Bitcoin Value Sinks After Chinese Exchange Move(nytimes.com)
nytimes.com
Bitcoin Value Sinks After Chinese Exchange Move
http://www.nytimes.com/2013/12/19/business/international/china-bitcoin-exchange-ends-renminbi-deposits.html
115 comments
Bitcoin fanboys have classic tunnel vision - they're so enamoured of the libertarian ideal of an anonymous crypto-currency that's not controlled by any government, that they ignored all the practical, economic and legal challenges it would need to overcome before it could become a real currency.
I am always amazed by the condescending tone of know it all speculators who think they've got it all figured it out. Labeling bitcoin enthusiasts as fanboys is a trite rhetorical tactic to marginalize their opinions, but what's really hilarious is that your tense (they ignored all challenges, an obvious falsehood btw) seems to imply that you've somehow definitively demonstrated that bitcoin is destined for failure. Guess what? Bitcoin was chugging along just fine before the Chinese hit the scene, in fact, black market merchants had no problem accepting bitcoin as their primary source of payment long before the financial world had even heard of bitcoin. I applaud your risky predictions though (bitcoin will fail, the price will drop if a government clamps down on bitcoin, bitcoin technology will be used in future financial systems), truly marked insight, you should recommend a reading list.
Anyway, I expect you to headline the inevitable "Bitcoin Once Again Breaks 1k" thread with a post linking to your comment here, explaining why you were full of shit... Though, I won't hold my breath since intelligent individuals like yourself will always find a reason to consider bitcoin a failure until its adopted as legal tender (something that the "fanboys" realize is completely unnecessary for the success of bitcoin).
I am always amazed by the condescending tone of know it all speculators who think they've got it all figured it out. Labeling bitcoin enthusiasts as fanboys is a trite rhetorical tactic to marginalize their opinions, but what's really hilarious is that your tense (they ignored all challenges, an obvious falsehood btw) seems to imply that you've somehow definitively demonstrated that bitcoin is destined for failure. Guess what? Bitcoin was chugging along just fine before the Chinese hit the scene, in fact, black market merchants had no problem accepting bitcoin as their primary source of payment long before the financial world had even heard of bitcoin. I applaud your risky predictions though (bitcoin will fail, the price will drop if a government clamps down on bitcoin, bitcoin technology will be used in future financial systems), truly marked insight, you should recommend a reading list.
Anyway, I expect you to headline the inevitable "Bitcoin Once Again Breaks 1k" thread with a post linking to your comment here, explaining why you were full of shit... Though, I won't hold my breath since intelligent individuals like yourself will always find a reason to consider bitcoin a failure until its adopted as legal tender (something that the "fanboys" realize is completely unnecessary for the success of bitcoin).
Blaming statements are pretty easy to spot if you know the signposts for them. Indicating a current outcome is 'predictable' because you said it was going to happen is a form of confirmation bias. Making a self referential comment to bolster his opinion sets the tone for the rest of the blaming argument that follows. Also, there the fact he didn't actually publicly call it first: https://news.ycombinator.com/item?id=6818680.
As you point out, the terms 'fanboy', 'tunnel vision' and 'libertarian' can be tactics to market a particular opinion. Ad hominem arguments are always a good indication someone is making blaming statements. I'm personally enamored with the fact that cryptocurrencies instantiate trust at their core because trust is important to me. That's not necessarily a libertarian viewpoint, so clumping me in with a group of libertarians effectively blames me for something that I'm not guilty of. FWIW, I don't have a beef with Libertarians, and may be one for all I know.
BTW, making a coy remark about his 'intelligence' and speaking for his future actions are blaming statements in themselves. It isn't helping the conversation much by doing that.
As you point out, the terms 'fanboy', 'tunnel vision' and 'libertarian' can be tactics to market a particular opinion. Ad hominem arguments are always a good indication someone is making blaming statements. I'm personally enamored with the fact that cryptocurrencies instantiate trust at their core because trust is important to me. That's not necessarily a libertarian viewpoint, so clumping me in with a group of libertarians effectively blames me for something that I'm not guilty of. FWIW, I don't have a beef with Libertarians, and may be one for all I know.
BTW, making a coy remark about his 'intelligence' and speaking for his future actions are blaming statements in themselves. It isn't helping the conversation much by doing that.
BTW, making a coy remark about his 'intelligence' and speaking for his future actions are blaming statements in themselves. It isn't helping the conversation much by doing that.
I admit, that part of my response was intentionally provocative, though, just to clarify, I wasn't being sarcastic when I regarded him as intelligent, my intent was to highlight the fact that intelligent individuals like the GP who are convinced they can conclude the definitive future of bitcoin will continue to do so because their intelligence drives a hubris that less confident (i.e. intellectually honest) individuals lack. The people who are used to telling everyone how finance really works can't help but bash all the fanboys over the head with their intelligent conventional wisdom.
I admit, that part of my response was intentionally provocative, though, just to clarify, I wasn't being sarcastic when I regarded him as intelligent, my intent was to highlight the fact that intelligent individuals like the GP who are convinced they can conclude the definitive future of bitcoin will continue to do so because their intelligence drives a hubris that less confident (i.e. intellectually honest) individuals lack. The people who are used to telling everyone how finance really works can't help but bash all the fanboys over the head with their intelligent conventional wisdom.
Right on. I made a blaming statement myself, and for that I apologize. Happens all the time! :) Also, I used the word coy incorrectly. Meh.
Indeed it's predictable that if the biggest buyer stops buying the prices will drop. You don't have to be a genius to figure that out.
The adoption of p2p technology, a protocol or a network has less to do with the quality of the technology itself, and more with the size of the network. Couldn't there be a better social network than FB? A better snapchat? A better Twitter? A better protocol than http?
Besides, too flawed from an economic perspective? Too inefficient? This is the rhetorical equivalent of "Spray and Pray"..
The current regulatory environment will not just disappear but itself. Bitcoin might win, bitcoin might lose, but there will be blood.
The adoption of p2p technology, a protocol or a network has less to do with the quality of the technology itself, and more with the size of the network. Couldn't there be a better social network than FB? A better snapchat? A better Twitter? A better protocol than http?
Besides, too flawed from an economic perspective? Too inefficient? This is the rhetorical equivalent of "Spray and Pray"..
The current regulatory environment will not just disappear but itself. Bitcoin might win, bitcoin might lose, but there will be blood.
I think the comparison to moon bases is a little dramatic. The infrastructure exists already for Bitcoin, and there is a thriving Bitcoin ecosystem. Whether or not it continues to grow is the question.
My tendency is to not agree with you, mostly due to your tone - see my note to vectorpush below for clarification.
Regardless, I hear you in that there challenges to be overcome to effect wide-spread adoption of this technology platform into the current financial markets. There is always a constant challenge in architecting, securing and operating financial networks. Innovation in these areas never stops, and it is unreasonable to assume we're going to adopt something long term that is insecure or outright broken. We are driven by trust, greed and fear, after all. I don't trust you and I think you are going to steal my money. I love my money, so I will take measures to protect it long-term.
Bitcoin is complex, and I've observed people having difficulty digesting the details on how it works. One thing of value that appears to be overlooked is the fact that Bitcoin is being secured by individuals (miners) putting power into the system. That power is used to compute the encryption used to secure the coins. Some have put the time to crack a single bitcoin key at 82 billion years.
The fact that Bitcoin is secured via power put into the system, currently around 7 quadrillion hashes per second, needs to be considered when discussing adoption trends. The value brought to this market by that computing power cannot be ignored.
It is, to put it succinctly, a platform of trust powered by the most massive compute engine humanity has ever built.
Regardless, I hear you in that there challenges to be overcome to effect wide-spread adoption of this technology platform into the current financial markets. There is always a constant challenge in architecting, securing and operating financial networks. Innovation in these areas never stops, and it is unreasonable to assume we're going to adopt something long term that is insecure or outright broken. We are driven by trust, greed and fear, after all. I don't trust you and I think you are going to steal my money. I love my money, so I will take measures to protect it long-term.
Bitcoin is complex, and I've observed people having difficulty digesting the details on how it works. One thing of value that appears to be overlooked is the fact that Bitcoin is being secured by individuals (miners) putting power into the system. That power is used to compute the encryption used to secure the coins. Some have put the time to crack a single bitcoin key at 82 billion years.
The fact that Bitcoin is secured via power put into the system, currently around 7 quadrillion hashes per second, needs to be considered when discussing adoption trends. The value brought to this market by that computing power cannot be ignored.
It is, to put it succinctly, a platform of trust powered by the most massive compute engine humanity has ever built.
I feel that the moon bases analogy is incredibly unfair. Bitcoin's utility has already been demonstrated, and, through that, the utility of decentralized digital currency in general. The remaining question isn't so much the long-term viability of this model as much as it is how far can it go?
Comparing it to the notion of a "moon base" is extreme on multiple levels, I guess one of them being that the actual demand for such is clearly minimal where as Bitcoin's adoption continues.
Bitcoin being banned by someone somewhere was a wholly inevitable and arguably necessary outcome. The positive spin on this news is that Bitcoin is on the radar at all to even be banned by anyone to begin with.
Comparing it to the notion of a "moon base" is extreme on multiple levels, I guess one of them being that the actual demand for such is clearly minimal where as Bitcoin's adoption continues.
Bitcoin being banned by someone somewhere was a wholly inevitable and arguably necessary outcome. The positive spin on this news is that Bitcoin is on the radar at all to even be banned by anyone to begin with.
""they ignored all the practical, economic and legal challenges it would need to overcome before it could become a real currency""
Bitcoin is born liberated and will continue to, irrespective of governments giving their stance. What else would a 'fanboy' expect from established players?
Bitcoin is born liberated and will continue to, irrespective of governments giving their stance. What else would a 'fanboy' expect from established players?
Why are you patting yourself on the back for one of the most obvious predictions imaginable? What's next, a brilliant prediction that if the US government bans electric cars, Tesla's stock will crash?
Dreamers will dream, the grounded will copy and implement the best of their ideas, and some people will just look for something to claim is broken and stupid and pointless and doomed.
China is a big player, but it's just one of many.
But even China can't stop bitcoin from being used in China. They just made it harder, that's all.
Bitcoin keeps getting adopted, the infrastructure is getting built, better software is being written. Whether you like it or not, it's getting more popular, that's just a fact.
I predict it will take Western Union and Money Gram and many smaller money transferers out of business in a few years. I'm sort-of confident it will take a significant portion of Paypal's business as well.
But even China can't stop bitcoin from being used in China. They just made it harder, that's all.
Bitcoin keeps getting adopted, the infrastructure is getting built, better software is being written. Whether you like it or not, it's getting more popular, that's just a fact.
I predict it will take Western Union and Money Gram and many smaller money transferers out of business in a few years. I'm sort-of confident it will take a significant portion of Paypal's business as well.
In some sense, I think the opposite. Bitcoin will succeed everywhere that PayPal and MoneyGram currently are failing. I suspect Bitcoin will replace a lot of cash and "valuables".
It may someday replace more "developed nations"/consumer-facing stuff like PayPal, but that will be a slow, politicized process fought in the arena of public sentiment. It will spread like wildfire in the arenas where there is currently no good means of transfer.
It may someday replace more "developed nations"/consumer-facing stuff like PayPal, but that will be a slow, politicized process fought in the arena of public sentiment. It will spread like wildfire in the arenas where there is currently no good means of transfer.
In April, I watched the price of bitcoin every day. When it approached $200 I said "f*ck it," took out a student loan and bought in at $225. The VERY NEXT DAY the price collapsed. I watched bitcoin slide to $50 in a state of complete and utter devastation. I felt so stupid. I decided not to sell, and just considered the loan to be a write-off.
Point being, you should assess the quality of your investment in years, not hours. And in regards to the Chinese government, allow me to quote Mahatma Gandhi:
> first they ignore you, then they laugh at you, then they fight you, then you win.
Point being, you should assess the quality of your investment in years, not hours. And in regards to the Chinese government, allow me to quote Mahatma Gandhi:
> first they ignore you, then they laugh at you, then they fight you, then you win.
There's a few things weird about this story. Are you really proud you have a leveraged position in bitcoin? Isn't that among the riskiest positions you can take on a very volatile, illiquid, and possibly illegal asset? That's totally a personal choice, but it's certainly not one I would or a typical retail investor should ever take. Your decision to buy-and-hold during a sell off in the Spring is at best an anecdote and certainly should not be used as any evidence on what behavior to do now.
Government intervention is just one of a few significant black swans: blocksize changes, verification (i.e. mining) fragmentation (effectively doubles the money supply for each split), and SHA collision attacks becoming practical. None of this should ever happen, right?
However, this line should be clarified in every context:
> took out a student loan and bought in at $225.
In the US, this is generally _not OK_. To everyone else in the US, do not read this as a positive example. Do not use student loans for bitcoin or any other investment.
What can I use my federal student loan money for? You may use the money you receive only to pay for education expenses at the school that awarded your loan. Education expenses include such school charges as tuition, room and board, fees, books, supplies, equipment, dependent child care expenses, transportation, and rental or purchase of a personal computer. Talk to someone at the financial aid office at your school if you need more details. [1]
[1] https://studentaid.ed.gov/sites/default/files/your-federal-s...
(Of course you may have been one of the small percentage who took out an unregulated private loan, but the principles behind those are generally the same).
Government intervention is just one of a few significant black swans: blocksize changes, verification (i.e. mining) fragmentation (effectively doubles the money supply for each split), and SHA collision attacks becoming practical. None of this should ever happen, right?
However, this line should be clarified in every context:
> took out a student loan and bought in at $225.
In the US, this is generally _not OK_. To everyone else in the US, do not read this as a positive example. Do not use student loans for bitcoin or any other investment.
What can I use my federal student loan money for? You may use the money you receive only to pay for education expenses at the school that awarded your loan. Education expenses include such school charges as tuition, room and board, fees, books, supplies, equipment, dependent child care expenses, transportation, and rental or purchase of a personal computer. Talk to someone at the financial aid office at your school if you need more details. [1]
[1] https://studentaid.ed.gov/sites/default/files/your-federal-s...
(Of course you may have been one of the small percentage who took out an unregulated private loan, but the principles behind those are generally the same).
It's also illegal in the UK to reinvest your student loan.
Update: I can't find a link to back this statement up and at least one UK Bank (Barclays) seems to encourage it. My evidence is therefore purely anecdotal — I remember it being noted in the terms at the time.
Update: I can't find a link to back this statement up and at least one UK Bank (Barclays) seems to encourage it. My evidence is therefore purely anecdotal — I remember it being noted in the terms at the time.
i love how you are telling him it was a dumb idea, when you have no idea if he sold enough at $1100 to cover his student loan, or that right now he is still in a position where he has doubled his money in a matter of months regardless of this crash.
Too many people offering investment advice in hindsight round here.
Too many people offering investment advice in hindsight round here.
Just because it worked out well in the end doesn't mean it was a good idea to begin with
It means it was a worthwhile risk that paid off.
Err isn't ivanplenty doing the opposite of offering hindsight investment advice? He's saying it was stupid despite it ending up being a profitable investment.
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Thank you captain obvious. I had ABSOLUTELY NO IDEA that using student loans for unauthorized investments is a violation of the contract. Gee willakers! I better go turn myself in!
Your reply makes me think: You should buy more. Invest as much as you can!
Well it WAS kinda "educational" for him, wasn't it? ;)
Please spare us the lecture on what an investor should and should not do. What someone does with their money is their choice and the consequences of what happens with that money is their consequence.
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allow me to quote Mahatma Gandhi
Gandhi never said the "first they ignore you" thing. It's been traced back to a speech by a union activist in 1912 or so. Lots of previous discussion about this on HN.
Gandhi never said the "first they ignore you" thing. It's been traced back to a speech by a union activist in 1912 or so. Lots of previous discussion about this on HN.
In 08' pension funds got wiped out. They felt so stupid. They decided not to sell, and just considered their loans a write-off. They stayed written off. You should assess the quality of your investment in utility, not years. And in regards to Bitcoin, allow me to quote myself
> Everything goes up in price, until it doesn't.
> Everything goes up in price, until it doesn't.
Reminds me of the reassuring heart surgeon saying:
"The bleeding always stops."
"The bleeding always stops."
I'd like to point out that, as an early adopter, it really pains me when I see people using situations like this to argue for the viability of Bitcoin as a currency.
Bitcoin is going to succeed because anecdotally you risked far more than was responsible on a winning gamble?
Prices don't just increase inexhaustibly. Bitcoin isn't going to 'win' if the only value it has is that people can wake up to find their investment multiplied overnight. These are the elements of a ponzi scheme, and you shouldn't argue for its success because of your kitschy miracle story.
Bitcoin is going to succeed because anecdotally you risked far more than was responsible on a winning gamble?
Prices don't just increase inexhaustibly. Bitcoin isn't going to 'win' if the only value it has is that people can wake up to find their investment multiplied overnight. These are the elements of a ponzi scheme, and you shouldn't argue for its success because of your kitschy miracle story.
Should a currency be an investment?
One of the greatest investors of all-time, George Soros, made billions betting against the British Pound. A pretty old currency.
http://www.telegraph.co.uk/finance/2773265/Billionaire-who-b...
http://www.telegraph.co.uk/finance/2773265/Billionaire-who-b...
I replied on the matter of investing in currency. Shorting is one investment strategy. Buy and hold is another one. I bet a lot of people would short bitcoin if they could.
Anyway this is ridiculous. People try to analyze an new phenomena with the old terminology. It doesn't work like that. You can't understand the change if you don't change your paradigm.
Anyway this is ridiculous. People try to analyze an new phenomena with the old terminology. It doesn't work like that. You can't understand the change if you don't change your paradigm.
Wrong question, I think. This thing is barely a currency. It has built-in deflation, which makes it a great long-term store of value (assuming it isn't killed somehow) in a world of depreciating alternative stores of value, but a bad currency. If you want a currency for day-to-day use, USD is what you want. If you want to hedge against USD depreciation, BTC is one option.
Wrong question, I think.
Bitcoin aspires to be a currency and is presented as one, at the same time as trying to boost adoption by presenting itself as a cannot fail investment (hence built-in depreciation, mining etc), so I think it's a fair question.
If I declare white pebbles currency, and that there are only 20 pebbles acceptable, and each year I'll throw one into the deep sea, I have an appreciating currency. What is missing in my pebble currency is confidence, an intangible and difficult thing to acquire, and an easy thing to lose.
If you want to hedge against USD depreciation, BTC is one option.
If you want a hedge against USD depreciation, given the huge volatility of Bitcoin, I'd say it's far worse than most other assets, or even most other currencies. A hedge against inflation should not be volatile, it is meant to reduce risk, and ideally it should have an intrinsic value or very predictable demand.
It should also be in a regulated market - I wonder which of these exchanges will go bust because of this crash? If they guarantee a price in USD for bitcoin to users and the price plummets straight afterward, or regulations mean they can't sell the coins, they're going to be in an awkward place. There are no guarantees that anyone who has money in bitcoin will ever be able to convert it out into another currency, because any of these companies could go bust and leave their customers with nothing. That's a very different situation from most other assets.
Bitcoin aspires to be a currency and is presented as one, at the same time as trying to boost adoption by presenting itself as a cannot fail investment (hence built-in depreciation, mining etc), so I think it's a fair question.
If I declare white pebbles currency, and that there are only 20 pebbles acceptable, and each year I'll throw one into the deep sea, I have an appreciating currency. What is missing in my pebble currency is confidence, an intangible and difficult thing to acquire, and an easy thing to lose.
If you want to hedge against USD depreciation, BTC is one option.
If you want a hedge against USD depreciation, given the huge volatility of Bitcoin, I'd say it's far worse than most other assets, or even most other currencies. A hedge against inflation should not be volatile, it is meant to reduce risk, and ideally it should have an intrinsic value or very predictable demand.
It should also be in a regulated market - I wonder which of these exchanges will go bust because of this crash? If they guarantee a price in USD for bitcoin to users and the price plummets straight afterward, or regulations mean they can't sell the coins, they're going to be in an awkward place. There are no guarantees that anyone who has money in bitcoin will ever be able to convert it out into another currency, because any of these companies could go bust and leave their customers with nothing. That's a very different situation from most other assets.
Is a website a document? It is, sort of, but there's also Gmail.
BitCoin is a new thing; it does not map well to preceding concepts, be it "asset" or "currency" or something else entirely.
BitCoin is a new thing; it does not map well to preceding concepts, be it "asset" or "currency" or something else entirely.
I think it maps decently well to the concept of a currency. It has no intrinsic value, and the amount of it in circulation is controlled by a central authority.
In the case of the US, the Fed constantly adjusts the dollars in circulation to further their monetary policies (typically low inflation, with economic growth), while in the case of BitCoin, the amount in circulation is set by a mathematical curve that is deflationary in nature.
Analyzing it as a deflationary currency (which many people treat as an "investment", because it increases in value over time) is about right.
In the case of the US, the Fed constantly adjusts the dollars in circulation to further their monetary policies (typically low inflation, with economic growth), while in the case of BitCoin, the amount in circulation is set by a mathematical curve that is deflationary in nature.
Analyzing it as a deflationary currency (which many people treat as an "investment", because it increases in value over time) is about right.
Currencies have additional characteristics in the real world, that are not part of the dictionary definition:
- I can file a police report if my dollars are stolen, and there is a non-trivial chance I could get them back.
- I can store dollars at an insured institution, with a high degree of confidence in retrieving them again. [1]
- I [get to | have to] pay my taxes in dollars.
In essence, for all of our lifetimes, "currency" has always meant "state currency", with all the good and bad that goes with it. Even when precious metals were the norm, states still tended to get involved (stamping the Emperor's face on certain coins and giving those coins preferential treatment).
While BTC meets the definition for currency in some ways, it's probably more practical in our current financial ecosystem to think of them as a highly fungible (and volatile) asset. (As with the stock market, no one should be putting all their life savings into crypto-coins.) As the ecosystem continues to grow, this may change.
[1] This might be the balancing factor to the deflationary issue, to the extent that it matters: that most people might end up keeping their hoard at an insured, well-secured BTC Bank, and paying a small steady percentage for the assurance that their whole pile doesn't disappear.
- I can file a police report if my dollars are stolen, and there is a non-trivial chance I could get them back.
- I can store dollars at an insured institution, with a high degree of confidence in retrieving them again. [1]
- I [get to | have to] pay my taxes in dollars.
In essence, for all of our lifetimes, "currency" has always meant "state currency", with all the good and bad that goes with it. Even when precious metals were the norm, states still tended to get involved (stamping the Emperor's face on certain coins and giving those coins preferential treatment).
While BTC meets the definition for currency in some ways, it's probably more practical in our current financial ecosystem to think of them as a highly fungible (and volatile) asset. (As with the stock market, no one should be putting all their life savings into crypto-coins.) As the ecosystem continues to grow, this may change.
[1] This might be the balancing factor to the deflationary issue, to the extent that it matters: that most people might end up keeping their hoard at an insured, well-secured BTC Bank, and paying a small steady percentage for the assurance that their whole pile doesn't disappear.
My point is that if you measure bitcoin as a currency it's doomed to be a failure. I don't care if its called a crypto currency, it's a crap currency. After one minute of reading about it the major benefit to me was its supply limit. Demand is erratic, supply is limited. It's an option on a black swan-like resource. Its name or what most people think of it as, doesn't change the fundamentals.
I'd agree my usage of the term 'hedge' isn't useful. But it is nice to have something that has appreciated so well over time, where my own currency has sucked.
I don't worry too much whether it succeeds or fails, but I assume if it succeeds it'll have to move through the hysteria and a trough of disillusionment to find some niche.
I'd agree my usage of the term 'hedge' isn't useful. But it is nice to have something that has appreciated so well over time, where my own currency has sucked.
I don't worry too much whether it succeeds or fails, but I assume if it succeeds it'll have to move through the hysteria and a trough of disillusionment to find some niche.
>It has built-in deflation, which makes it a great long-term store of value
It also has a very large risk premium, which makes it inferior to other options for solely a long-term store of value.
>If you want to hedge against USD depreciation, BTC is one option.
Bitcoin is an imperfect hedge against U.S. dollar depreciation. There are valid reasons for investing in Bitcoin, but this should not be one of them.
It also has a very large risk premium, which makes it inferior to other options for solely a long-term store of value.
>If you want to hedge against USD depreciation, BTC is one option.
Bitcoin is an imperfect hedge against U.S. dollar depreciation. There are valid reasons for investing in Bitcoin, but this should not be one of them.
>It has built-in deflation, which makes it a great long-term store of value
Besides, so far, Bitcoin has been highly inflationary. In a bit more than a year, the number of bitcoins in circulation has doubled.
https://blockchain.info/charts/total-bitcoins?timespan=all&s...
Besides, so far, Bitcoin has been highly inflationary. In a bit more than a year, the number of bitcoins in circulation has doubled.
https://blockchain.info/charts/total-bitcoins?timespan=all&s...
>Bitcoin has been highly inflationary
Inflation and deflation are not solely functions of the supply of money. They are functions of the price of money, which is a function of both supply and demand. The price of goods, which have been reasonably stable in U.S. dollar terms, have fallen in terms of Bitcoin. Thus Bitcoin is presently deflationary, not inflationary.
Inflation and deflation are not solely functions of the supply of money. They are functions of the price of money, which is a function of both supply and demand. The price of goods, which have been reasonably stable in U.S. dollar terms, have fallen in terms of Bitcoin. Thus Bitcoin is presently deflationary, not inflationary.
You are completely right. I hope I haven't mislead anybody with my comment.
If you want to protect yourself against USD depreciation, buy Treasury Inflation-Protected Securities (TIPS). Ultra safe, ultra boring.
But why would you want to? Inflation is bad if you have lots of money but no (prospects of) income. Retirees for instance. Most of you are in the opposite situation.
But why would you want to? Inflation is bad if you have lots of money but no (prospects of) income. Retirees for instance. Most of you are in the opposite situation.
Currency speculation is a risky but thriving market
Speculation is not the same as investing.
You can speculate in currency fluctuations in any currency, but to refer to a currency as an investment is a huge red flag for it as a currency, and for investment assets you should prefer slow appreciation over wild fluctuations and speculative moves.
You can speculate in currency fluctuations in any currency, but to refer to a currency as an investment is a huge red flag for it as a currency, and for investment assets you should prefer slow appreciation over wild fluctuations and speculative moves.
investment and speculation are two sides of the same coin (pardon the pun). all investment has risk. bitcoin speculation is a high risk investment. this may not be good for everyone but its an investment nonetheless.
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Speculation is not investment. The difference is that investments pay dividends, and buy and hold is a viable strategy. A speculator is relying on appreciation to make flipping the asset pay off, and is screwed if they eventually need a greater fool and can't find one.
invest. "1. To commit (money or capital) in order to gain a financial return". nothing about dividends or buy and hold here. your definition seems very narrow by comparison.
I wouldn't take a definition seriously that failed to exclude lottery tickets.
Ever since Rich Dad, Poor Dad I've been careful to distinguish assets that bring income, and other forms of property and equity whose price is purely an illusion supported by speculators' predictions about other speculators' whims.
Ever since Rich Dad, Poor Dad I've been careful to distinguish assets that bring income, and other forms of property and equity whose price is purely an illusion supported by speculators' predictions about other speculators' whims.
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It doesn't matter if it should or not, it is. As is most other currencies. See how George Soros made his fortune.
speculation != investment
I keep hearing this but I never see any angle to this statement where it could possibly be true.
An investment is productive - buying a share in a company allows that company to increase production, which should increase their profit.
Lending money to a company allows that company to invest, and increase their profits.
Buying BTC is nothing like that. It's speculation - hoping that the price will go up, nothing more.
Lending money to a company allows that company to invest, and increase their profits.
Buying BTC is nothing like that. It's speculation - hoping that the price will go up, nothing more.
FWIW, most "investments" that regular people make in the stock market are also, in fact, speculation. Once the stock has been issued originally, the issuing company receives no proceeds from subsequent sales of that stock. There might be secondary or tertiary effects that eventually lead to real investment, but for the most part, the majority of American's retirement savings are in speculative holdings.
"If you really think of it, when a stock doesn't pay dividends, there really isn't a whole lot of difference between a share of stock and a baseball card." - http://blogmaverick.com/2008/09/08/talking-stocks-and-money/
China is afraid. Bit-coin is an unregulated way of moving money out of China and they are known for keeping the movement of money in and out of china under very strict control.
The only way of regaining this control is by forcing all major companies to ban bit-coin.
You think the companies are happy about this they were making a very nice profit from the transactions.
The only way of regaining this control is by forcing all major companies to ban bit-coin.
You think the companies are happy about this they were making a very nice profit from the transactions.
Right. China still has currency controls on the RMB. Makes it a pain for me to move it out of China en masse, not that I've tried yet.
It's obviously a matter of controlling the flow of money (or capital in general). I fail to understand how anyone thinks this demonstrates a flaw or shortcoming of Bitcoin.
If you find an ant taking a crumb of bread from under your table you aren't afraid. You're annoyed. Let's not lose perspective here.
Bitcoin is spelled without a hyphen.
Unregulated capital flight is really not a feature of Bitcoin.
Bitcoin is money with the ledger built into it. It's not for hiding wealth, but for tracking it. This is a market correction that had to take place.
People get confused right now because the ledger is more or less blank. It won't be. (As a slightly dystopian side note, BTC with very little history may become very very valuable.)
In the future, it is going to be preferable to pay for anything large with cryptocurrency. It's overkill to buy a coffee with Bitcoin. But a house, a car, maybe even rent? What better way to prove you own or have paid for something? The currency knows when and how it was used.
We currently live in a world where banks try to foreclose on homes that aren't even mortgaged. Bitcoin and the like will end that. But even more importantly, Bitcoin is about wealth protection. The average Joe will have very little of the deflationary income. But large banking institutions will.
Bitcoin is money with the ledger built into it. It's not for hiding wealth, but for tracking it. This is a market correction that had to take place.
People get confused right now because the ledger is more or less blank. It won't be. (As a slightly dystopian side note, BTC with very little history may become very very valuable.)
In the future, it is going to be preferable to pay for anything large with cryptocurrency. It's overkill to buy a coffee with Bitcoin. But a house, a car, maybe even rent? What better way to prove you own or have paid for something? The currency knows when and how it was used.
We currently live in a world where banks try to foreclose on homes that aren't even mortgaged. Bitcoin and the like will end that. But even more importantly, Bitcoin is about wealth protection. The average Joe will have very little of the deflationary income. But large banking institutions will.
We currently live in a world where banks try to foreclose on homes that aren't even mortgaged. Bitcoin and the like will end that.
No, it won't. The problem was never proof of payment. The problem in almost all cases was proving ownership (by the foreclosing bank) of the ownership of the mortgage/loan, which Bitcoin can't and won't solve because it's not something that can be put into the Bitcoin protocol or software. (The bank you take out a mortgage from is rarely the bank that you end up making payments to; the original bank usually sells your mortgage to another financial institution willing to accept the credit risk.)
But even more importantly, Bitcoin is about wealth protection. The average Joe will have very little of the deflationary income. But large banking institutions will.
Why is this a good thing? You've basically just said that the rich will just get richer and the average Joe will, in relative terms, will become even poorer (as prices increase to keep pace with the increasing wealth of the rich).
No, it won't. The problem was never proof of payment. The problem in almost all cases was proving ownership (by the foreclosing bank) of the ownership of the mortgage/loan, which Bitcoin can't and won't solve because it's not something that can be put into the Bitcoin protocol or software. (The bank you take out a mortgage from is rarely the bank that you end up making payments to; the original bank usually sells your mortgage to another financial institution willing to accept the credit risk.)
But even more importantly, Bitcoin is about wealth protection. The average Joe will have very little of the deflationary income. But large banking institutions will.
Why is this a good thing? You've basically just said that the rich will just get richer and the average Joe will, in relative terms, will become even poorer (as prices increase to keep pace with the increasing wealth of the rich).
Altcoins with faster transaction times and built-in inflation formulas could change the game. I'm bullish on crypto-currency in general, but I don't think it's a given that BitCoin is guaranteed to be the winner, long-long-term.
> BTC with very little history may become very very valuable.
Unpack this? I had thought that if you sent coins to a fresh wallet ID, it becomes effectively anonymous. (I've heard of some who generate a new public key for every transaction.)
> BTC with very little history may become very very valuable.
Unpack this? I had thought that if you sent coins to a fresh wallet ID, it becomes effectively anonymous. (I've heard of some who generate a new public key for every transaction.)
> Unpack this? I had thought that if you sent coins to a fresh wallet ID, it becomes effectively anonymous.
Not really, you can see where the money came from, and assume the same owner (or a relationship between the owners).
To anonymize bitcoins you have to 'mix' them - take X bitcoins from N people, send them to a single address, then send X to new addresses for each of the N people. Because any persons bitcoins might end up going to someone else, you cannot assume it's the same person or a transaction any more.
Not really, you can see where the money came from, and assume the same owner (or a relationship between the owners).
To anonymize bitcoins you have to 'mix' them - take X bitcoins from N people, send them to a single address, then send X to new addresses for each of the N people. Because any persons bitcoins might end up going to someone else, you cannot assume it's the same person or a transaction any more.
"BTC with very little history may become very very valuable"
Perhaps, but I think that's why some degree of drug site users.. according to my readings, prefer litecoins. (just not sure how important of a feature ltc is, but it seems to be at least quite important to some)
The value is in having exchanges with little history, and having viable altchains that people can buy into and sell out of.
Perhaps, but I think that's why some degree of drug site users.. according to my readings, prefer litecoins. (just not sure how important of a feature ltc is, but it seems to be at least quite important to some)
The value is in having exchanges with little history, and having viable altchains that people can buy into and sell out of.
> BTC with very little history may become very very valuable
Why would a virgin coin be more valuable than one that has passed through countless wallets? What is the advantage?
Why would a virgin coin be more valuable than one that has passed through countless wallets? What is the advantage?
>"It is not issued by a central monetary authority, it does not have the properties of legal currency and it is not a currency in the real meaning of the word."
Certainly an amusing quote, given the extensive actions to stop the spread of such a non-threatening non-currency.
By "ban", I assume they mean "made illegal." The former of course being a euphemism for the latter. A couple questions come to my mind as such.... How will China enforce such a ban? Can China physically or technologically bar access to Bitcoin deposits?
Regardless of the Chinese government's ability to effectively enforce such a ban, the price of Bitcoin has taken a noticeable dive.
Certainly an amusing quote, given the extensive actions to stop the spread of such a non-threatening non-currency.
By "ban", I assume they mean "made illegal." The former of course being a euphemism for the latter. A couple questions come to my mind as such.... How will China enforce such a ban? Can China physically or technologically bar access to Bitcoin deposits?
Regardless of the Chinese government's ability to effectively enforce such a ban, the price of Bitcoin has taken a noticeable dive.
> the price of Bitcoin has taken a noticeable dive.
Don't judge on one day. Wait for a week, 10 days before making conclusions on the price of Bitcoin. Bitcoin has shown to be pretty resilient to news that were considered bad by the media. We'll see.
Don't judge on one day. Wait for a week, 10 days before making conclusions on the price of Bitcoin. Bitcoin has shown to be pretty resilient to news that were considered bad by the media. We'll see.
> Wait for a week, 10 days before making conclusions on the price of Bitcoin
My conclusion is that it's pretty fucked up [1].
Nov 15 $US430
Nov 22 US$843
Nov 29 US$1137
Dec 6 US$552
Dec 13 US$869
Dec 18 US$584
Pick one of those dates before today and imagine saying "wait for a week ... before making conclusions on the price of Bitcoin".
[1] https://coinbase.com/charts
My conclusion is that it's pretty fucked up [1].
Nov 15 $US430
Nov 22 US$843
Nov 29 US$1137
Dec 6 US$552
Dec 13 US$869
Dec 18 US$584
Pick one of those dates before today and imagine saying "wait for a week ... before making conclusions on the price of Bitcoin".
[1] https://coinbase.com/charts
Interesting, you already have the dec 18 value while the day is far from over. You have a strange way to pick up numbers.
It's down to ~480 so it's lost $100 in 30 minutes. Let's just say that my strange way of picking numbers can be described as "flattering" ... at worst.
No, you should pick numbers on a daily average with an indication of the daily variation on the value if you want to be fair, not at a precise instant, because Bitcoin can have as much as 30% variation in a given day, so I too can make up numbers out of thin air by picking up a very biased time during the day.
It ended the day at $582 [1].
> because Bitcoin can have as much as 30% variation in a given day
Hence, "pretty fucked up".
[1] https://coinbase.com/charts
> because Bitcoin can have as much as 30% variation in a given day
Hence, "pretty fucked up".
[1] https://coinbase.com/charts
30% is either "f+++ed up" or a massive opportunity for daily trading, depending on your point of view. I see it rather as the second.
Today I've seen it back at 530 and now at 520.
Who knows, I wouldn't be surprised if by EOB we're back above 600.
As parent said, with Bitcoin you have to look at things in a different way since it works in a very different way than anything else we've ever seen.
As parent said, with Bitcoin you have to look at things in a different way since it works in a very different way than anything else we've ever seen.
But does it really? It looks like rampant speculation to me. I've seen that many times in markets.
Have you seen before a functioning globally distributed ledger system being speculated on in the markets ?
Have you seen a <insert something that for some reason it will be different this time thing here> is generally a poor argument. But one speculators cling to and try to convince others of adamantly.
That price seems way high indeed. But I think the point still stands.
It doesn't matter what dates or time taspeotis picks; his point is that at any date and time Bitcoin is too volatile to meaningfully function as a currency.
No major currency suffers from 30% intra-day volatility against other currencies. It would make pricing goods and services essentially impossible. Who would care about saving up to 5% on credit card fees if they're suffering 30% arbitrage losses because they set/update their prices at the wrong time of day?
No major currency suffers from 30% intra-day volatility against other currencies. It would make pricing goods and services essentially impossible. Who would care about saving up to 5% on credit card fees if they're suffering 30% arbitrage losses because they set/update their prices at the wrong time of day?
Wait for a year. Two years. Three years.
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Wow, this has really got the attention of the Chinese authorities. This only alludes to how incredibly disruptive bitcoin is going to be. Time to go all-in if you haven't already...
> Time to go all-in if you haven't already...
If every possible outcome confirms your hypothesis, you are not considering the evidence properly. If China hadn't moved against Bitcoin, would you think that would make Bitcoin a less attractive speculation?
If every possible outcome confirms your hypothesis, you are not considering the evidence properly. If China hadn't moved against Bitcoin, would you think that would make Bitcoin a less attractive speculation?
going all in is probably not adviseable in any technology investment, but I get his point, the Chinese Government see bitcoin as a way that its citizens can circumvent currency controls and it also affects the exchange rate of the RMB, which is very closely controlled byt he Chinese Government. This doesnt mean that bitcoin is "going to the moon" this means that as a disruptive technology it is making itself known and coming up against predictable barriers.
The comment you responded to was a bit "buy buy buy" but the sentiment is just another way of saying "first they ignore you, then they laugh at you, then they fight you, then you win"
The comment you responded to was a bit "buy buy buy" but the sentiment is just another way of saying "first they ignore you, then they laugh at you, then they fight you, then you win"
That sentiment is also often a way to cover for the incoherent belief "P(A|B) > P(A|-B) > P(A|B)".
I think that depends on your entry point. Perhaps if you got in at $1000 you may be trying to convince yourself, or others, that holding long term makes sense. However if you got in at <$3 and have been holding bitcoin for a period of over 18 months then actually it is not an incoherent belief that it will be worth over $1000 again, it is a projected outcome based on the historic performance of the technology as a currency.
> If China hadn't moved against Bitcoin, would you think that would make Bitcoin a less attractive speculation?
Yes. Didn't I just say that?
Yes. Didn't I just say that?
> Time to go all-in if you haven't already...
I can calculate the movement of the stars, but not the madness of men Sir Isaac Newton
I can calculate the movement of the stars, but not the madness of men Sir Isaac Newton
Not sure if you are being ironic. Regardless of the merits or lack thereof, it would be nice to be able to have an intelligent discussion online about Bitcoins, without being clusterbombed by the army of shills and speculators.
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After the peak of $1100 and being pretty happy last week, and the subsequent decline, I sold my stash at $800 last week, no regrets.... yet.
Probably a great time to buy.
Probably a great time to buy.
> Probably a great time to buy.
Why?
Why?
> Probably a great time to buy.
He or others like him may not have sold off all of their coins and need dumb money to keep the price afloat just a little longer...
If it were a great time to buy, he would have. Follow the actions and not the words in markets like this.
He or others like him may not have sold off all of their coins and need dumb money to keep the price afloat just a little longer...
If it were a great time to buy, he would have. Follow the actions and not the words in markets like this.
I've been investing long enough to know that:
1) if a disruptive tech has plenty of personal intrigue and 2) plenty of brilliant people herald it
then buy the crash.
1) if a disruptive tech has plenty of personal intrigue and 2) plenty of brilliant people herald it
then buy the crash.
He thinks that the price is near or at the bottom, I suppose.
It's possible, but not too likely at all at this point, that China will reverse this decision. I don't know how far BTC will fall, but let me tell you this. If it falls to under $10 like this person[1] says, I'm going all in... $5,000 USD's worth because I'm a fool. If, by some improbable & unfeasible way, China does reverse and BTC reaches $1,000+ again my cheers will be so loud that everyone on HN will actually hear me.
1. http://www.businessinsider.com/williams-bitcoin-meltdown-10-...
1. http://www.businessinsider.com/williams-bitcoin-meltdown-10-...
What makes you think it's possible China will reverse it's decision? This reads like wishful thinking.
Awesome. I have a little regret that I wasn't brave enough to sell at $1000. But then I'd have to decide when to buy and I'd probably chicken out and already buy for something like 800$. And I'd be risking the scenario I'm most afraid of that I get stuck without bitcoins and I can buy much less of them because the prize never goes below for what I sold them.
I came here for some opinions on where the dive ends.
Will we see the BT under 200$?
Will we see the BT under 200$?
If you look long enough you can see the end of all things.
Bitcoins, I as an outsider have to say that many people will be tempted to buy because of the low price. This low price is being advertised by lots of people as a reason to buy, probably trying to mask the news of China not allowing the business. What big economy has accepted bitcoin as a currency? Edit: What reason is there to be optimistic about the bitcoins.
Bitcoins, I as an outsider have to say that many people will be tempted to buy because of the low price. This low price is being advertised by lots of people as a reason to buy, probably trying to mask the news of China not allowing the business. What big economy has accepted bitcoin as a currency? Edit: What reason is there to be optimistic about the bitcoins.
Comparison to previous bubbles (with standard disclaimer about past performance not being an indicator of future results): http://m.imgur.com/i5w3yPj
$200 is certainly possible, if not likely.
$200 is certainly possible, if not likely.
Anyone who thought the Chinese government were going to ignore a mechanism that allowed people to bypass capital controls with impunity was pretty naive.
Bitcoin fanboys have classic tunnel vision - they're so enamoured of the libertarian ideal of an anonymous crypto-currency that's not controlled by any government, that they ignored all the practical, economic and legal challenges it would need to overcome before it could become a real currency.
It's a bit like the people who watched the moon landings on TV and believed that we'd have moonbases by the end of the 20th century. Technology needs time to develop and mature, and there typically needs to be a compelling commercial case for its adoption.
The technological principles that underpin Bitcoin will see more widespread adoption within the next few years but they'll be deployed within the pre-existing financial context, perhaps as a mechanism for OTC trading or to support real-time gross settlement in the wholesale markets. In the retail market, I envisage an M-Pesa-style digital payments/money-transfer solution that complements the the traditional banking and payments systems. We might see alternative currencies built on Bitcoin-style infrastructures but based on something that people value in a different way from dollars and cents (e.g. the rainforest).
But Bitcoin itself is too flawed from an economic perspective, too inefficient and too big a step to be able to function effectively as a currency within the current AML/sanctions-focused regulatory environment.