Bitcoin approaching $1000

http://markets.blockchain.info/

by daraosn • 13 years ago

67 108 13 years ago

markets.blockchain.info

mrb2• 13 years ago

It already surpassed $1000 last week, on BTCChina (world's largest Bitcoin exchange): http://blog.zorinaq.com/?e=75

obilgic• 13 years ago

You can't use USD on BTCChina!

mrb2• 13 years ago

Correct. But it peaked at 6989 yuan which is equivalent to $1147.

sixQuarks• 13 years ago

why are there all different prices? which one is correct?

kilovoltaire• 13 years ago

As I understand it, exchanges where it's hard to get your money out as USD (e.g. Mt. Gox) have high USD exchange rates, whereas places where it's easier (e.g. BTC-E) have lower rates.

In theory if the exchanges were all equivalent in this regard then the rates would pretty quickly stabilize, because people would use USD to buy BTC low on BTC-E, send it (as BTC / for almost free) to Mt. Gox, then sell the BTC high on Mt. Gox for way more USD, and repeat and profit until the rates converge. (see "arbitrage") But it's not easy to get USD out of Mt. Gox last I checked, so that doesn't seem to happen.

jat850• 13 years ago

There's no "correct" price. The price is dependent on exchange - it's a supply and demand aspect. All the exchanges do is reflect what the latest transactions respectively.

You could buy bitcoins in a private transaction for any price.

There is obviously some potential for arbitrage here but it's probably risky given the volatile nature right now.

moocowduckquack• 13 years ago

The one you can get.

Zircom• 13 years ago

Different exchanges trade at different rates.

bcoates• 13 years ago

The exchanges are illiquid as all hell, so arbitrage carries a lot of risk. Bitcoin is a nice demonstration that market efficiency isn't magic, but has underlying rational-actor mechanisms that will break down in exceptional circumstances.

tagawa4• 13 years ago

Each exchange's price is correct - it's just price variation based on multiple factors, similar to how a can of coke can be priced differently in various shops. E.g. if you intend to trade with MtGox, their price is the one you should be concerned with. Virtual currencies are still a relatively minor market so there's more discrepancy between exchanges compared to, say, mainstream currency or stock trading.

lsc• 13 years ago

This is actually... an interesting question, though badly put. The naive answer is that a 'correct' price is what someone else will pay for your good, and different people in different markets are willing to pay different prices.

The thing is, the prices at which trades are executed on different exchanges vary by more than 10%, and as far as I can tell, there's nothing stopping a single actor from participating on all exchanges at once.

Now, if the difference between the odds one bookie is offering on next week's met's games and another bookie is greater than the vig, someone is going to come in and arbitrage it.

at this moment

MT.GOX 954.00

BTC-E 858.21

Now, I'm pretty sure that none of the bitcoin exchanges take a 10% cut, so what's going on here? how come nobody is buying on the lower priced exchange and selling on the higher priced exchange? (or rather, how come that behavior hasn't resulted in fairly even prices across exchanges?)

jbaudanza• 13 years ago

It is difficult to withdraw USD from MtGox. There are large fees for bank transfers and it can take weeks for mtgox to process. For this reason, there are fewer sellers on MtGox which means the price is inflated.

new299• 13 years ago

Because it's hard to get cash out of Mtgox and the price reflects that fact (few people cash out dollars on Mtgox, but I think more trading goes on).

That's also the reason you can't just buy low and sell high, the cash out time is 2 weeks, and a lot can happen in 2 weeks.

tedkalaw• 13 years ago

It is EXTREMELY difficult to get money into BTC-E. You have to go through multiple currency exchangers which each take a cut of the action. It takes a lot of time and is annoying as hell.

conception3• 13 years ago

There were a number of answers, but if you actually work out the math, outside of big jumps where one exchange may be moving too fast for people doing arbitrage, with all the fees and transfer costs, the prices work out to be about the same. So, BTC-E has a 1% fee, plus whatever cost it took you to do the International Wire Transfer (say $35 bucks). That already gets you to ~$900. So, you get into Gox and sell. Well, that's 2200 JPY, you have to pay for the wire, $920, plus your bank probably charges you $20 for receiving a wire, $940... and that's before the 4 weeks+ it takes for Gox to get you your money + the trading fees. It may look like there's room for arbitrage but the price differences, for the most part, do take all costs into effect.

(PS Yes, I know the wire transfer fees can be lowered in terms of percentage of the cost by transferring more money at once; it's just a simple illustrative example.)

rwinn• 13 years ago

http://realtimebitcoin.info shows a weighted average from the 3 largest exchanges

eof• 13 years ago

"Which one is correct" is a philosophically hilarious notion!

but, the prices are different primarily because of cost (in terms of fees for wire transfers and third parties) of getting money in and out of the exchange, ease of doing so (gox is pretty cheap but is taking like 30+ days to get paid), and just access (much harder for chinese to be on gox than btcchina and china also has strict capital control laws that bitcoin seems to be an easy loophole around).

Similar to why cocaine is cheaper in colombia (or miami) than NYC or bumfuck kentucky.

donpdonp• 13 years ago

https://cointhink.com/arbitrage/btcusd charts mtgox/btce/bitstamp and calculates the amount of arbitrage between the exchanges. It uses the orderbooks of each exchange to tally the amount available for arbitrage.

jjoe• 13 years ago

The question is will it retreat into the sub $500 level like it did a week ago. Nonetheless I'm seeing stronger support even at the $800 level.

yeukhon• 13 years ago

It was 250 like two weeks ago.... how the hell can anyone get into the market with this high value these days -_-

whackedspinach• 13 years ago

You just buy less BTC, I suppose.

tagawa4• 13 years ago

Anyone can still get into the market - you can pay $10 and receive a certain amount of Bitcoins in return. It's not like the housing market where high prices mean you can potentially not make a purchase.

EDIT: To clarify my comment - I meant the housing market as in the ability to buy a home outright.

captainarab• 13 years ago

Looking at the volume/quantity of BTC trades, its pretty clear that this is a demand driven price increase.

Given all of the new investors, how many of them will stay and how severely will demand be impacted with the next seriously negative market event?

300bps• 13 years ago

Given all of the new investors

How many people buying bitcoins are investors and how many people are just trying to buy something with a transaction that can't be traced back to them? That's a big draw to Bitcoin right now.

To investors, the price you pay matters. To people just trying to buy goods and services with it, it doesn't matter if Bitcoin is at $50, $100, $2000 or $20000.

bytefactory• 13 years ago

It will, if the timeframes for these fluctuations are rapid enough. Imagine converting $1000 of USD you've converted this morning, and by tomorrow when you actually go in to place the order, the price has dropped to $800. You've lost $200 worth of purchasing power overnight!

josu• 13 years ago

I'm not sure that the volume is reflecting an increase in demand, at least not a tenfold increase in demand in just a couple of months.

The increment in volume can be the consequence of increased daytrading activity. Once the price started shooting a lot of volatility was introduced in the system, which allowed daytrading. Many arbitrage opportunities also opened up, which probably moved the volume up as well.

Yes, it seems like bitcoin is catching up some speed, but I don't think that this sudden spike in price is demand driven.

wmf• 13 years ago

Given that demand started from near zero in China, tenfold growth after legalization of Bitcoin doesn't surprise me at all. The movement in the BTC-USD market looks like arbitrage catching up to the Chinese activity.

analog313• 13 years ago

If nothing else, watching the up's and down's of Bitcoin is a motivation to think about what life would be like in an economy where currency is volatile.

thiagoperes• 13 years ago

This reality is just a plane ticket away: http://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe

mmaunder• 13 years ago

...which is an interesting use case as bitcoin as an alternative currency. Africa is full of migrant workers in less stable economies who need to send money home at low cost and with no delay. e.g In South Africa you can buy a code at a grocery store that you can SMS to your family back home, they go to their local branch of the store and get the funds by giving the code. But it costs and it's slower than BTC. Also banking in Africa is notoriously expensive due to the low per-account balances depositors keep. You pay to put money in, you pay to take it out.

A fertile environment for a currency ruled by the laws of nature and math rather than assholes and exploiters.

drcode• 13 years ago

It's OK, thiagoperes, even people on TV have already confused HyperINFLATION with bitcoin price DEFLATION, so you don't really need to feel so embarassed.

In the end, the only people who know you did this are people in this reddit thread, and your userid is semi-anonymous.

cfontes2• 13 years ago

When I was young in Brazil we had an inflation rate that was crazy ( 1985+ )

I remember my parents getting their paychecks and running with me and my brother to the supermarket which was CROWDED to get the whole month supermarket done. If you waited 3 days or so you would not be able to buy all the food you needed.

It is terrible I can assure you that.

Here is the kind of inflation I am talking about.

"It stayed in the 100% level until the mid-80's and then grew to more than 1000% a year, reaching a record 5000% in 1993." Wikipedia.

lingben• 13 years ago

Bitcoin's deflationary inevitability is actually worse, I would argue, than the kind of inflation you mention.

analog313• 13 years ago

I have some "over printed" bank notes and postage stamps from the Weimar Republic. The money would be worthless by the time they got it printed, so they just ran it through another press to add more zeros. My grandparents lived through that.

grandalf2• 13 years ago

bitcoin inflation would actually mean price deflation in an economy where bitcoin was widely prevalent.

grandalf2• 13 years ago

I think this is going to become known as the way the Winklevoss twins made their mark (when they sell).

a3voices• 13 years ago

The twins are expecting it to go to a $100 billion market cap, so I don't see them selling any time soon.

hcal• 13 years ago

What they claim to expect and what they actually expect are probably a bit different. It wouldn't be surprising to see them sell much earlier than they publicly indicate.

brosco45• 13 years ago

Soon, a million

andy_ppp2• 13 years ago

Big sell off end of the year, but I'm hedging by trying to buy some now. It's a finite commodity of real utility and value. It's recognised as legal by the US government (and it's not anonymous).

I will be laughed at but I'm going to suggest this time next year it'll be worth $10000 per bitcoin :-D

dnautics• 13 years ago

I think your analysis is correct, but I'm still downvoting you.

andy_ppp2• 13 years ago

Well, in this topsy-turvy world, I will up-vote you comrade.

dustingetz• 13 years ago

Pretty sure no human is buying BTC at $1k, this spike has got to be HFT bots arbing across exchanges or making tiny trades, every human is thinking "cool im smart so ill buy when it crashes"

bello• 13 years ago

I don't think markets work like that.

ars_technician• 13 years ago

Wow, it takes guts to comment on something you clearly know nothing about. For arb to exist, someone has to be buying at that price somewhere.

wyrmlet2• 13 years ago

Would someone please explain how to interpret this or link me to explanation? The y axes are not labeled, and I am not familiar enough with exchanges to infer. Thanks!

teraflop• 13 years ago

The graphs are pulled from http://bitcoinity.org/markets which, if you click on the "wtf?" link in the top right, provides an explanation.

The line graph shows the current market price of 1 BTC, using the right y-axis which is in US dollars. It's overlaid on a bar graph of trading volume in BTC, which uses the left y-axis.

wyrmlet2• 13 years ago

Perfect!

rms• 13 years ago

I've been using https://bitcoinaverage.com/

mikecane2• 13 years ago

Digital Tulipmania. http://en.wikipedia.org/wiki/Tulipmania

jnbiche• 13 years ago

That's all you got?

georgemcbay• 13 years ago

At least a tulip is an actual thing that looks nice, bitcoin is some data in a file that was created by pissing away energy, the perfect embodiment for the ridiculousness of modern economics.

It is mindboggling to me that people take it seriously. It is a perfect example of a tulipmania-like house of cards.

beedogs• 13 years ago

Litecoin is nearing $20 as well, and still relatively easy to mine. In fact, many of the altcoins are skyrocketing in value now that the Chinese exchanges have opened.

minikomi• 13 years ago

Watching the BTC-e chat during all this is.. nerve wracking. People shouting about crashes, "LTC to the moon", "pump NMC now!" ... very very odd.

mithras• 13 years ago

Tehy've been doign that since the beginning of time. It's their thing.

m12• 13 years ago

Any estimates on when/if a crash will come and how much will it fall to?

TomGullen5• 13 years ago

How could anyone possibly know that! Crash is a fuzzy word as well.

m12• 13 years ago

estimates

MattyRad3• 13 years ago

A lot of people bearish on Bitcoin's future claim that it cannot last and the fad will be extinguished because it isn't backed by something, like gold, or a government. I would like somebody to explain why gold is inherently valuable, or why government support is necessary. All I've really read on the subject is that "gold is inherently valuable because it's always had value, historically." Could someone elaborate?

brainburn2• 13 years ago

The problem with governments is that they will stop at nothing (well, maybe murder) to make you comply with what they want.

aet• 13 years ago

Do you want corporations in control or government? You can't vote corporations out. You can vote government out.

analog313• 13 years ago

Gold is volatile too.

bunderbunder2• 13 years ago

Gold is inherently valuable because you can use it to do things like protect circuit contacts from corrosion, or protect astronauts from solar radiation.

Government-backed currency isn't inherently valuable, per se, but for residents of many countries it's useful stuff to have because you need it to pay your taxes, and there's often a statutory obligation to accept it as a form of payment for settling debts.

Neither of those uses necessarily accounts for 100% of the value of either gold or fiat currency. (Arguably, not even close.) But they do place a kind of floor under their values. For gold it's a fairly absolute floor - there'll always be uses for gold, so it'll always have at least some value. For a national currency that isn't necessarily the case, as the case of the Zimbabwean dollar famously illustrates. However, when the currency is backed by a nation with a strong, stable economy then in theory (and, so far, in practice) that provides sufficient protection against the worst extremes of volatility.

Bitcoin, by contrast, is working without a net. Naturally that isn't a problem if it doesn't need a net. But there's an argument to be made that every currency is primarily fueled by human psychology, and every Dumbo likes to have his feather to hold.

MattyRad3• 13 years ago

Interesting, thanks. That puts it in more perspective for me. Although, still, it seems the term "inherent" might be a poor adjective to use to describe the system.

fragsworth• 13 years ago

People bearish on Bitcoin's future price are usually the same people who are pissed that they didn't buy any bitcoins.

But often, something happens - they realize how incredible the technology is. Then they buy it, and suddenly they're bullish because they want the price to go up.

The price of gold is probably going to be killed to a very low ($50-100/oz?) price because the only thing keeping its value so high is how convenient it is as a store of manipulation-free value. However, bitcoins are far, far more convenient. And they will be even less subject to manipulation.

cfinke2• 13 years ago

I would like somebody to explain why gold is inherently valuable

Basically, gold is valuable because it is useful. For example:

* Gold is the most maleable and ductile of all the metals.

* Gold is very efficient for transmitting heat and electricity.

* Gold has the highest corrosion resistance of all the metals.

* Gold does not oxidize.

* Gold can be used to make jewelry, which people find naturally attractive. It is the only "gold-colored" metal.

* Gold is used in electronic components: connectors, switch and relay contacts, soldered joints, connecting wires and connection strips.

* Gold alloys are used for fillings, crowns, bridges and orthodontic appliances.

* Gold is used as a drug to treat a small number of medical conditions.

* Small amounts of gold are used to remedy a condition known as Lagophthalmos, which is an inability of a person to close their eyes completely.

* Radioactive gold is used in diagnosis. It is injected in a colloidal solution that can be tracked as a beta emitter as it passes through the body.

* Gold is also used as a lubricant between mechanical parts on space vehicles.

* Gold is also used when making specialty glass for climate controlled buildings and cases.

* The visor on the helmet of an astronaut's space suit is coated with a very thin film of gold.

What can you do with a Bitcoin?

conception3• 13 years ago

Buy a pizza.

cscurmudgeon• 13 years ago

Can you send actual gold to the other of the planet within the blink of an eye?

TomGullen5• 13 years ago

The current price of gold is far greater than the values of all those things. If gold price was based on intrinsic value alone it would be worth considerably less than it is now.

jhales• 13 years ago

These uses form a negligible amount of the value of Gold, presently and historically.

MattyRad3• 13 years ago

The features you just described are equally applicable to different kinds of metals/alloys. Arguably, other metals have even more practical applications. Why shouldn't those be more valuable than gold? In addition, the practical applications of gold you've just listed are, I expect, not what gold is normally used for. Economies, hopefully, aren't defined by whether their currency can make space equipment or electronics (especially since those are modern developments that predate the value in gold). So while what you've just said is true, it still doesn't fully answer the question.

betterunix5• 13 years ago

"I would like somebody to explain...why government support is necessary."

Suppose you issue me a loan of some money, and I never bother to pay you back. What are you going to do about it?

grinnbearit2• 13 years ago

Enforcement of contracts and control over the money supply can be (and imo should be) independent.

grinnbearit2• 13 years ago

Gold has monetary utility, value as a store of value, besides being useful because of its shininess.

Moldbug puts it better than I can in this comment, take a look here http://unqualified-reservations.blogspot.in/2011/04/on-monet...

pnispel• 13 years ago

Something I've been thinking about is if the entirety of currency in the US was represented in bitcoin (bitcoins were the currency rather than dollars), how much would each be worth?

So there is about $1.2 trillion in circulation [1] and the cap for bitcoins is 21,000,000

1.2 trillion / 21 million ~= $57,142 per bitcoin

Is this right, or am I missing something?

[1] http://www.federalreserve.gov/faqs/currency_12773.htm

conception3• 13 years ago

1.2 trillion in physical currency. You want the M2 number (http://www.tradingeconomics.com/united-states/money-supply-m...) which is about 11 trillion.

So about another order of magnitude there.

adamb_• 13 years ago

If it reaches $1000, will mining bitcoins be considered a worthwhile endeavor again?

brownbat3• 13 years ago

1. As profitability goes up, more people join in, increasing the difficulty factor, reducing the profitability. 2. If deflation continues, you're probably better off just investing in coins.

Here's a profitability calculator where you can play with values (it starts with some reasonable defaults). (I can't tell if it accurately captures earnings from transfer fees though...)

brownbat3• 13 years ago

EDIT: http://www.bitcoinx.com/profit/

Bitcoin approaching $1000

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