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[Lonely1]

Yes, because every drug lord just loves the idea of their transactions being published on a traceable public medium, ideal for post-arrest investigation

That's why they keep their deals in easily found written ledgers in the movies

The problem is to arrest them in the first place- :O And take into account that they often lose millions during raids because they stuff their money on their mattress, literally.

 

[jmood88]

"the best part about bitcoins is that you get to watch libertarians slowly discover why financial regulations exist to begin with".

Sucks for the people who lost their money though.

That's an early contender for quote of the year.

 

[The Horror the horror]

I gave you this reason and you ignored it!

A currency needs to be a commodity that's limited in supply and not in demand for any practical use -- otherwise it's not a currency, it's just a component of a barter economy and suffers from those problems. (This is to say, wheat, or cows, or iron, are all bad currencies, because people can manufacture them and people tend to use them for non-currency purposes, which will make them terribly inconsistent as stores of value.)

But if a currency is a commodity that's both useless and hard to get, why would anybody accept it? For a currency to work, a third ingredient is necessary -- people have to believe, after accepting it, that they can trade it for other goods and services. This is a classic network effect problem.

Luckily, there happens to be a time-tested solution to this -- charge people some sort of tax or fee, and explain that it can only be paid in your currency. Voila, you're the demander of last resort. If people have a reasonable expectation of paying taxes or encountering somebody who will, they can safely trade in your currency. This creates a baseline demand pattern which gives your currency enough stability and gives merchants a reason to accept it.

Notice what happens to the currencies of countries that are not expected to be able to collect on their taxes due to military or organizational crises. Two classic examples here are Weimar Germany and civil war Zimbabwe. Sound familiar?

From a currency perspective, Bitcoin has two of the three legs covered -- it's limited in supply and has to practical use. But it's in the unenviable position of being a currency without an army, and thus without any taxation authority. Without a Bitcoin-mandatory demand, what's the point of collecting Bitcoin as a merchant? First of, you'd only do it if you felt very confident of encountering a lot of Bitcoin users -- like, say, if you ran a computer parts supply company such as Tiger Direct. You'd need to be very confident of clearing your currency market, because you'd dump to a stable store of value immediately after every transaction. How many bitcoins does Tiger Direct hold in its account, versus holding as dollars?

There's a real, factual, even physical reason why Bitcoin's not a real currency. It has nothing to do with magic or morals. It's the same reason that gold's not a real currency any more. It has to do with the way currency actually works.

Correct. But in all actuality, the only ingredient required for the successful emergence of new currency is the imposition, under the threat of fines or imprisonment, from the government. There was nothing wrong with gold as a legitimate form of currency - it was practical; its worth couldn't be manipulated regularly; it wasn't too rare, nor too plentiful; and its value wasn't limited to simply a form of currency -- it could be used for other reasons.

 

[empty vessel]

Correct. But in all actuality, the only ingredient required for the successful emergence of new currency is the imposition, under the threat of fines or imprisonment, from the government. There was nothing wrong with gold as a legitimate form of currency - it was practical; its worth couldn't be manipulated regularly; it wasn't too rare, nor too plentiful; and its value wasn't limited to simply a form of currency -- it could be used for other reasons.

Gold is anything but practical. Not only is it heavy, its supply is beyond control. Currency supply--which is the oil of an economy--must grow with the economy. Otherwise, it serves to constrain it, which is exactly what gold did.

 

[The Horror the horror]

Gold is anything but practical. Not only is it heavy, its supply is beyond control. Currency supply--which is the oil of an economy--must grow with the economy. Otherwise, it serves to constrain it, which is exactly what gold did.

That is incorrect.

First, 50% of all the gold mined throughout the world since Columbus is stockpiled, either by the goverment or in banks. An estimated 30% is in trinkets, ornaments, or are privately hoarded. A commodity which exists to the extent of 80% of it total world production since back when America was discovered isn't in short supply.

Second, and more fundamentally, supply isn't even important. The primary function of money is to measure the value of the items for which it's exchanged. For example, if the supply of gold is so small that a one ounce coin would be too valuable for minor transactions, people simply would use half ounce coins or tenth ounce coins.

Read a book called The Creature for Jekyll Island. I highly recommend it.

 

[pigeon]

Correct. But in all actuality, the only ingredient required for the successful emergence of new currency is the imposition, under the threat of fines or imprisonment, from the government. There was nothing wrong with gold as a legitimate form of currency - it was practical; its worth couldn't be manipulated regularly; it wasn't too rare, nor too plentiful; and its value wasn't limited to simply a form of currency -- it could be used for other reasons.

In the time period in which gold was a successful currency, it fit all three of the conditions I outlined -- its supply was controlled to the extent possible, it had no practical use, and it was accepted as payment for taxes. Industrial uses of gold weren't discovered until the middle of the twentieth century (except for jewelry, of course, but that's best understood as a form of saving). Of course, that's because in the time period in which gold was a successful currency, central banks and thus monetary policy did not exist. As soon as monetary policy began to be developed -- and began to be important -- gold was immediately problematic, since its supply cannot be manipulated by the issuing government. Hence the nearly hundred years of economic crises America suffered grappling with the bi-metallic standard in the nineteenth and early twentieth century.

Second, and more fundamentally, supply isn't even important. The primary function of money is to measure the value of the items for which it's exchanged. For example, if the supply of gold is so small that a one ounce coin would be too valuable for minor transactions, people simply would use half ounce coins or tenth ounce coins.

This is not true. Money is both a medium of exchange and a medium of account. One of those is blind to inflation and deflation, but one isn't, and it's actually so important that there's a whole field of economics about the fact that it isn't.

 

[Ty4on]

Has there ever been a currency that has gone through this? How did they solve those challenges?

I haven't looked through their history, but other currencies had someone controlling them. Cryptocurrencies aren't new, but the earlier versions had serious flaws that bitcoin fixed. One being that the guy who made them started with all the coins which REALLY sounds like a ponzi scheme
Cryptocurrencies have to be safe without any trust while you have to trust your bank every time you make a online/card payment. The disadvantage is that you need to verify it which can take some time. Some coins like Dogecoin are much faster to verify (faster block mining), but are more prone to errors (orphan blocks, look it up).

Hilariously, even if gold and silver were identical to every other metal conductor (and they aren't), they're still more valuable in more real-world situations than bitcoins ever will be for the simple fact that they can be used to make things.

Who cares when the value would be trivial if Gold lost its monetary value. Wouldn't surprise me if bank notes that are usually made of quite sturdy materials (ours are cotton, but will survive a wash) have more practical uses to make things.

I also find it a huge shame that metals that have some specific uses like gold, silver and platinum are mostly hoarded. Silver could make excellent heatsinks as it is the metal that best conducts heat, but instead it is used to burn my hands while I eat. In computers even copper which is second best is often too expensive.

 

[The Horror the horror]

This is not true. [BMoney is both a medium of exchange and a medium of account. One of those is blind to inflation and deflation, but one isn't, and it's actually so important that there's a whole field of economics about the fact that it isn't.

Edit, my mistake. Read the sentence incorrectly, but I'm still baffled as to what made my statement incorrect.

 

[Deleted member 1235]

so bitcoin prices are back to usual again. well..... the largest exchange disappearing seemed to do fuck all to the prices after all.

let's all admit that nobody knows where the fuck this will go.

 

[Hitokage]

That is incorrect.

First, 50% of all the gold mined throughout the world since Columbus is stockpiled, either by the goverment or in banks. An estimated 30% is in trinkets, ornaments, or are privately hoarded. A commodity which exists to the extent of 80% of it total world production since back when America was discovered isn't in short supply.

Second, and more fundamentally, supply isn't even important. The primary function of money is to measure the value of the items for which it's exchanged. For example, if the supply of gold is so small that a one ounce coin would be too valuable for minor transactions, people simply would use half ounce coins or tenth ounce coins.

Both of these statements are time-independent, completely ignoring that the nature of the problem is time-dependent. The first simply says "there's a lot of gold", and the second "we could divide it up" with respect to present value when compared to past value is a statement of DEFLATION.

Read a book called The Creature for Jekyll Island. I highly recommend it.

Or he can read something actually informative.

 

[The Horror the horror]

Both of these statements are time-independent, completely ignoring that the nature of the problem is time-dependent. The first simply says "there's a lot of gold", and the second "we could divide it up" with respect to present value when compared to past value is a statement of DEFLATION.

I'm not getting what you're saying here. What are the past value and present problem, exactly?

 

[Hitokage]

I'm not getting what you're saying here. What are the past value and present problem, exactly?

When the value of a currency goes up, prices and wages need to fall accordingly(by half or more, since we're subdividing units). This discourages spending and encourages hoarding, as my X amount of currency is now worth at least twice as much as it used to. It also makes loans and other fixed price agreements more expensive over time.

 

[DrEvil]

so bitcoin prices are back to usual again. well..... the largest exchange disappearing seemed to do fuck all to the prices after all.

let's all admit that nobody knows where the fuck this will go.

Thing is, Gox had been failing for the better part of six months already, it's not like the market didn't see it coming, and that's why there was no real big crash. It went down 60 bucks and has since recovered..

Those who were risking purchases of the gox BTC at like $130 were essentially hedging their bets that gox would emerge somehow, but honestly, I wouldn't have (and didn't) gone near it with a ten foot pole.

 

[The Horror the horror]

When the value of a currency goes up, prices and wages need to fall accordingly(by half or more, since we're subdividing units). This discourages spending and encourages hoarding, as my X amount of currency is now worth at least twice as much as it used to. It also makes loans and other fixed price agreements more expensive over time.

I understand the definition and the effects of deflation; I'm wondering how it relates to our discussion of gold as a legitimate form of currency.

 

[cdkee]

Read a book called The Creature for Jekyll Island. I highly recommend it.

Here we go...

 

[Hitokage]

I understand the definition and the effects of deflation; I'm wondering how it relates to our discussion of gold as a legitimate form of currency.

Gold was a deflationary force in the 20th Century while not being immune to wild swings in value in the 19th Century. It's pretty much the worst of both worlds at this point.

 

[Stinkles]

so bitcoin prices are back to usual again. well..... the largest exchange disappearing seemed to do fuck all to the prices after all.

let's all admit that nobody knows where the fuck this will go.

Let's all admit that it is not a predictable or stable currency. And possibly not a currency.

 

[pigeon]

Edit, my mistake. Read the sentence incorrectly, but I'm still baffled as to what made my statement incorrect.

The stability of a medium of account is very important, because its relative rise and fall in value affects the decisions made by investors. Thus, the fact that stability isn't important for a medium of exchange does not make gold a sensible currency, because currencies must be both a medium of exchange and a medium of account, and gold's instability makes it wholly unsuitable as a medium of account.

 

[The Horror the horror]

Gold was a deflationary force in the 20th Century while not being immune to wild swings in value in the 19th Century. It's pretty much the worst of both worlds at this point.

We're at the point of no return at this point, I'll agree, but I'm not aware of any wild swings in the value of gold in any period, outside of WW2 and the Oil crises. What years are we talking about?

 

[Makai]

We're at the point of no return at this point, I'll agree, but I'm not aware of any wild swings in the value of gold in any period, outside of WW2 and the Oil crises. What years are we talking about?

The entire 19th century. Bimetallism failed because the market value of gold and silver were always independently in flux. There's no benefit to pegging our currency to a commodity now that we have central banks and we're not going back barring some catastrophic political crisis that sends us back to feudalism.

P.S. Thanks for the economics lesson, everybody. The bit about our currencies being backed by taxation was enlightening.

I don't ask for anyone to agree, but walls of text loaded with assumptions based on very old information are just not something I want to deal with.

Ha!

 

[empty vessel]

That is incorrect.

First, 50% of all the gold mined throughout the world since Columbus is stockpiled, either by the goverment or in banks. An estimated 30% is in trinkets, ornaments, or are privately hoarded. A commodity which exists to the extent of 80% of it total world production since back when America was discovered isn't in short supply.

There is X amount of gold. New gold gets mined at Y% per year. These two things are out of our society's control, for the most part. We can devote more resources to mining gold at home or, I suppose, even abroad (although it would cost us), and maybe increase the rate of production over some period of time, but this is more or less a crap shoot. The important part is that we have little control over the supply of gold. If we have little control over the supply of gold, and if gold is used as currency, then we have little control over the supply of our currency. It is stupid for a society to give up control over the supply of its currency, because the supply of currency is highly relevant to how efficiently an economy produces social wealth.

Second, and more fundamentally, supply isn't even important. The primary function of money is to measure the value of the items for which it's exchanged. For example, if the supply of gold is so small that a one ounce coin would be too valuable for minor transactions, people simply would use half ounce coins or tenth ounce coins.

Consider a society comprised of 100 people with 100 pounds of gold. There is in this society an average of 1 pound of gold per person. Prices of goods and services are set relative to that supply of gold. Now set this society in motion. 50 years later, the population has doubled. Assuming for simplicity that the total amount of gold in the society remains the same, there is now an average of 0.5 pounds of gold per person. What is the result? You say that people will use less gold to purchase things. That is correct. Another way to say that is that the prices of goods and services denominated in gold will fall. What used to cost 1 ounce of gold will not cost 0.5 ounces of gold. As this experiment continues on, it should be apparent to you that (1) having gold appreciate relative to real goods and services over time will cause people to hoard gold at the expense of buying the goods and services offered for sale in gold (this means that the demand for goods and services falls); (2) when people reduce their purchasing of goods and services, producers reduce their supply of goods and services to meet the lower demand; and (3) we are now describing an economy that is shrinking and not growing.

But I have actually understated the problem with gold, because not only is the society gaining population such that there is less gold per person, but the new people mean that the economy should be expanding, so that there are more goods and services available for sale in gold. When you combine (1) less gold per person with (2) more goods and services available for sale in gold, you get an even faster depreciation.

You might balk and say this isn't fair because I have kept the total amount of gold the same instead of allowing it to rise as more gold is mined. The problem here is that you've just admitted that it is desirous to have an expanding money supply, and hence it is desirous for a society to be able to control the supply of its currency, and hence why gold is a terrible currency. It's literally the worst economic idea in the world.

 

[The Horror the horror]

The entire 19th century. Bimetallism failed because the market value of gold and silver were always independently in flux.

Again, this is completely new to me. I haven't seen a single chart or graph that supports the statement that gold fluctuated in the 19th century.

 

[Makai]

Again, this is completely new to me. I haven't seen a single chart or graph that supports the statement that gold fluctuated in the 19th century.

Do you really need it? It's a commodity. Commodities do not have constant value.

 

[pigeon]

Again, this is completely new to me. I haven't seen a single chart or graph that supports the statement that gold fluctuated in the 19th century.

This is a tricky one. The price of gold obviously didn't fluctuate, because most countries were on the gold standard -- the price of gold can't fluctuate if your money is pegged to it. But the inflation rate can vary abruptly, since it's tied to the production of gold, and so the short-term exchange rate (which varies directly with the inflation rate) can vary as well:

http://econbrowser.com/archives/2012/02/why_not_abolish

The vertical line indicates the establishment of the Federal Reserve. Notice what happens to short-term interests rates at that point. Keep in mind that this is an indicator of the state of the money supply. Does that look stable to you?

 

[hydrophilic attack]

That's an early contender for quote of the year.

I liked Krugman's take:

Bitcoin was, of course, created in part to cater to libertarian dreams – to provide a way to store your wealth where governments can’t steal it through taxation or currency debasement.

And it’s true! Thanks to Bitcoin, you can instead have your wealth stolen by private hackers.

 

[Ty4on]

I liked Krugman's take:

I was about to say that Krugman had at the very least admitted that he didn't understand Bitcoins, but I was paraphrasing to myself.
I guess the Target breach also means that cards are unsafe.

 

[pigeon]

I was about to say that Krugman had at the very least admitted that he didn't understand Bitcoins, but I was paraphrasing to myself.
I guess the Target breach also means that cards are unsafe.

Krugman's phrasing may not be all that clear, but there's an important point to be made here -- if MtGox were instead the Bank of Dominaria, accepting and storing US dollars, they'd be insured by the Federal Deposit Insurance Corporation and you'd be reimbursed for any losses up to $250,000 per depositor. It's the power of financial regulation in action! In this case bitcoin really has given users the unique opportunity to lose way more of their money than they would have with a government-controlled currency. It's disruptive!

 

[Manmademan]

I was about to say that Krugman had at the very least admitted that he didn't understand Bitcoins, but I was paraphrasing to myself.
I guess the Target breach also means that cards are unsafe.

Cards both credit and debit are heavily regulated, and consumers have many avenues to recover funds in
Case of hacking or fraud. Cards are nowhere close to the situation bitcoin is in

 

[Trouble]

Cards both credit and debit are heavily regulated, and consumers have many avenues to recover funds in
Case of hacking or fraud. Cards are nowhere close to the situation bitcoin is in

Shit, my bank is kind enough to disable my card if I make out of character purchases, just in case. lol

 

[Ty4on]

Krugman's phrasing may not be all that clear, but there's an important point to be made here -- if MtGox were instead the Bank of Dominaria, accepting and storing US dollars, they'd be insured by the Federal Deposit Insurance Corporation and you'd be reimbursed for any losses up to $250,000 per depositor. It's the power of financial regulation in action! In this case bitcoin really has given users the unique opportunity to lose way more of their money than they would have with a government-controlled currency. It's disruptive!

MtGox wasn't a bank.

Bitcoin transactions cannot be reversed and lost coins cannot be retrieved, that is a consequence of a zero trust system and only time will tell how practical this is. There is however no shortage of information about how to keep your wallet safe. Bitcoins were after all designed to work without a bank.

Online wallets and exchanges look like online banks. However, you should always choose such services carefully. As of today, these services generally don't provide enough insurance and security to be used to store your money like a bank. Using security features like two-factor authentication can help to increase the security of your accounts.

Cards both credit and debit are heavily regulated, and consumers have many avenues to recover funds in
Case of hacking or fraud. Cards are nowhere close to the situation bitcoin is in

That is true, but my point was that MtGox failing had nothing directly to do with Bitcoin. It was awful and shows that we need more trusted players, but nothing specifically about the security of Bitcoins.

Edit:

Shit, my bank is kind enough to disable my card if I make out of character purchases, just in case. lol

That part always amazes me. Losing a card is like "oh no, I have to wait for my new one"

 

[pigeon]

MtGox wasn't a bank.

Sure. It was just an organization where people stored their bitcoins at a zero or near-zero return in exchange for convenience and safety. What distinction are you drawing, exactly?

My point is that, if it WERE a bank, the people who had money in it would be way better off today.

 

[CloudyTuba]

"the best part about bitcoins is that you get to watch libertarians slowly discover why financial regulations exist to begin with".

Sucks for the people who lost their money though.

Even though I think that the libertarian point of view has its merits in certain areas, I am loving this quote.

 

[Parallax Scroll]

oh no, my pretend money

 

[cdkee]

oh no, my pretend money

Say what you will, byt I've made around $300 messing around with inconsequential amounts of money. Not bad for pretend money.

 

[Beant]

I finally bought some btc today. Yeah I know the risks and all, and I was really pretty anti bitcoin for a while (maybe because I missed the boat). I figure now that I have some cash in it, it will either make me some money (yay) or flounder which is what i was selfishly rooting for initially. Sort of like betting against your favorite sports team. Even if they lose at least you get something.

 

[Damaniel]

Say what you will, byt I've made around $300 messing around with inconsequential amounts of money. Not bad for pretend money.

Well, I made money from Bitcoin as well (only about $2000, I sold them at $15 per), through Mt Gox of all places. Doesn't make Bitcoin any less 'pretend' from a viable currency standpoint.

I have no opposition to the general idea of a cryptocurrency. My problem (and the problem of the lot of other people) is that the 'features' that make Bitcoin desirable to libertarian types (anonymity and lack of central authority) are the same things that make it an inherently bad form of currency. People can't trust anyone involved with the system, because there's no safeguards or regulations to protect the money. If my bank goes insolvent, my money will be replaced. If Mt Gox goes insolvent, some libertarian tells me 'caveat emptor' and suggests another, equally shady looking exchange to move my transactions to. For a purely speculative play, that's fine, but I wouldn't want to be paid in such a currency, nor would most people. That doesn't even account for the extreme volatility - I don't want to use a currency that can shift 50% or more in value in a single day, both up and down. I can't plan or save for purchases in the future, since my $800 Bitcoins might be worth $100 next week (or maybe $1500, but who knows)? But in the end, currency requires stability and trust, and Bitcoin provides neither.

 

[MikeHattsu]

Still have 1 coin. I used my gambling money though. Would never invest life savings or anything like that.

 

[Ty4on]

Edit: ^^^^^That is like the golden rule with cryptocurrencies (at least Dogecoin) now. Only spend what you can afford to lose.

Sure. It was just an organization where people stored their bitcoins at a zero or near-zero return in exchange for convenience and safety. What distinction are you drawing, exactly?

My point is that, if it WERE a bank, the people who had money in it would be way better off today.

It was an exchange with no guarantee. I tried to read through their (cashed) ToS and it never mentioned anything other than transactions. MtGox was also known (sadly didn't get yelled loud enough) for huge issues with slow withdrawal. Googling MtGox and warning I get this thread from November. It was (sadly) the biggest exchange so a lot of people lost their money, but an exchange is never a safe place to store your money. There are online wallets that act like banks and should be secure. You also don't need one for Bitcoins as it would have been safer in a secured and externally backed private wallet.

 

[Chichikov]

Wat.
A successful speculator has to predict ahead of time what something will cost in the future. When they do business based on that prediction, they cause the prices to get there faster. When that future price reflects actual value (as opposed to being a random bubble thing), the speculator is speeding up the allocation of resources to productive uses and away from non-productive uses. They are adding liquidity to the market; when no one has an immediate concrete need for a good, a speculator may still want it. They are assuming risk; if the speculator predicts wrong, they're giving money to others. These are valuable contributions not unlike those of an investor.

What useful resource allocation is being achieved by buying bitcoins at $300 and selling them at $500?
And give me a break with the "getting to the right price" talk, bitcoin market cap is over 7 billion dollars, you think that reflect anything but a speculative bubble?
You think there's enough productive economic activity being done with bitcoins to justify that?

There are people who made millions of dollars speculating on bitcoin prices and they contributed nothing to society, they are the textbook definition of parasites, they're taking away wealth without generating any.
Sure, they assume risk and might lose money, but that's only because a better parasite got the best of them, it is still not a useful activity.

 

[Delusibeta]

so bitcoin prices are back to usual again. well..... the largest exchange disappearing seemed to do fuck all to the prices after all.

let's all admit that nobody knows where the fuck this will go.

Well, there's some people in this thread demonstrating why: there's a bunch of people who have managed to delude themselves that Bitcoin is The One True Currency, and no amount of price collapses, exchange shut-downs and other associated disasters will pursuade them otherwise.

 

[tokkun]

so bitcoin prices are back to usual again. well..... the largest exchange disappearing seemed to do fuck all to the prices after all.

let's all admit that nobody knows where the fuck this will go.

To say that the prices are back to the usual is untrue. It had been apparent that things were bad at Mt Gox for a few weeks now, so a lot of the drop in value had already been priced into the market. If you look at the last 30 days, bitcoin is still down 30%, despite this recent reecovery. That is a huge decline. Don't be fooled into thinking there was no effect just because the panic sell-off period has rebounded to "only" a 10% drop.

 

[Trouble]

Also, as pointed out if bitcoins are lost forever the value of the remaining bitcoins shoudl actually go up.

Of course all logic and sanity go out the window in such situations and during small time windows (stock/commodity markets often don't react sanely in the short run).

 

[Suikoguy]

Also, as pointed out if bitcoins are lost forever the value of the remaining bitcoins shoudl actually go up.

Of course all logic and sanity go out the window in such situations and during small time windows (stock/commodity markets often don't react sanely in the short run).

Nobody is arguing that the price won't go up as bitcoins are lost. What were are arguing is that makes the currency deflationary.

 

[IchigoSharingan]

econ gaf is most impressive gaf

 

[mashoutposse]

Bitcoin can enjoy a long run if some player jumps in with a product or service that makes BTC truly accessible to the masses. That will keep the flow of "losers" strong, which will keep the speculators speculating.

If not, no amount of wishing will keep BTC from crashing suddenly and spectacularly.

Bitcoin will then return to primarily being a "proxy" currency for anonymizing financial transactions. Its value and longevity will once again be governed by the popularity of the marketplaces where such a vehicle is best suited (Silk Road 3.0).

 

[criesofthepast]

Also, as pointed out if bitcoins are lost forever the value of the remaining bitcoins shoudl actually go up.

Of course all logic and sanity go out the window in such situations and during small time windows (stock/commodity markets often don't react sanely in the short run).

A new rumor is that the private keys to these 700,000+ coins have actually been lost and they weren't stolen. It would explain why in an interview on an IRC chat the CEO of MtGox mentioned that the coins are "technically not lost, at least not yet." And he's basically scrambling to find a way to access them again. If so then yes the value would go way up considering 6% of coins are now gone forever and no one has access to them.

Actually hoping that is the case here and they aren't in some hackers hands. What a huge fuckup regardless.

Edit: More info here from a guy who's leaking documents and info. Extremely interesting read. The CEO is the biggest fucking fraudster. Hope his ass lands in jail. This shit is like a soap opera.

http://two-bit-idiot.tumblr.com

 

[paile]

To say that the prices are back to the usual is untrue. It had been apparent that things were bad at Mt Gox for a few weeks now, so a lot of the drop in value had already been priced into the market. If you look at the last 30 days, bitcoin is still down 30%, despite this recent reecovery. That is a huge decline. Don't be fooled into thinking there was no effect just because the panic sell-off period has rebounded to "only" a 10% drop.

You know, I'm not meaning to single you out by any means but your post sums up the views of all the naysayers putting me and the concept of Bitcoin down in this thread. You're happy to post your opinions on how 'down' it has been in x timeframe yet seem to have little real idea what actually happens in a bubble.

If you look at the last 30 days...really?

Gee ok. By god you're RIGHT!!!

It's called being in a speculative bubble. Bitcoin was blown up to over $1000 in value in the last few months, driven out of pure speculation. To see the long term price trend for bitcoin, one needs to look back to October before the price blew up to such heights and since that time it follows the classic bubble pattern of price spike, pull back, recovery and return to mean.

Back in October Bitcoin was worth around $130. I fully and totally expect it to return to around $150-$200 within the next month or two. It will trend around that range for some time to come, before the next speculative bubble comes along to blow it up into the many thousands. Guess what, bitcoin can fall from its current $550 down to $200 and you can still make an absolute packet shorting it.

History is my evidence for this. Bitcoin is beset with numerous speculative bubbles each much bigger than the last but the long term, average trend for bitcoin is upwards. It has been upwards from day one when it was worth a fraction of a cent. I suspect this is true because of the fundamental characteristics of the currency as noted in this thread, i.e. it is deflationary. A decline in supply should precipitate an increase in price. This is pretty basic market dynamics.

There is a altcoin called 42coin. Have many of you have ever heard of this coin? Not many I bet. As the name implies only 42 of these will ever be mined. What is the price of one 42coin? What are they worth? $85,654 per coin.

Why so much? Because supply dictates price. It doesn't matter if they are 'worth' that, it doesn't matter if you can buy anything with them, that is what the market will pay for one. So that's what they cost to buy. Their value, for what it is worth, is that they can be traded into bitcoin. That gives them their worth.

And as with this coin, Bitcoin will only increase in price over time as its supply becomes increasingly limited (i.e. they become lost aka Gox, more people buy into the market, mining supply falls as difficulty rises etc) and as Bitcoin gains more and more popular awareness in mainstream culture (more means to buy bitcoin, more acceptable and use of bitcoin in the wider economy, more mainstream media attention about bitcoin etc).

 

[Slavik81]

Why so much? Because supply dictates price. It doesn't matter if they are 'worth' that, it doesn't matter if you can buy anything with them, that is what the market will pay for one. So that's what they cost. Their value, for what it is worth, is that they can be traded into bitcoin. That gives them their worth.

Supply AND demand dictate price. There are plenty of rare things on their Earth, but only a small subset of them are valuable.

Also, there are two sides to every trade. If [42Coins] only value is that they can be traded for Bitcoins, why is the party that already has Bitcoins giving his up to get an otherwise useless coin?

 

[East Lake]

You know, I'm not meaning to single you out by any means but your post sums up the views of all the naysayers putting me and the concept of Bitcoin down in this thread. You're happy to post your opinions on how 'down' it has been in x timeframe yet seem to have little real idea what actually happens in a bubble.

If you look at the last 30 days...really?

Gee ok. By god you're RIGHT!!!

It's called being in a speculative bubble. Bitcoin was blown up to over $1000 in value in the last few months, driven out of pure speculation. To see the long term price trend for bitcoin, one needs to look back to October before the price blew up to such heights and since that time it follows the classic bubble pattern of price spike, pull back, recovery and return to mean.

Back in October Bitcoin was worth around $130. I fully and totally expect it to return to around $150-$200 within the next month or two. It will trend around that range for some time to come, before the next speculative bubble comes along to blow it up into the many thousands. Guess what, bitcoin can fall from its current $550 down to $200 and you can still make an absolute packet shorting it.

History is my evidence for this. Bitcoin is beset with numerous speculative bubbles each much bigger than the last but the long term, average trend for bitcoin is upwards. It has been upwards from day one when it was worth a fraction of a cent. I suspect this is true because of the fundamental characteristics of the currency as noted in this thread, i.e. it is deflationary. A decline in supply should precipitate an increase in price. This is pretty basic market dynamics.

There is a altcoin called 42coin. Have many of you have ever heard of this coin? Not many I bet. As the name implies only 42 of these will ever be mined. What is the price of one 42coin? What are they worth? $85,654 per coin.

Why so much? Because supply dictates price. It doesn't matter if they are 'worth' that, it doesn't matter if you can buy anything with them, that is what the market will pay for one. So that's what they cost. Their value, for what it is worth, is that they can be traded into bitcoin. That gives them their worth.

And as with this coin, Bitcoin will only increase in price over time as its supply becomes increasingly limited (i.e. they become lost aka Gox, more people buy into the market, mining supply falls as difficulty rises etc) and as Bitcoin gains more and more popular awareness in mainstream culture (more means to buy bitcoin, more acceptable and use of bitcoin in the wider economy, more mainstream media attention about bitcoin etc).

paile you're doing in a rudimentary form what's called "technical analysis." Which is separate from judging if the thing invested in is actually worth something. It's like if I were to decide to invest in Tesla Motors I looked at mathematical trends of the stock price instead of the balance sheet or earnings. You're trying to capitalize on market psychology not actual value.

 

[paile]

Supply AND demand dictate price. There are plenty of rare things on their Earth, but only a small subset of them are valuable.

Also, there are two sides to every trade. If their only value is that they can be traded for Bitcoins, why is the party that already has Bitcoins giving his up to get an otherwise useless coin?

Speculative activity precedes real world activity. These same arguments were being made when Bitcoin hit $1, $10, $100 and $1000. Clearly it has value of sorts to people because clearly people would not be being into it otherwise.

So yes there is inherent value to bitcoin that does not exist with other currencies. Transactions can be completely anonymous. It can be sent anywhere in the world within a few hours. It is inherently deflationary as noted, as thus can act as a store of wealth.

It is the 'money of the internet' in many respects. After getting fiat into it I can then do all sorts of things with it; I can gamble it, I can trade it, I can buy goods and services from those who accept it. I can transact with bitcoin far more efficiently and quickly than I can with fiat.

There are a lot of intrinsic benefits to bitcoin. Claiming that it is purely an instrument of speculation and illegal activity is not true at all.