything will be done online sooner or later and that whoever is first to occupy a particular niche in the Internet would dominate that market globally and forever. For example, the first to create an online shop for pets would have such an advantage that if executed well, competitors would never be able to catch up anymore. By buying a share of pets.com, you did not want to buy a share of a company without profits, you wanted to buy a share of the future before it was too late. People thought they would be buying the equivalent of a few square feet of future Manhatten. Domain names changed hands for crazy prices. It was very hard to resist the general sentiment as it was repeated over and over, for years. One of the few that resisted was Warren Buffet - and the media pitied him for not understanding the New Economy due to his advanced age.

phaed3• 13 years ago

To the core!

jmduke• 13 years ago

Bitcoin's price at the first of November was $197. That's around a 250% increase over the course of two and a half weeks.

General question: if you expect the price of Bitcoin to continue this rate of growth, does the rational consumer have any reason to spend? I don't follow BTC too closely, but it feels as though there's an innate conflict between its role as a speculative investment and its role as a currency.

dragontamer4• 13 years ago

One area of speculation is whether or not the rise of CryptoLocker virus has inflated BTC prices.

With victims that number "in the tens of millions", many people are being FORCED to use BTC, whether they want to speculate or not.

http://www.coindesk.com/tens-millions-uk-may-targeted-crypto...

3pt141592• 13 years ago

Good question! Yes you have a reason to spend. While it is true that bad money drives out good, in this case we are not comparing equivalent monies. The reason is that in order to buy drugs safely online you MUST spend bitcoin. So even if you are just converting temporarily to make the transaction happen, we don't get the liquidity freezes that most hard currencies had during scrip floods.

For example, Joe wants drugs, he takes $1000 to Frank for a bitcoin. Joe sends the bitcoin to Charlie's address for some cocaine. Charlie sells the bitcoin for $1000 in order to buy some cocaine from his importer. Its status as sole-use currency for certain transactions provides liquidity to the market.

Brakenshire5• 13 years ago

That hardly seems like a full currency, just a short-term transfer medium, with a very dubious role as a long-term store of value.

gnaritas14• 13 years ago

but it feels as though there's an innate conflict between its role as a speculative investment and its role as a currency.

Exactly the reason a deflationary by nature currency isn't going to succeed as a currency. Bitcoin might want to be a currency, but it isn't a currency, it's a commodity like Gold and its deflationary nature dooms it to be.

polarix4• 13 years ago

Pulverizing the dead horse: it will hold value like gold, but its infinite divisibility and ease of transport make it more like an evolved currency.

jowiar• 13 years ago

You shall not crucify mankind upon a cross of ... err... bitcoin? </snark>

Anyway, in all seriousness, Bryan's speech still holds true today. Currency's role is to facilitate the exchange of goods and services. The value created by doing something today decreases over time, such that a thousand years from now, it is a mere blip in history. A deflationary currency runs counter to this -- some nerds who decided to buy some video cards in 2013 end up with a measurable percent of global wealth in 2020? That bag of weed someone sold in 2011 is worth a house in 2020?

Hermel2• 13 years ago

At some point in time it will reach an equilibrium price and it will only deflate as quickly as its economy is growing.

Also note that gold-backed currencies have a much longer track record historically than fiat currencies. The US economy grew significantly under the gold standard and prices were much more than today.

Houshalter5• 13 years ago

Er, Gold was a currency for a few thousand years. Deflation is a good thing in a currency since it increases it's value when you aren't spending it. I've heard some argue that that might be bad for the economy at a large enough scale, but at an individual level that is certainly a positive.

nly• 13 years ago

Stable inflationary currencies also fail the everyman. If you're smart you protect wealth through investment and 'saving' back in to the fractional reserve banking system scheme. Reality check though... most people have very little savings and zero, or next to zero, investments... and why should they? With the exception of ensuring a good future quality of life with a pension (largely 'taken care of' by your employer) many people have no interest in such investment.

Velocity of money will certainly be lower under a deflationary currency in a highly speculative environment, but nothing gets around the fact that when I want a soda, or when I need to buy a house I'm going to do so, regardless of the 'price' of Bitcoin.

And long long term, why would I, in my day to day life, even care what the price of Bitcoin is against the Dollar any more than I care about the price of the Dollar against the Thai Baht?

Do people living in Eurozone countries still convert back to their pre-€ currencies to get a sense of value?

rsynnott12• 13 years ago

With the exception of ensuring a good future quality of life with a pension (largely 'taken care of' by your employer) many people have no interest in such investment.

They may not know they do, but it's likely that their employer, say, is dependent on investment and/or cheap credit. They are also rather likely to have long-term debt (mortgages etc); that can get very ugly in a deflationary spiral, as wages drop but the debt remains.

poopsintub• 13 years ago

I don't pretend to know anything about how bitcoin works but it seems to be very volatile. The stock market is bad enough, but this fluctuates wildly just on speculation and seemingly nothing more.

rhizome• 13 years ago

Hey, just yesterday it was the same price as a share of Apple stock, which is very stable! Now it's even higher, so, maybe think about converting those Standard Oil shares.

hnha2• 13 years ago

What really grinds my gears is that you have to assume that everyone who talks positively about it, just does so to make his bitcoins "worth" more. For that reason alone I hope that it will fail. Speculation and hype should not be rewarded.

blake8086• 13 years ago

I guess by the same token, everyone who doesn't have any has to criticize it to justify their decision not to buy.

polarix4• 13 years ago

Oh, but in this case, they really really should be rewarded. The point is that military might has floated fiat for millenia. Pulling that down will require a lot of mindshare, and it's going to be damn hard without a lot of hype and projection. Luckily we have that power.

SwellJoe5• 13 years ago

I have such a tiny holding of BTC that I don't have much of a monetary interest in seeing it explode like it has (I bought 1.5 BTC when it was trading at $200, and 1 more when it was trading at $516), but I do have an interest in seeing the old banking and finance model fail (I might like to see some of the banksters rotting in jail, also, but I'm unlikely to get that dream fulfilled).

So, I want BTC to succeed because the world would be a much better place without the old monetary middlemen. Without credit cards taking exorbitant fees from both vendors and consumers. Without banks charging fees to hold your money. Without banks socializing losses and privatizing profits. All of those things become a possibility (not a certainty, but a possibility) with an alternative worldwide currency like Bitcoin.

antonius• 13 years ago

Everytime I see a new bitcoin article discussing its' new price, I'm reminded why I should have never sold at $75. Sigh.

davidw• 13 years ago

Failing to predict the future is one of those human foibles that we all suffer from every now and then.

scotth• 13 years ago

What price should you have sold at?

rjd2• 13 years ago

I look at it and think its a con. Coincidentally after a several massive thefts, the price suddenly raises? sounds like deliberate manipulation to dump stolen coins to me.

Wouldn't mind betting some syndicate took a huge upfront loss to drive up price, and are now recapitalising that loss with said stolen coins.

sliverstorm2• 13 years ago

Can be explained as "no news is bad news", e.g. high profile thefts got BTC a spike in publicity.

Up until this month, nobody but geeks knew what BTC was. Now I'm hearing philosophy & art majors talking about it.

3pt141592• 13 years ago

Why did you sell all of it? I sold as it went up as well, but I always held back 20% of my original purchase just in case this very thing happened...

romanovcode• 13 years ago

Already down to $520.

cryowaffle2• 13 years ago

Check out prices at bitcoinity.org/markets, prices haven't gone down to $520, it's short term stabilized around $720 after the first round of congressional meeting.

taigeair4• 13 years ago

I wouldn't mind buying some to speculate since I can only lose the amount I buy which won't be much. But it's not very easy to do it.

What's everyone using?

cryowaffle2• 13 years ago

coinbase.com is quite easy, just AHC like you do anywhere

taigeair4• 13 years ago

consensus haha

byoung2• 13 years ago

I signed up with Coinbase (YC S12) today specifically to engage in gold rush type speculation. Much better odds than lottery tickets, and more convenient than driving to Vegas.

phaed3• 13 years ago

Well did you pick the wost possible service for the job. Currently you can't buy coins at Coinbase til the 22nd.

tensafefrogs• 13 years ago

Coinbase (a YC backed company) is probably the easiest (and one of the more trustworthy) places to get set up and buy some.

[disclosure: this is a referral link] https://coinbase.com/?r=5125b580c746f00bc6000018&utm_campaig...

philfreo• 13 years ago

Coinbase is definitely the best if you're just looking for stable and easy to use. They also have great APIs / merchant tools. (If you want more detailed volume depth for "day trading" then other exchanges are better).

This link earns us both $5 if you buy 1 BTC: https://coinbase.com/?r=4fedfb2d6cbd3b0003000845&utm_campaig...

Macha• 13 years ago

Given the current value of 1 BTC, $5 is a pretty small referral bonus.

lmg6432• 13 years ago

not to add fuel to the fire: but if bitcoin is really un-hackable (can't guess individual keys held offline by private owners), untraceable, and all that goodness ...

... and there are only 21 million of them in the world ...

... then the value of each bitcoin could be $100,000 or more, assuming it can attract 1/4 of the interest that gold currently enjoys worldwide.

of course, as the value creeps up, it's use as a currency will diminish, and it becomes more of a store of value. eg, without bitcoin dimes and quarters, you'd have a hard time buying smaller items. but it is lighter than a pound of gold for sure.

the possibilities are interesting.

carlosdp• 13 years ago

There are smaller denominations. You can have .00000001 bitcoins, for example (it's 8 decimal places = 1 satoshi right?)

joezydeco2• 13 years ago

Yes. More decimal places can also be added later on.

If we really get to the point where 1BTC = USD100,000, I could see the decimal point shifting and rebase (e.g. 1BTC now = 100,000 new BTC)

w4• 13 years ago

But they do have "bitcoin dimes and quarters," in the form of fractional bitcoins.

wlesieutre• 13 years ago

And my company will be huuuuge, once it captures 1/4 of the market of China.

SwellJoe5• 13 years ago

Bitcoin isn't a company. It's not comparable to much that has existed before, actually. So, while I won't try to predict where BTC will end up, I think it's not a useful analogy to compare it to a company and discuss market share in those same terms.

lmg6432• 13 years ago

depending on the market dynamics, it is quite often that "someone" can capture 1/4 of the market (it just may not be you).

if there are many perfect stores of digital value then bitcoin will be one of many, not that special, and unlikely to dominate. i am not familar with the alternatives. my post is a thought exercise on potential value of a digital currency.

with regards to bitcoin dimes and quarters - i stand corrected. although i confess to having a hard time imagining how folks will keep track of all this.

VladRussian22• 13 years ago

but if bitcoin is really un-hackable

it may be un-hackable, yet not irreplaceable. One can imagine a government initiating a similar crypto-currency, controlling it through humongous server farms built somewhere where real estate and electricity is cheap, and accepting tax payments in that currency and blessing businesses to accept it as well.

polarix4• 13 years ago

Yes, you're right. If people had trust in said government that such a currency would hold value, it would probably win.

exit• 13 years ago

the value of each bitcoin could be $100,000 or more, assuming it can attract 1/4 of the interest that gold

what market capitalization of gold are you basing that estimate on?

adrianwaj2• 13 years ago

China: Bitcoins welcome here.

icpmacdo• 13 years ago

Man I really wish I had a handful of bitcoins right now.But I think that it is going to be rough for people either way if the price goes up you will have a bunch of depressed people not buying in and if it goes down a bunch of people are going to be REALLY depressed for obvious reasons

dragontamer4• 13 years ago

Interesting.

Clarkmoody is using "Mt. Gox", which is a well known exchange where it is damn near impossible to get your USD out of. Notice that other BTC exchanges (btc-e is more cannonical right now...) have prices closer to $550.

Keep in mind WHICH exchange these prices are coming from. Unlike more established currencies, there is very little arbitration going on between exchanges, and prices swing DRAMATICALLY between say... Mt. Gox and BTC-e.

fudge• 13 years ago

BTC-e is above $610, BTCChina at $830.

[edit current prices]

acallaghan• 13 years ago

"One likes to believe in the freedom of Bitcoin. But glittering prices and endless rate rises shatter the illusion of integrity."

Tycho• 13 years ago

Will cross $1000 within 2 weeks.

matthuggins• 13 years ago

But how many more weeks before it comes crashing down?

rjd2• 13 years ago

Probably as soon as all the stolen coins in circulation have been cashed in and suddenly there is no market manipulation to keep it up.

phaed3• 13 years ago

I give it days, if not hours.

lafar6502• 13 years ago

I bet the only goods that are currently bought for bitcoin are US dollars.

songzme• 13 years ago

The most common question I get every day when the topic of bitcoin comes up: "This is skyrocketing. Is it a good time to buy?"

The truth is, there is no right or wrong answer. Bitcoins could very well go to 6000/coin and we'll still be asking that same question. Bitcoins could also just as likely go down to $1/coin and everybody would be talking about how they could've sold at $650/coin. The beauty here is that BitCoins is not managed by anyone, its completely p2p, and its 100% opensourced. Nobody controls it, nobody has insider info, nobody knows what is going to happen.

I would personally throw in a few thousand just see what it becomes. If nothing comes of it, think of it as a very expensive speeding ticket.

kzrdude• 13 years ago

This is the third time bitcoin price has spiked this wildly, you just need a log plot to see it:

http://blockchain.info/charts/market-price?showDataPoints=fa...

going by history, it would be wiser to buy in the dip after the spike.

Brakenshire5• 13 years ago

Seems like pure speculation; finance stripped of any contact with the real economy.

scotty792• 13 years ago

I'd take that any day instead of speculative finance attched to food trade.

the_cat_kittles• 13 years ago

small point: people who know regulatory rules and opinions ahead of the public can benefit, like some traditional insider trading

cstrat3• 13 years ago

"nobody has inside info"

It is not known who are making all the trades, wouldn't it be possible that a small group of large bit-coin holders are simply trading between each other in an effort to inflate the price... they have nothing to lose.

olefoo2• 13 years ago

BTC to BTC transactions don't affect the exchange rate.

The exchange rate between BTC and USD is only affected by trades between the two currencies. Now the relative illiquidity of some of the major exchanges ( mtgox especially ) and the fact that it's relatively difficult to find counterparties definitely contributes to the volatility.

xorblurb• 13 years ago

they have nothing to lose

the trading fees ?

wmf3• 13 years ago

I don't think BitStamp or MtGox allow such dark trades. When you put an offer on those exchanges it may match anything on the book. Basically if you want to push the price up you have to make that price available to the masses.

cs702• 13 years ago

The number of bitcoins is fixed, so price is a solely function of mass adoption.

All else being equal, the more people who adopt Bitcoin, the higher its price.[1]

[1] http://cs702.wordpress.com/2011/05/29/on-the-potential-adopt...

Edits: replaced "supply" with "number of bitcoins" and "demand" with "mass adoption," which more accurately convey my thoughts. (Thanks for pointing that out, amalcon!)

wozniacki• 13 years ago

The Winkelvosses must be laughing all the way to the bank.

Must have at least made one trip to cash out a portion, since they first started stashing the coin. [1]

[1] http://www.bloomberg.com/video/winklevoss-twins-mine-11m-bit...

phaus2• 13 years ago

I don't think anything can put the smile back on their faces due to the fact that they still feel as if someone stole their $100 billion idea.

adrianwaj2• 13 years ago

Those guys should hire bodyguards now.

amalcon• 13 years ago

Supply does not mean what you think it means, in an economic sense. Economically, supply is how willing people are to sell a commodity. In this sense, BTC supply is definitely not fixed (right now supply is determined mainly by the speculative activity).

The demand side of the equation can be debated, but do not pretend that the supply side doesn't exist.

TYPE_FASTER• 13 years ago

So, it's like a digital form of Beanie Babies?

tlrobinson• 13 years ago

Yes, if you could subdivide and send Beanie Babies around the world in minutes for a few cents.

VMG• 13 years ago

There is good reason to assume that the senate hearing on CSPAN-3 has something to do with it. Strong positive signals there.

http://www.c-span.org/Live-Video/C-SPAN3/

the_watcher• 13 years ago

I bought a bit of BTC in October because I am interested in it. I've now sold off enough to cover my initial investment plus a bit extra, and now get to watch BTC with house money.

caycep• 13 years ago

how easy is it to sell your BTC for USD?

astrodust5• 13 years ago

About as easy as scoring a kilo of weed.

jrs2352• 13 years ago

I've been seeing the bitcoin news hitting [more major] news outlets. Seeing an article like this http://finance.yahoo.com/blogs/michael-santoli/bitcoin-price... with a picture of physical coins worries me. Why? All the uninformed people that want to get in on this bitcoin action may be sold of physical coins by scammers like the coins in the pictures. I'm concerned for the technically illiterate.

vezzy-fnord2• 13 years ago

I'm not feeling very jaded today, but I think you might be underestimating people's intelligence.

If they want to get into Bitcoin, I think they'd read up on it being entirely virtual (minus the optional paper wallets) pretty quickly.

jrs2352• 13 years ago

Sadly, I worried about older folks. I bet you could get some metal "bit coins" like those in numerous pictures and go door to door selling them for several hundred dollars to some people. It'd be easy o come up with a story as to why you're selling them.

schrodinger• 13 years ago

How is bitcoin income reported and taxed? Is it the same as holding a stock?

mcherm• 13 years ago

You should ask a tax professional or your own tax lawyer for advice. But my own plan is to treat it as being equivalent to holding a foreign currency which, in the US is (more-or-less) taxed like capital gains that is always considered short-term regardless of how long you held it.

I may be wrong.

taigeair4• 13 years ago

Don't think it's regulated that much yet.

wmf3• 13 years ago

In the absence of specific regulation, everything is taxed by default.

pbreit• 13 years ago

An obvious bubble but impossible to predict when it'll pop. It could easily go to $1k, $10k, $100k and beyond since supply is so limited and most of the coins are held tightly by folks who have already cashed out nicely.

ewams• 13 years ago

That graph is darn sexy, and I am talking about the object itself not the data. The most practical and useful "interactive chart" I have ever seen. Props to Clark Moody. Does anyone know how to use that type of chart to display information from other data sources?

triptychs• 13 years ago

I'm interested in it's psychologically limited factors related to price "per" bitcoin... or, in other terms, bitcoin's "exchange rate".

Owning 1 bitcoin, no matter what it's worth, psychologically makes you feel poor. It's an arbitrary habit and, really, meaningless but to the average person they can't stand trading $1000 for 1-2 bitcoins. When people look in their bank accounts, they want to see thousands... millions! Not 1 or 2. Right? I think people would more likely buy 10,000 of something they perceive as a currency instead of 1.0000 -- even if through a change of "terms" they were worth the exact same in USD. Am I selling the general public short in this assumption?

(Probably not pertinent note: I sold today and no longer hold any BTC.)

AndrewDucker• 13 years ago

Does this mean that it's become more economic for miners? Are people breaking out their GPUs right now to make a few dollars?

throwwit• 13 years ago

I wonder how many ppl are repurposing PS4 or XB's to mine.

brainburn2• 13 years ago

Noone in their right mind would do that

Bitcoin broke $700 ($750 at this moment)

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