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(Reuters)   It takes two to make a market. Bank of America: Bitcoin market to top out at $1300. People's Bank of China: Challenge accepted   (reuters.com) divider line 26
    More: Interesting, People's Bank of China, Bank of America, digital currency, printing money, capital controls, central banks  
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1369 clicks; posted to Business » on 06 Dec 2013 at 11:06 AM (33 weeks ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



26 Comments   (+0 »)
   
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2013-12-06 10:00:10 AM
www.inc.com
 
2013-12-06 11:30:51 AM
Apparently Bitcoins are really useful to Chinese officials for moving their embezzled assets overseas.
 
2013-12-06 11:35:49 AM
Most of these Bitcoin articles smell awfully press-releasey to me.
 
2013-12-06 11:40:16 AM
Beenz
 
2013-12-06 11:46:00 AM
I can't believe these crazy libertarian WOW gold pieces are worth so much now.

Never bet against people's insanity or stupidity I suppose.
 
2013-12-06 11:46:32 AM
The common arguments in this "debate" are not mutually exclusive.  Encrypted, stateless currencies have potential.  Bitcoin is likely not worth $1000 a piece.
 
2013-12-06 12:07:36 PM
The only way I would buy bitcoins is if I had access to a time machine.
The bigger idiot theory of investing is way too risky for me.
 
2013-12-06 12:21:38 PM
Bitcoins will likely never become worthless, but once the speculators are done with them, they will drop fast. 

Then again, I said this back when they were $30, so what the fark do I know?
 
2013-12-06 01:09:36 PM

Rapmaster2000: Encrypted, stateless currencies have potential.  Bitcoin is likely not worth $1000 a piece.


Why not? If there were 1000x more Bitcoin in existence, would you have a problem with a Bitcoin being worth about a dollar?

I don't know what the actual value of one is going to end up being, but there's no reason to arbitrarily say it can't be worth $1000 simply because that's a large number.
 
2013-12-06 01:13:24 PM
Thank god these forums weren't around when the internet was being built. The applications that will be built on bitcoin can bring about a lot of positive change. But I guess y'all just wanna watch the world burn...
 
2013-12-06 01:22:07 PM

TheRealist: Thank god these forums weren't around when the internet was being built. The applications that will be built on bitcoin can bring about a lot of positive change. But I guess y'all just wanna watch the world burn...


Bitcoin has most of the same problems as precious metals: the value is based on scarcity, the supply is inflexible, they are prone to speculation, and as a result the price is highly volatile.  And despite what some Internet Libertarians choose to believe, economies based on the gold standard are not more stable or more prosperous than economies based on fiat currencies, so there's no reason to think that an economy based on Bitcoin would be any better.

Perhaps some sort of cryptocurrency will end up changing the world, but I don't think Bitcoin is going to be it.
 
2013-12-06 01:32:24 PM

anfrind: TheRealist: Thank god these forums weren't around when the internet was being built. The applications that will be built on bitcoin can bring about a lot of positive change. But I guess y'all just wanna watch the world burn...

Bitcoin has most of the same problems as precious metals: the value is based on scarcity, the supply is inflexible, they are prone to speculation, and as a result the price is highly volatile.  And despite what some Internet Libertarians choose to believe, economies based on the gold standard are not more stable or more prosperous than economies based on fiat currencies, so there's no reason to think that an economy based on Bitcoin would be any better.

Perhaps some sort of cryptocurrency will end up changing the world, but I don't think Bitcoin is going to be it.


I'll help you understand the flexibility.

0.01
0.000001
0.00000000000000000000000001
0.000000000000000000000000000000000000000000001

Can just keep adding 0's as needed.

There will always be fluctuation in price like with all currencies.  Stability will come in time as it's still new.
 
2013-12-06 01:49:05 PM
Sell Mortimer! Sell! where's Beeks?
 
2013-12-06 02:02:36 PM

divx88: anfrind: TheRealist: Thank god these forums weren't around when the internet was being built. The applications that will be built on bitcoin can bring about a lot of positive change. But I guess y'all just wanna watch the world burn...

Bitcoin has most of the same problems as precious metals: the value is based on scarcity, the supply is inflexible, they are prone to speculation, and as a result the price is highly volatile.  And despite what some Internet Libertarians choose to believe, economies based on the gold standard are not more stable or more prosperous than economies based on fiat currencies, so there's no reason to think that an economy based on Bitcoin would be any better.

Perhaps some sort of cryptocurrency will end up changing the world, but I don't think Bitcoin is going to be it.

I'll help you understand the flexibility.

0.01
0.000001
0.00000000000000000000000001
0.000000000000000000000000000000000000000000001

Can just keep adding 0's as needed.

There will always be fluctuation in price like with all currencies.  Stability will come in time as it's still new.


webnv.net

SUPPLY DOES NOT WORK THAT WAY!

If you just keep dividing Bitcoins into ever-smaller fractions, then you end up deflating the currency, which gives people a financial incentive to hoard them instead of spending them.  Again, the same problem as with the gold standard.
 
2013-12-06 02:05:02 PM

anfrind: TheRealist: Thank god these forums weren't around when the internet was being built. The applications that will be built on bitcoin can bring about a lot of positive change. But I guess y'all just wanna watch the world burn...

Bitcoin has most of the same problems as precious metals: the value is based on scarcity, the supply is inflexible, they are prone to speculation, and as a result the price is highly volatile.  And despite what some Internet Libertarians choose to believe, economies based on the gold standard are not more stable or more prosperous than economies based on fiat currencies, so there's no reason to think that an economy based on Bitcoin would be any better.

Perhaps some sort of cryptocurrency will end up changing the world, but I don't think Bitcoin is going to be it.


At least if you have a chunk of gold or platinum you can take it somewhere and liquidate it, no matter how much of it you have.

Is it even possible to liquidate BTC, especially in any significant volume? There's rather low daily and monthly transaction limits, and even if those aren't an issue, there's still a wait of a 3-4 weeks (being generous here) before you see any cash.
 
2013-12-06 02:23:01 PM
rustypouch:
At least if you have a chunk of gold or platinum you can take it somewhere and liquidate it, no matter how much of it you have.

Is it even possible to liquidate BTC, especially in any significant volume? There's rather low daily and monthly transaction limits, and even if those aren't an issue, there's still a wait of a 3-4 weeks (being generous here) before you see any cash.


Coinbase.com (based inside the USA) will let you sell 50 bitcoins per day and you will have money in your bank account in less than a week.
 
2013-12-06 02:37:29 PM
David Woo and other currency strategists at Bank of America issued a note to clients Thursday saying Bitcoin has "clear potential for growth."

And that's my indicator to stay as far away from bitcoins as possible.
 
2013-12-06 03:47:11 PM
But who is going to keep mining?

I looked today and if you could purchase on of the upcoming ASIC miners today it would be very much worth it but after about a year the 2 TH/s ASIC miner only earns a few dollars per difficultly level. The better ones have a four-five month lead time which nearly eliminates any chance of profit unless you assume massive inflation in the value of the Bitcoin ongoing.
 
2013-12-06 03:51:02 PM

rustypouch:
Is it even possible to liquidate BTC, especially in any significant volume? There's rather low daily and monthly transaction limits, and even if those aren't an issue, there's still a wait of a 3-4 weeks (being generous here) before you see any cash.


That's essentially the argument of the BofA analyst: They're liquid enough for small transactions (business-to-consumer), but because it takes a little less than an hour for transactions to make their way into the blockchain, its use as a currency is going to be limited to small-time business-to-consumer e-commerce, where things aren't time-critical. If I'm buying 1000 shares of XYZ, I want the trade filled at $50.05, not $50.06, and I want it filled in real time. If I'm buying a $5K flat-screen TV from some website, the website can afford to wait an hour for the transaction to be confirmed before they pack up the TV.

So if it takes 10% of e-commerce/money transfer (not time-critical; if the transaction doesn't go through, don't ship the goods) and acts like a commodity (because unlike a Greek savings account, it's hard/impossible to confiscate), the question is "how much B2C action is going on, and how much of that is likely to be captured by BTC?"

The analyst pokes at the velocity of money and guesstimates that households have about $10B in cash reserved for shopping, assigns a $1B value for that in BTC, and goes for $5B because the US is about 20% of the world. Similar logic values the money transfer business at $4.5B, and about another $5B in BTC expected to be hoarded like junk silver and gold bars. $15B maximum fair value for bitcoins divided by however many BTC are in circulation (presently 12M BTC) = about $1300. That's a pretty reasonable theoretical maximum for something so new.

The first 12M BTC are the easiest ones to mint, and it's going to be a very long time (decades) before the last 9M are minted to get the maximum supply of 21M BTC. It's probably going to be 3-4 years before we even get another 2-3M coins into the mix, it's going to take time for retailers to accept the coins, and there's always the risk that some or all of the projected valuation drivers for bitcoins fail to materialize.

Right now, it's too volatile to use in mainstream e-commerce (daily price swings are larger than retail profit margins), but that will likely change as the speculative fervor dies down. I'm not sure what happens after that -- it either fades into illiquidity/disuse as miners give up (and the blockchain gets too big for end users to deal with), or it gets mainstream traction, dips to the $500-800 range, and works its way towards $1000 in a few years.

No, I don't own any. Failing to pick up a few dozen back when GPU mining was still feasible was a life-altering fail on my part. A few hundred bucks' worth of wasted electricity, warming my house over a winter, done more as a lark than a serious attempt to make money, could have changed my life forever.
 
2013-12-06 04:57:48 PM

nocturnal001: I can't believe these crazy libertarian WOW gold pieces are worth so much now.

Never bet against people's insanity or stupidity I suppose.


Now you got me wondering -- what is the exchange rate for WoW gold to USD these days?
 
2013-12-06 06:48:50 PM
Done in one.
 
2013-12-06 07:46:42 PM
Not to be that guy, but does anyone have a decent primer on bit coin?
 
2013-12-06 08:28:47 PM

CodeMonkey4Life: The only way I would buy bitcoins is if I had access to a time machine.
The bigger idiot theory of investing is way too risky for me.


Yep. It's funny hearing people on reddit say "LOL, everyone not invested in bitcoin is so regretting it now!"

Not really. For one, the last time I thought it was at a bubble, I was right, and I had a good 6 months to get in at less than half its peak. No thanks.There's just no way to quantitatively value this thing. I'm not touching it. Way to risky.
 
2013-12-07 01:36:00 AM
I would still like to know if the Bitcoin price can be influenced by two guys selling the same one back to each other. How can the average price of an anonymous currency actually be tracked?
 
2013-12-07 02:26:32 AM

dangelder: I would still like to know if the Bitcoin price can be influenced by two guys selling the same one back to each other. How can the average price of an anonymous currency actually be tracked?


It's not anonymous. The published prices at the exchange are what people were willing to pay/accept from the exchanges. This is why you'll see slightly different prices between mtgox, bitstamp, btce, bitfinex, campbx, and so on. If it weren't for the time delay in confirming transactions, arbitrage between the two exchanges would make those prices identical, not merely "close to identical". If pricing were in real-time, anyone could write a 'bot that buys from the exchange that sells the cheapest bitcoins and immediately sells them to the exchange that offers the highest price for bitcoins. (I'm sure such bots exist. I'm confident that the aggregate action of all such bots helps improve liquidity and decrease pricing spreads between exchanges. I'm not convinced they're making money with an instrument that moves 1-2% per day, and in an environment in which it can take an hour or two to round-trip a trade. Arbitrage is funny like that.)
 
2013-12-07 07:20:21 AM
I bought some bitcoins a month back with intent of using them on the new Silk Road. By the time they actually hit my account (three week delay for first-time buyers) I had almost doubled what I put in.  Since then I've been speculating on it and even with the recent drop, I've made money. Granted, I've only made about $40 given the tiny amounts I've been throwing around, but results is results. Makes me wish I had more money to toss around on something like this.
 
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