This page has been archived and commenting is disabled.
Bitcoin Rises Over $500
One day before the Senate's digital currency hearing titled "Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies", Bitcoin is largely oblivious to any potential regulatory threats, either at the legislative or the city level, where as reported previously the New York superintendent is in a rush to enforce BitLicenses on businesses that accept BitCoin, and moments ago crossed $500 for the first time ever. Instead, it appears that as we also reported previously, the Chinese Bitcoin craze has reached the parabolic threshold, going so far as making Bitcoin an acceptable payment for real estate, which means that while for the time being Bitcoin becomes the alternative inflation protection medium for hundreds of millions of Chinese, all bets on how high it can get are off.
Intraday chart:
1 Year Chart:
1 Year log chart:
Curious where the demand is coming from? A week ago we showed a handy utility, FiatLeak, which shows where the BitCoin transactions are taking place:
Finally, for those curious what a "fair value" on Bitcoin may be, here is what we presented a week ago, courtesy of Global Macro Investor's Raoul Pal:
So yes: Bitcoin is volatile. Very. That much is clear. But what is not so clear, and perhaps a key reason for this volatility, is just what the fundamental, or intrinsic value of BitCoins is when one strips away the pure euphoric momentum to the upside or downside.
To answer that question, we go to Raoul Pal, head of the Global Macro Investor, and his November 1st recommendation to "Buy Bitcoins"(when BTC was $210 so nearly a 100% return in 1 week) which among other things attempts to "value BTC using a macro framework" or, in other words, the first supply-demand driven fair value assessment of BTC.
His take, and price target, in a nutshell:
A fudge, but not a stupid one
Let’s use a broad guesstimate. One Bitcoin should theoretically be worth 700 ounces of gold or pretty close to $1,000,000, if we adjust existing supply of both to equal eachother.
One BTC is currently worth 0.14 ounces of gold.
That gives BTC an upside of 5000 times to equal the current price of gold, supply adjusted. Clearly, I and everyone else believes that Gold may well be much higher than here in the next 5 to 10 years, thus versus the US Dollar the upside for BTC could be multiples of that.
Now, before you shake your head, simply go back to the chart of Gold versus the US Dollar and just recognise that it has risen 8750% since the 1920s. And just remember that Microsoft rose 61,000% from its IPO to it’s peak.
Considering what we know about the world, I personally believe that Bitcoin may well explode in value as more and more people begin to use it.
If you stuck $5,000 into Bitcoins and each Bitcoin did go up to a gold equivalent of let’s say, only 100 ounces of gold (not the potential fair value of 700), then at current prices your Bitcoin stash would be worth $3.3m.
Now that’s what I call a tail-risk option. It’s either worth zero or it’s worth a truly outstanding amount of money.
I bet you never thought you’d see this in a macro publication. But I’m serious. This just might work.
Read on in the attached pdf below (link)
»
- 43013 reads
- Printer-friendly version
- Send to friend
- advertisements -
Money does not have value, money in any form does not have value be it gold/bitcoins/fiat. Money only has value when MAN gives it value by accepting it as a mode of exchange. You can't do nothing with money if no one accepts money.
Money and value is based on the human psyche. Labor, work, your very existence, everything in life does not have value or meaning. It's the human psyche that creates these non-existent notions of value.
That being said.
Do I like Bitcoins? As a speculative tool, yes.
Do I like Gold/Silver? Yes. At least I can turn those commodities into goods even if not accepted as payment to get whatever it is that is accepted as payment.
*
Stating truisms as if they were some kind of deep philosophy is going to fool the tools, nobody else.
Only human beings value things, because value is a human concept. Money has value, you could of course exterminate all the human beings, then money would no longer have any value.
BTC is advancing in price because it is finding new markets, new customers and the supply is not increasing. Holding an asset that is appreciating in value could be called specualtion, but holding money that is a store of value is more commonly called savings - something the western world seems to have completely forgotten about.
" Only human beings value things, because value is a human concept. "
I'm not so sure about that. But again, there is probably a question of definition about "value" .
Frankly if I could send a message back in time to my younger self at the start of the year, it would have been ,'sell all precious metal, but bitcoin. Sell BTC at $190 at btc and buy silver again.'
"BitCoin - backed by? Well, nothing! Physical gold is GOLD! Freely accepted as payment anywhere"
Show me you paying for a tankful of gas in gold on YouTube. I triple-dog dare you. I'll show you a purchase on YouTube made from a gift card at a gas station paid for with Bitcoin.
Your move.
At least tulips are pleasant to the eye.
Bitcoins don't grow in the ground. They also can't be counterfeited or be debased with tungsten.
no... they just came into existence because some math wizard put up a tool on the internet for free.
That guy will return. Or anybody with the proper key.
And nobody will know who he is when all the money is gone.
The early adopters are the smart guys. all the rest are gamblers who turn into sad parrots who convince each other that the bitcoin cooky will turn into a million bitcoin cookies.
my god...
so most people spend like 500 bucks on bitcoins...
and they think... that in a few years somebody is willing to give them a million for it?!
HAHAHAHAHA
I'm sorry but bitcoin is the pets.com of investments of 2013 :)
To the moon alice!! WE ALL GONA BE RICH!!!
HAHAHAHAHAHAHA
JUst don't waste more than 500 bucks into it. you'll feel such a fool if you do.
I thought my siler, I bought in 2010-2011 would be worth hundreds of thousands by now. Not happended. Karma man.
> so most people spend like 500 bucks on bitcoins...
You could have bought them at ~$20 when yours truly and others were suggesting it on this very board not too long ago. I recall the same voices screaming, "you have to be an idiot to spend $20 on these beanie bux." In two years, there'll be someone much like yourself telling people they're idiots for spending $3k on a bitcoin.
Know how I got rich in the past ten years? I listen to what the arrogant and the ignorant make fun of and what they take seriously and I do the opposite.
Why not just mine them. Tonne of cheap options.
http://www.amazon.com/ASICMiner-Block-Erupter-USB-Sapphire/dp/B00CUJT7TO
32 bucks...2.5w...base cost of electricity at .15 running at 330MH/s
Then you pool that USB with a bunch of other people and you run a BtC jackpot pool. Your computer is on, make it do some work for you. Those key's btw are slow as shit btw. New stuff coming out everyday with the new RasberryPi platform. Faster...and faster...and faster.
Early adoption isn't just necessary to make money, it's also to stay relevant.
I'll use a government agency for my example. One of my past clients has 12000 workstations. With the same numbers provided above over a payoff period of 12 months the capital investment of 400k returns 3.5 BTC per day with a collective pool tally (all the workstations chugging along with a usb device in them) of 3960000 MH/s.
After the 365 days the department is ahead...around 30k with a profit decline projection/amortization on the equipment of 0.61. The next year, if basing the price action of BtC on nearly 500 today. If it goes to a million, hey...guess who wins?
This is all from crap you can buy off a shelf right now. Cheap to implement (slide in a usb port and put it in the pool). Easy to replace (Take out usb key and recycle). Now multiply that by billions of workstations all chugging along creating the currency for a department, company or nation or a community organization.
Debt vanishes pretty quickly once it's transferred into the BtC sphere, it's priced to pay back expectations. Which right now is zero plus interest. This is how you solve an unsolvable math problem, you change the transaction medium to one that allows sliding up and down. No negatives, just fractions on fractions.
Can't be counterfeited or debased? LOL. Dream on.
https://www.casascius.com/TandC.aspx
You know how those aren't BtC's? They are missing an address on each of them. Those are a SCAM...would you think any more of them if the makers said they were worth a dollar?
You know how you combat that? You provide information on standards...just like all banks do. The way I get paid in BtC is my cell phone and swipe. Just like an interact card. Faster than a grocery store check out. Swipe, done. P2P. Just like cash.
whoa whoa there mr. green rasta-didas dude. i know you've had to put up with a lot of ignorance here, but-you wanna splain to me why a causascius coin (or any of the other paper btc cheques) are necissarily a SCAM? yes. they could be. but don't have to be. i'll accept an answer from anyone inowledgable and pro bitcoin. i just think in your defensiveness of bitcoin , trying to be a digital purist ,and bit of a know it all -you over-spoke.
my reason for wanting an answer- i believe i have a pretty good non-cryptographer/non computer dude overview and decided a year ago to get in, but for reasons of my own have not wanted to open a wallet and do the basic grunt work. i'll get around to it eventually with some of my 100 satoshi's notes, but for now- i want bitcoin and i don't want 'em anywhere near a computer. got a better way to do that?
Pencil and a piece of paper. you write the coin 'name' on the bit of paper. Done. Paper in your wallet. The physical coins are just amusment park tokens.
Unless they have the crypto serial on them...For an everyday guy like yourself. Got a phone?
https://play.google.com/store/apps/details?id=de.schildbach.wallet&hl=en
Swipe and go. Just like CC/Debit, same physical rules apply. You can link the wallet to your main account. Or just have a couple of coins in it. Just like a bank account. If you are feeling really paranoid. Copy your wallet to a thumb drive, or again, write it on a bit of paper and put it in a safety deposit box.
It's money and follows all the same rule. Tommorrow I'll have a step by step to get anyone to make a wallet and start making their first bitcoin on Win7/Apple/iPhone/Linux/Android.
Take your pick. Open source projects are usually unilateral across platforms if people like them. So don't buy it like a beanie baby, it's still money and a migration of money. It takes a while to make the wallet. And then it's hurry up and wait situation, but it will make you a bitcoin. Might be fast, but it's the same process if you want to invest more than a couple of nights fooling around with it.
yeah well. my "amusment park tokens" have numismatic value, so fuck off. i'm happy yer all digigi ...
but when trying to help the masses understand their options, screaming SCAM! doesn't help anyone.
Anyone can print a physical bitcoin, assuming you have the digital bitcoin to start with.
To answer your question, no, bitcoins can't be counterfeited or debased.
but now i'm feelin' all iggnant again. externalized check or coin ... the digi-btc behind it is still in possesion of the issuer and not the buyer? i'll still have to go somewhere outside of zh for answers (and shit....i can't even keep this friggin' computer on long enough to post a note- what the fuck would i want with my money in it) doesn't mean i don't want some btc...
Tulips are not durable, divisible, portable or scarce.
they are porable and there do still exist tulips that sell for over 100.000€
evidently dates are. good sound islamic money for a thousand years.
The first nation to adopt BitCoin will be the world super power. The parasitic nature of banking the way it has been done since inception has brought each successive empire to an end. BitCoin has the potential to end the tyranny of Western Central Banks and I think the Chinese recognize it.
So what Western Central Banks will do is attempt to crash BitCoin, through legislation, and then buy it up as fast as they can. But that will only put them and the nations they have conquered at a greater disadvantage.
Really, so if Belgium adopts BitCoin then pax-Belgae, Belgium rules the waves? Bitcoin is a joke, it's a prank played by someone to see how fucking stupid people can really be. It's the tulip mania of the digital age. "Hey, I want you to exchange the money you got from your labor for this digital password. But, it's really rare and going to be worth 700 ounces of gold. Trust me, it's a great buy at $500 per password".
Exactly. This supports the conspiracy theory that Satoshi Nakamoto is the CIA. The same CIA that is well aware of the coming end of the US dollar hedgemony.
Hey, I'm too chicken to jump on it, but congrats to the bitcoiners who are doing well. The enemy of my enemy is my friend. I hope you folks do well.
You could buy 10 bucks worth. 10 x 2000 = 20000 so it has the potential to turn into 20 grand over the next 5 years.
But for larger amounts I'd wait because judging by past decisions of the war criminal regime of central bankers they will have their political mercenaries attempt to fuck it up and continue to unfold their plan of destroying the United States of America to merge it with Mexico and Canada.
Read what you just wrote. The "buy bitcoin" crowd is basically selling it as the latest "money for nothing" scheme, which by definition is a greater fool play because bitcoin is just a figment of someone's digital imagination rather than a representation of real, tangible wealth.
Chain letter.
Define "do well"... If Bitcoin continues to be plagued by large fluctuations in value I think it hurts the platform. Also the Bitcoin haters miss the point, it's not so much a "currency" as we think of one today, but a medium of exchange that could move a lot of trade to a barter system that excludes the IRS. And while it is not tangible like gold, there is a finite amount of Bitcoins, and that makes them more solid than our dollars in many ways. And for every concern about Bitcoin being at the mercy of a decentralized internet, well your paper dollars are a solid hack job (perhaps government sponsored) away from disappearing at any time. UUnsecured creditor indeed...
" a medium of exchange that could move a lot of trade "
Yes, and in order to handle that load the market cap of Bitcoin needs to increase incredibly, reflected in the price per BTC.
"Horseless carriages are bunk. They'll never catch on."
-Buggy whip makers and their investors, late 19th century
Chinese prefer coins instead the worthless paper dollar!
Watch out dollar there's a new kid in town!
This is more important than most people think. There is a lot of USD sloshing around in China as well, and bitcoin is an easy way for smaller players to offload some of that.
This article is a ludicrous extrapolation of a false premise - that bitcoin will be as widely accepted as and be seen as having equivalent value to gold. Let's see, gold has a 5000 year history as a store of value. Bitcoin is more fiat than fiat currency, because at least with fiat currency there's a piece of paper you can hold. Bitcoin is tulip mania without the tulips.
$1mil per bitcoin? Anyone who trades $1mil for a bitcoin will be the butt of jokes for the next hundred years. They will probably make up a world after you like "ponzi".
"because at least with fiat currency there's a piece of paper you can hold."
Paper wallet.
bitcoin is not a fiat currency. It is backed by math. I'm not sure if I believe in god but I know 1+1=2 - math is the only thing that is real and that is what backs bitcoin.
Until another cryptocurrency comes along, and then another, and then another..... while bitcoin itself is mathematically limited in supply, the supply of possible cryptocurrencies is boundless.
Well this is the whole point. It is called the free market providing for us the best product at the lowest cost. If you are in opposition to this then you might as well just go get a job at the Federal Reserve.
Yes it is a free market but having a boundless supply of cryptocurrencies defeats the purpose of the limited supply in any one since, in aggregate, they are limitless in supply. I don't think many holders of BTC have fully thought this through.
I own BTC and I have thought it through. Do you remember how many electronics companies there were a few decades ago when the portable electronis boom began? More than you can count. How many are there now? Maybe a handful at best. The companies that supplied inferior products went out of business. Yes, there were losers. Welcome to free market economics. Yes, there were winners as well, everyone who uses electronic gadgets. We all benefit because that industry was allowed to have intense competition. This competition resulted in superior produces at a lower cost. Crypto-currencies are not going away. They are here for good. If you are afriad of the disruption to the status quo they may cause and advocate using laws or government force to stop crypto-currencies, then you might as well go work at the Fed, because it is the same thing.
when i think "fiat" i tend to think less about it's not being backed by anything and more about- "by decree", 'forced', etc. seems to me people are choosing bitcoin freely. oh ye of little faith.
Fiat currency is backed by the assets in the banks balance sheets. Which are mostly worthless but not entirely.
They include some gold (not much, but still more than nothing).
They include mortgages, which give value to USDs because they slave someone into bidding for USDs.
I laughed out loud.
Intrinsic value of Bitcoin comes from
1) It's utility as a medium of exchange which is second to none in speed cost and efficiency
2) the difficulty in creating bitcoin through mining , you can't just add numbers onto the liability side if a balance sheet (see fiat money)
3) the network backing the currency is the most powerful in the world
4) The perception of value of the people buying it and the ability to reduce transaction and remittance costs to next to zero
5) hedge against inflation , stupid politicians and corrupt bankers
Do you realize that all your arguments also apply to litecoin?
Call me skeptical but I don't believe Bitcoin has intrinsic value.
I tried to find fault with Bitcoin's rational and I couldn't find any, especially, as compared to the legit backless fiat issued by central banks. I will leave the gold comparison alone, other than to say, all money's value is derived from the emotional attachment the person/society attaches to it, and not inherently "real" by nature.
Those are the Bitcoin hawker talking points.
Bitcoin is easy to transport, but just as easy to lose. If a static shock zaps your thumb drive and you don't have a backup, there goes your Bitcoin. It is essentially the same as losing your wallet with a wad of cash. The speed issue doesn't really apply. I can wire transfer money almost anywhere in the world instantly. I also don't have to worry about using an online exchange that may not be safe. Bitcoin's security has been heavily exaggerated. Millions of dollars in Bitcoin have been stolen over the past few weeks. Many people are buying Bitcoin without downloading the block chain, rendering the Bitcoin worthless.
Mining Bitcoin is not difficult. It may be time consuming, but it is not difficult. Computers do the work and there is no exploration or refining costs like gold. Bitcoin miners cost a few hundred dollars to manufacture and are sold for thousands. When Bitcoin traded at $50 you could buy a RISC miner for $499. When Bitcoin went to $200 the same exact machine was being sold for $2500. Did the cost to manufacture them instantly increase? Certainly seems like the guy selling a pick axe he bought for $2 to a desperate prospector for $1000.
The Bitcoin network is not the most powerful in the world. It is a decentralized network and is not backing the currency. Bitcoin essentially works like Folding at Home or distributed network rendering. Claims of the network's power come from the petahash thrown at mining. The hash rate isn't really applicable to anything outside Bitcoin. The dedicated miners are worthless for just about anything else. If a portion of the Bitcoin network is lost, the rest of the block chain cuts it out. You can make the largest most powerful claim about any P2P system. Active torrents consume as much bandwidth as the Bitcoin network. How much computing power is thrown at Facebook status updates on a given day?
With the price fluctuations of Bitcoin, it is worthless to use as a medium of exchange for commerce. Business requires a stable medium of exchange. Daily fluctuations of 10-20% make it impossible to price goods in Bitcoin.
All Bitcoin has is the perception of value. I'd argue the only thing driving the value of Bitcoin is the perception that the value will continue to go up. Remember the idea that homes would double in value every five years?
Bitcoin may have been created out of good intentions, or sinister ones. We don't know because we don't know who really created it. Some gut named Satoshi? Is anyone sure about that?
"With the price fluctuations of Bitcoin, it is worthless to use as a medium of exchange for commerce. Business requires a stable medium of exchange. Daily fluctuations of 10-20% make it impossible to price goods in Bitcoin."
This is a common complaint about Bitcoin, but doesn't Bitpay the payment processing company solve this issue by allowing a merchant to accept Bitcoin and immediately crediting their bank account with their chosen currency. The merchant doesn't need to worry about Bitcoin price volatility at all.
adr: I had a good chat with Seek a few days ago and asked him to help me understand BTC as it pertains to my personal situation. Long story short, he said it probably isn't for me since I don't buy things on the net and I don't care to use it as a speculation tool, which is what I perceive it to be at that this time (that is not Seek's opinion).
As I mentioned to Seek, I believe what LawsofPhysics has been saying in many posts... "Markets will become local"... and I never realized that I had always been shopping "local" for many years anyway. Whether it's silver maples or food, I have it right here.
There is one exception. I am a frequent buyer of WB7's art which requires international transactions. That's a small issue which I never would have considered if not for reading ZH over 3 years ago (member for 2 years). I consider WB7's art an investment that I look at and enjoy every day, especially after he shredded the #AskJPM twitter forum.
WB7coin, BitcheZ!
I must have missed the Senate committee meetings when PCLN went over 1000, GLD and SLV got smashed down by selling billions of $ of paper pms..
The bankers should have let gold fix their currency problems by rising to the correct price to back their paper. They are getting flanked and may have lost control. If they don't throw a lifeline to harness themselves back to gold, their fiat paper is going to go into the toilet. And the world learns once again why money needs to have value. It is not very hard to compete with nothing. And it is very easy for pure free market nothing to compete with government controlled ponzi nothing.
Thanks, Quin-----
You are on the mark---if it is a joke, it is a joke that debases fiat currencies even more
and allows us to see with clarity the true nature of uncontrolled fiat farming
I am curious about how this turns out--
people or politicians????
Bitcoin has entered the true mania phase. However the volume is still extremely low.
If you had 100 Bitcoin, what is there to stop you from entering a bid to buy one coin for $1000 drastically increasing Bitcoin's value in the the volume environment? Sure you just paid $1000 for one Bitcoin, but you then doubled the value of the 100 you hold. It sure seems like the holders of Bitcoin are bidding the price up themselves. Kind of like a CEO using his company's money to buy back and bid up the stock so he can sell more of his personal stash at a higher price.
The Fiatleak site shows a two part market. Some Americans and some Chinese. Kind of odd how the rest of the world is sitting this one out.
Where are all the Bitcoin defenders? Or are they starting to see the insanity in the price moves. All pyramid schemes blow up eventually.
It is the only market not controlled by leveraged derivatives left. It makes it more appealing. But yeah. It is entering a mania, unless the it is really saying the death of government fiat currency is at hand. In which case, you will do just as well holding almost anything physical.
"unless the it is really saying the death of government fiat currency is at hand."
Uh, BTC nominal market capitalization is $5.7b. USA prints that before breakfast each day and every day. Someday, perhaps..
I would argue it's a telling point that most of the bitcoin trades are being done by Americans and Chinese - two cultures that are the most susceptible to chasing money-for-nothing schemes.
> If you had 100 Bitcoin, what is there to stop you from entering a bid to buy one coin for $1000 drastically increasing Bitcoin's value in the the volume environment? Sure you just paid $1000 for one Bitcoin, but you then doubled the value of the 100 you hold.
It doesn't work like that and you probably know it...
You can enter a bid to buy for whatever but it'll be filled by the lowest priced ask available.
Even if you asked what if someone wanted to buy 1000 Bitcoins for $1K/per, it wouldn't move the price more than $50 or so at this time.
But yeah the fucking thing is going wild.
It seems DIY speculators have learned their lesson in paper silver and gold and took their money to Bitcoin exchanges!
I know just bidding $1000 for one wouldn't cause the price to move that fast. Just trying to make the point that it seems like people who hold large stashes of Bitcoin could be manipulating the market higher. It is in the best interest of someone holding Bitcoin to increase its value. What makes it easy to manipulate the price is the ability to divide Bitcoins almost infinitely.
Instead of bidding up a single Bitcoin. Bidding up 1/10th or 1/100th of a Bitcoin a few cents would have major impacts on the price of a whole unit. Much of what is going on in China is people buying 1/4 or less of a Bitcoin. One person paying $50 and then the next paying $51 increases a total Bitcoin $4.
I also haven't heard anything about solving the blockchain size problem. Has that been fixed?
Most of the exchanges present the depth of market on both sides, that is the amount for sale and the amount being bought. If some rogue puts a few on the market at a bad price it becomes obvious that a mistake/manipulation has been made when the corresponding depth is not there.
Turnover in XBT was $1B per day this week. That's 20-25% of total market. That's not a thinly traded market at all. So no, one guy can't just bid it up.
China just surpassed Germany, so it's not a two part market. It's a global market with the US dominant.
This shows bitcoin activity: http://bitcoinwatch.com/ you can see more than 1M bitcoins sent past 24 hours (it's the weekend, so it's only $0.5B per day.)
More stat links: http://blockchain.info/stats
And this impressive chart on market volume: http://blockchain.info/charts/estimated-transaction-volume-usd?daysAvera...
OT
Why is USdebtclock spinning crazy today?
36 billion an hour seems a little much.
http://www.youtube.com/watch?v=9u_poGz0tNc
Lots of places now accept BTC
https://www.spendbitcoins.com/places/
https://en.bitcoin.it/wiki/Trade
BTC - Buy the Collapse
Stack On
My advice, when the water gets all the way up to the deck, just follow the rats ;-)
Canary in the coalmine for the US dollar.
The US federal reserve printing into a collasping dollar will be a sight to see.
I don't really like charts that trend vertically like that.
Are there ANY examples of that being a good thing?
Also as BTC is divided out to more and more decimal places and as the number of transactions grow how is the computational power going to keep up?
Is it possible that all BTC transactions could all end up on only a handful of powerful servers?
Controlled by entities with sufficiently large financial resources?
Just a little Monday morning paranoia to share with you all.
I would be more than happy to be proven wrong here.
I like charts that trend vertical like this when I got into the market during the horizontal part.
The gold 20-year chart has a nice upswing on the right side too, and that's made me just as happy as bitcoin has.
As a speculative investment BTC is going just fine thanks.
But what are your thoughts on my question regarding the concentration of BTC within fewer and fewer miners/ servers as BTC is used by more and more people.?
It would seem that somehow to maintain BTC over the long run, as the mining runs dry some serious resources will have to be provided each year( by whom ) to keep the accounting up to date worldwide. As the system becomes more resource hungry and thus concentrated at the accounting end, and ever more diffuse and complex at the transacting end. It would seem to me that it's vulnerability to failure would increase.
Do you agree this is a logical outcome or am I missing something?
I think you're missing transaction fees. Miners collect them in addition to mining rewards; the expectation is as mining returns drop that transaction fees become a larger source of income for miners. As bitcoin volume grows (ie larger economy) the small fees per transaction add up to a meaningful incentive for miners, who continue to be barely profitable.
A couple important distinctions -- there's no bitcoin server, as it's a peer to peer network, so any full peer will be maintaining a copy of the blockchain (e.g. the ledger for all bitcoin.) Disk space is super cheap relative to blockchain size, and having a copy on hand speeds transactions, so even in the long run anyone with an appreciable connection to bitcoin will likely support the peer network (e.g. a store with a single PC and POS, bitcoin POS service providers, etc.)
I do think it's natural that a few larger operations would emerge -- for point of sale applications you could easily see someone like VISA maintaining some peer infrastructure, and intercepting small sales for the transaction fees and consolidating them before registering them on the blockchain -- and that's to be expected and not a particular threat to bitcoin per se. If somehow all transactions were legally mandated (and somehow enforced) to take place through a single entity, then of course it'd be a threat, but it also wouldn't be bitcoin anymore.
To answer your question:
Bitcoin Open to Takeover, Researchers Discover With New Algorithm
http://www.sciencedaily.com/releases/2013/11/131104112234.htm
Then there's the big problem of a secret backdoor in NSA created SHA-256. The NSA doesn't release anything into the wild without a backdoor. BTC blinded claim it's double hashed-protected from the NSA like the NSA wouldn't think of that.
NSA was caught before thanks to Edward Snowden's revelations of an NSA backdoor in the Dual_EC_DRBG algorithm, a cryptographic random number generator
http://www.infowars.com/nsa-snooping-takes-down-u-s-computer-networking-...
Interesting comment on wiki about SHA-256:
This only fuels my suspicion - picking constants that are deliberately non-random numbers with interesting potential mathematical properties?
http://en.wikipedia.org/wiki/Talk:SHA-2#Secret_backdoor
Bitcoin developer Gregory Maxwell: “Problems with SHA-256 would be potentially more problematic as we cannot replace it in a backwards compatible way.”
http://motherboard.vice.com/blog/what-do-the-latest-nsa-leaks-mean-for-b...
http://www.zerohedge.com/news/2013-10-28/obama-asks-if-he-should-be-worr...
BTC could be the globalist-planned one-world currency or a lead in to it. which in either case will be psyoped to send it very high, but not sure what will happen in the immediate aftermath of Senate hearings.
I have a dream, that the bitcoins the US Government recently confiscated might soon increase by a factor great enough to pay off the debt......
Yes, that is how close to the ridiculous this is getting.
The amount of crypto currency is unlimited. Because every nation, every state, every town could roll its own crypto currency units.
Still I wish I had purchased BitCoin at $30 when it first started, I remember I started mining it in the background on my PC without success.
I might grab 2-3 just in case it does go to a million (in real inflation adjusted dollars) just be cautious folks it could just as easily dump.
The key competitors, including Litecoin are not doing as well. It may be like Highlander, There can be only one!
Put your coin in cold storage and forget about it for a couple of years.
Reminds me of picture..Would you have invested?
http://www.snopes.com/photos/people/microsoft.asp
People are soooo conditioned to see the purchasing power of their money decreasing all the time, that when they see one that holds its value, they think it's "going up."
this is best comment about BTC I have seen .
Any alternative money for me needs to be insurance against colapse. Why do I want a volitatile store of wealth that depends on technology, electricity and politics? I already have a shaky financial system to deal with.
I'm more worried about the online Bitcoin exchanges stealing millions of dollars worth of Bitcoin from people.
I know how to keep my computer safe using torrents and blocking router ports. My dad sure as hell doesn't. He's nuked four computers over that past few years looking at pictures of cars on bad sites. My wife killed our house computer downloading a sermon from a church website because it was infected with a worm.
You think the average person can handle a crypto current and a Bitcoin wallet? Not only that but also keep it safe?
For widespread adoption there will have to be a centralized regulated exchange for Bitcoin. People will not accept it otherwise. People trust banks because there is some level of protection from fraud. There is not protection with Bitcoin. If you believe you are transferring $5000 for 10 Bitcoin and the exchange isn't legit, you just lost your $5000 with no recourse.
And when "those" people lose their bitcoins they are lost forever.
This is a very valid concern, especially right now as there are a number of smaller exchanges with bad security and the presence of scammers posing as exchanges.
It's likely as the adoption expands you'll have entities with sane IT policies get involved, and that those exchanges get brand recognition for being reliable and safe. The situation isn't much different than pre-FDIC banking when the US was still on the gold standard, e.g. when banks got robbed, it was actual people's accounts getting drained. This resulted in banks investing in security.
The well run exchanges use cold wallets to protect themselves and their users. In the long term I think we'll see some intelligence about handling bitcoin emerge, e.g. you don't keep more than 1 bitcoin in a cell phone wallet and if you have more, keeping them in cold storage or with some established, proven service. We're still very early on in the development of infrastructure here, which is why bitcoin is so risky.
@seek or mr.greenrasta-didas dude- it a page back now (about page 6) but what of storing bitcoins off grid? casacious or paper cheques... thoughts or comments please.
It's a very good idea. I can't emphasize how much of a good idea it is to keep any substantial quantity of bitcoins in an offline cold wallet, preferably paper with a passphrase. Here's some background: https://en.bitcoin.it/wiki/Paper_wallet
There are a number of tutorials online about how to do so. I will just emphasize a few key points:
1 - Offline wallets are a good thing. 2 - create them offline, ideally if you can disconnect any network cables and use a USB keychain drive operating system install. 3 - use a passphrase 4 - back it up and make copies and never put the private key into a computer until you're ready to spend.
Following these steps virtually guarantees your bitcoin's security.
thanks seek. not divuldging yet how ... but my bitcoins are going for 1500$ now. numismatic bitcoin. .someone who's opinion i was listening to skeered me, but he overshot his level of competancy .
So physical bitcoins, I presume, like Casascius. IMO those are more of a novelty than anything else, and seem to exist mostly to get people claiming there's nothing physical about bitcoins to shut up, or people that are into art. I never really "got" them from an investment/currency perspective, considering a paper wallet with an opaque covering fulfills the same function. It's still got bitcoin behind it, but carries a heck of a premium!
People put trillions into retirement plans and have lost it all.
Your point is everyone needs to stop being lazy and research. Ask questions. A sales person doesn't do much business if they are selling crap and want to stay in business for a long time. So flim flam business practices are the same as always. Nice thing is the more people adopt, the more eyes, the more eyes. The harder it is to put one under your nose.
There is a limit on how to troll someone when online that falls flat on it's ass when truth is presented.
Example I had a business partner years ago, his brother, him and myself would go for a tear on Friday nights. 'MK' would get six pints of courage in him and then tell the most outrageous bullshit to a table of girls. One time he decided that he would be a Couch insurance salesman, he and his brother had cards made up and everything.
So he's eyeballing the place, table of girls. He tells his brother and me to follow the lead. The usual introductions are made, the girls bite the line. He goes off on a sales pitch he invented in a cab over to the place.
The patter was "People need insurance for their couches because they don't put plastic on them anymore". Then he and his brother continued to explain how wealthy they are from couch insurance.
By the next morning everyone got sober, literally in the middle of the breakfast place we all headed to after a good night one of the girls starts going loonie on him. "There's no such fuckin thing as couch insurance!" and they were dating for three months or so.
At least it turned out better than when the story was we were all Mango farmers on a research stint...whatever the story 'M' made up typically made all men in the group well hung millionaires with ridiculous career handles.
Needless to say, check what's being offered or you are in for a surprise. Like everything else in life.
Martin Blank "sold" couch insurance, worked of for him.
@adr, yes, operating as your own bank comes with a good deal of responsibility. Ease-of-use and security can increase in the future. We are currently in the early adopter phase and those who participate will realize larger results from taking risks and practicing proper security.
Wow, the BTC masturbators are rampant here today, one big circle jerk lol.
"it's real monee!" "can't be hacked!" "I won't lose my passwords or wallet!"
It is still digital, right?
Yep, still digital, just like the majority of fiat and like 100% (unfortunately) of the paper gold market.
Own stocks? Bonds? Bank account? Guess what, they're digital too.
The difference with other forms of digital representation of wealth is that there is a record of it somewhere else. Same with stock certificates. The record of my digital fiat is stored multiple places with redundancies if one fails. I also save a copy of my statement monthly and print a copy of my balance every few days. If there were an event wiping out the mainframe at a bank, I could prove how much money was there.
Also if I demagnetize my debit card, I don't lose all the money in my bank account.
With Bitcoin, you hold the record of its value. If you lose the record or it gets corrupted it's gone. There is always the chance that your transaction will not be validated by the blockchain as well making your Bitcoin worthless. If a local group of people traded Bitcoins and the value which they decided was different than the rest of the network, their value would be invalidated.
It may well prove much harder to confiscate bitcoins than gold.
I think you have a fundamental misunderstanding of bitcoin accounting.
Every compliant peer holds a record of value of every peer on the network. It's replicatd hundreds of thousands of times. There's likely more backups of bitcoin accounts than there is of any other bank or currency at this point (not hyperbole, there's just that many nodes on the network.)
To spend money in your bank account, you need to demonstrate the authority to do so, with the account number, your ID, and a signature. If you were to be dropped into a town without access to those, you couldn't spend a dime until you could reacquire all of them. If you weren't able to do so, your money would be lost to you, even though it's still in the system. Indeed, if you simple don't access your accounts for a few years, your money can be lost to you today.
Bitcoin is no different. The private key is needed to sign your transactions. You can maintain any number of copies of a private key -- it's just a string of numbers and letters, after all, and not a long one at that -- but yes, if you lose every single one of them, you lose control over your bitcoin. However, if you have a private key -- which can be written on a slip of paper -- you can transact your bitcoins anywhere in the world you have access to the internet.
(As a tip, I suggest rather than writing down a private key, you use a paper wallet with a passphrase, just in case the keys were to be discovered by someone with ill intent.)
Disney avatar. I'll just leave it at that....
he's not even a modo ...
Hyperinflationary collaspse vs deflationary collaspe, Bernanke/Yellen and their 12 Fed stooges have already decided which one.
They'll just keep printing.
Chinese can now buy real estate with bitcoin. What happens when we mix the red hot Chinese real estate market with the red hot bitcoin market? I don't know but I am guessing it is not going to be boring. This is the real question that matters, how are the Federal Reserve Corporation and the US government going to stop it?
http://www.finextra.com/community/fullblog.aspx?blogid=8475
I am seeing in these comments from gold-bugs the same irrational hatred fiat-bugs have for gold-bugs. You guys are so afraid of BTC and so in love with gold you have become the very people you claim to be in opposition to: fiat-bugs who don't bother to learn why gold is sound money. You are suffering from cognitive dissonance. BTC is not your enemy, BTC is your friend. Give this a read. I was once a gold-bug BTC hater. Now after educationg myself I realize BTC compliments a diversified portfolio of denationalized currencies.
http://knowmadiclife.com/blog/2013/4/3/is-bit-coin-sound-money
http://knowmadiclife.com/blog/2013/11/6/bitcoin-hits-new-record-high-bub...
http://knowmadiclife.com/blog/2013/10/4/bitcoin-lives-to-die-another-day...
I agree, Gold , BIt Coins,
Whats the difference?
As long as its not being debassed.
My only fear with bitcoins is , its technology, technology gets outdate / replaced.... and its entire value is based on how hard its encryption is to crack......... once then encryption is cracked.......thats it game over for bitcoin, that being said, the encryption is as strong as it can be realisticly.... but eventually someone will get around to cracking it.
Id rather see people using physical currency, but gold and silver bottle kneck themselves (you cant spend fractions of a silver coin and send it wirelessly to china to buy bootleg stuff) ;) like you can with bitcoins.
Lets put it this way.
Buy everything, gold, silver, bitcoins and just sit back and see which one of your bets pay off.... Silver is cheap, Bitcoins, the price of bit coins are meaningless because you can spend / buy 0.000001 of a bitcoin.... so the value is really what someone is willing to pay for 0.000001 of a BC, buy 1 or 2 bitcoins, store them in a safe place and forget about them.
Bet on anything other than USD's or stocks, because stocks are fucking bubbled up as obvious as it can be.
So hasn't the NSA cracked the encryption yet ?
or would they let on, or quietly play it to advantage, if they had ?
I think its completely possible they cracked it already.
They might want to wait for it to climb a bit higher before they destroy it, you know, for a bigger shock value to scare people away from not only bitcoin, but other crypto currencies that may arise in its wake.
The U.S. Govt + Federal Reserve would be stupid not to slam this thing down, it threatens the entire status quo , the elite would be bankrupted in short order if the majority of global transactions take place in anything other than U.S.D.
If I wanted to crack the encryption, the first places I would look is the handler, you have to look for vulnarbilities in the way the coins are transfered and mined.
If the CIA wanted they could just mine enough coins into existance and dump them..... they have plenty of access to raw computer power to doit... it would cost them almost nothing to mine the remaining bit coins and slam them down on the market.
amen.
We are in a classic Buble now - you can make a lot of money, but do not make any mistakes compare it to Gold. After its collapse this Ponzi Scheme will provide another leg up for Gold:
Peter Schiff: Bitcoin Is Not Gold
http://sufiy.blogspot.co.uk/2013/11/peter-schiff-bitcoin-is-not-gold-gld-gdx.html#Bitcoin Heist And Jim Rickards On Taper, Janet Yellen and Gold GLD, MUX, TNR.v, GDX
"In this very interesting episode RT is reporting about the hunger for the FIAT Currencies alternatives and how it is driving the Bitcoin Bubble, but it is not The New Gold or even close to it - as we have written before. New security concerns are reported with the cryptocurremcy and Jim Rickards dissects the Currency War situation in the ECB, BOJ and FED race to the bottom. You will find out why Janet Yellen can not Taper and what is behind the Gold and why Gold Standard is still valuable option even today. After our yesterday US dollar chart observations it has fallen out of bed so far today - maybe somebody already has received Janet Yellen's testimony for tomorrow's nomination hearing."
It is centralized fiat currency that is in a bubble. The only reason the precious metals are not aping the curve is because they are manipulated, as we all know. Bitcoin could well be the only remaining real world currency after things have reached their course, and could well be on par with precious metals for investment purposes. How many ZHers were crying shitcoin when it was $30 a BTC. What has your silver and gold done since then?
OMG...Seriously? Did you just reference Peter Schiff as some kind of authority on Bitcoin. That guy went full retard on a recent CNBC interview. He called Bitcoin a pyramid scheme and while trying to further criticize it said...
" people talk about the finite supply of Bitcoin (but) you can break your Bitcoins down into many many pieces so there's plenty of Bitcoin for everybody"
He was incorrectly trying to prove that it Bitcoin isn't rare by the fact that it is highly divisible (to 8 decimal places).
Doesn't this guy have like a business degree from a major University?
Didn't they include a course in basic fractions and decimals such as the one I remember completing in Junior Fuckin High School!?
Well of course he's got gold combi bars to sell, so I guess that's clouding his brain a bit.
A few months back American elite bankers and politicians launched an attack on bitcoin, even attacking the major exchanges where they were bought and sold, then the Silk Road guy got careless and the elites discovered his identity, he was quickly taken down and bitcoins went to the government police state agencies who steal on the excuse of drug use.
The US police, bankers, politicians and spy agencies were smirking at their coming destruction of bitcoin. Enter China, not only did world bitcoin user community fight back, but China announced bitcoin will be an official part of the giant Chinese intenet and online commerce and community. Now the American repressive police and bankers smirk no longer. When Well over a billion people and the world's most productive economy and manufacturer says bitcoin is fine, we will use it, accept it. In short, this was a middle finger to America's attempt to enforce dollar hegemony on the internet, Ha! Ha!, it didn't work! China is moving fast to divest of dollars, to buy gold and to accept bitcoin as an internet currency. The USA claims special status, to be exceptional and thus the world's decider. This is fucking fantasy at this point. When America has no industrial base, and claims finance and health care as most of it's GDP, then America is a fake power.
Bitcoin was not crushed, and the all powerful American Banker elites were smacked in the face.
I like Peter Schiff's explanation the best. They are this century's version of tulip bulbs.
biTulip?
Peter Schiff is a doofus. He thinks Bitcoin is not rare because it can be divided into smaller parts. Maybe he was sleeping when they covered decimals in Junior High math class.
Keiser over Schiff any day.
i'm still waiting for comment from sheik imram hossein ....
I regret not getting some Bitcoins....and will never forgive my "cold, dead hands"
I could've had more fun with them....than without
Buy now, if for no other reason then to ease the pain of watching it go up and not owning any.
ZH capitalizes on this bitcoin scam. It causes controversy, debate and hopefully ad clicks between goldbugs and bitcoin believers. Lots of people here seem to buy it everytime.
Bitcoin is a ponzi, HFT trading vehicle... a fad... beanie babies... modern day tulip bulbs. It's price activity is based on the "greater fool" theory.
Everything is a bubble. Except BitCoin...?
Note to self: backup my data before I go to the next boating trip.
Trillion dollar bitcoin solves lots of .govs problems
The path to riches (probably). Here is what to do:
Buy bitcoin, as bitcoin is the only currency that is deflating. Everthing else is being printed.
When the Comex is about to run out of its reserves, sell bitcoins, buy precious metals.
ANYTHING that offers a subsititute to the manipulating moneychangers currently managing fiat is absolutely a good thing in my opinion. Competition is good. And for those worriws about counterfeit btc's or frozen btc accounts, or, just outright shinnanigans, look no further than what your moneychangers are doing to your store of value right now. I mean really.....do you still need evidence to convince you that the current fiat system isn't EVERYDAY being debased, botched, counterfeited, stolen, at your expense?
Is btc a bubble? Wrong question. Has the fiat become so distrusted that its store of value and purchasing power have become questionable at best to the extent that it has encouraged resources to seek alternative stores of value? Obviously. The rise of value in btc ought not to be thought of as another mania/bubble. Rather it should be thought of as a signal that people are losing confidence in fiat such that they are prepared to consider almost any alternative that offers some credibility in its own stewardship and store of value.
People are quick to dis btc when instead, ought to be thinking about the implications of a rising btc such that increasingly people are willing to swap fiat for it. And for no other reason, the fact the government wants to get its grubby mits onto it, should be giving everyone pause to at least give some consideration to the possibility that btc et al forms of exchange are a credible threat to the longevity of leviathon.
I don't pretend to understand the inner workings and algorithms driving btc. But I do understand the need for competing substitutes to a system of exchange that is no longer fair - no longer protects the individual from the long arm of central authorities that depend upon the perpetual free lunch for its survival. BTC is owned by nobody and for that reason offers an alternative store of value and a hopeful alternative to the increasing immiseration of the middle class.
The last thing left - The headline: China Will Accept USTs redemptions in Bitcoins:
Bitcoin Rises Over $500 - Its Collapse Will Start The New Gold Leg Up
ZeroHedge reports another amazing development with Bitcoin. While Janet Yellen can not see "Any Bubbles Around" the cryptocurrency is in a parabolic rise and crossing $500 valuation now. Our take is that it is the classic Bubble Ponzi Scheme in the development now and the higher it goes the harder it will fall from the sky. It does not mean that you can not make money or that Bitcoin is bad, just be very careful comparing Tulips to Gold. Everybody who is cashing out their Bitcoins at these or higher levels can receive our congratulations. Everybody who is providing cash for this should be careful. We have all classic signs of the Bubble in Bitcoin growing very fast and its collapse will ignite another Bull Leg in Gold. Here where we take Bitcoin as the very serious and positive groundbreaking development in the modern financial history. Nothing less than that. The magnitude and speed of its appreciation are showing that this moment of the real FIAT currencies alternatives can be very close now.
Bitcoin appreciation demonstrates in part the level of the real hunger for the alternatives to FIAT currencies now and how high Gold and Silver will go later oncethey can not be suppressed any more. Bitcoin has given to the Web generation the idea of the Gold 2.0 and it has exploited it with meme speed of going viral. Its collapse will leave all the driving factors - apart from the pure Buble ones like chasing new buyers buying only because it is going up - in place and exodus from the FIAT based monetary system will continue, but will find its way to the time proven Gold based standard. If you think that Bitcoin will go straight up to the sky and undermine all FIAT monetary system, please consider to make a research on its origins and how it could be manipulated as well. The simple act making its illegal with numerous real and fabricated concerns about its "limited amount" and "security" will do the trick at any time. We will throw a joke here as well: how can we be sure that it is not NSA with The FED - who are really behind it now? Who has the real picture of its full code and infrastructure? Who can guarantee that it is not compromised already or will not be in the future? Once we see the headlines that China is accepting US Treasuries redemption in Bitcoins, we will take our joke part out of this statement. Don't you think that it is too easy to get out from 17 Trillion of U.S. Debt? http://sufiy.blogspot.co.uk/2013/11/bitcoin-rises-over-500-its-collapse....
"Who has the real picture of its full code and infrastructure?" Its open source, just as Linux. YOu can go an check the code whenever you want. IF you can read it and understand it of course.
This is a fad, a thrashing around looking for a solution to avoid the collapse of fiat money. But GOLD (and Silver) are the only solution. Not digital money, which is the cause of this coming crisis where the same asset can be loaned out 100 times over.
perhaps a key reason for this volatility, is just what the fundamental, or intrinsic value of BitCoins is when one strips away the pure euphoric momentum to the upside or downside.
Bottom line: It's not real money, so it's true value is zero.
yeah and if we all sat around with manipulated gold/silver stacks nothing would be happening... bitcoin is waking people up more than any of you snobby stackers ever did the past decade right?
I disagree. Bitcoin is draining resources away from Gold and Silver into a computer.
It's good that there are people like you spewing ignorance, the world needs ditch diggers. Im deep in PMs as well but as others have stated on numerous occasions the manipulation makes it incredibly difficult to advance. As a possible store of wealth sure yes PMs are king....for now. Btc has merit and obviously many are reaping the financial benefits. The tired argument that one cannot eat a bitcoin, buy gas or insert it into their anal cavity has really run its course. Now if you'll pardon me I have to go exchange some disney money for silver and possibly a new condo.
All of us people holding PM for last couple of years have been in pain. Every commentator has been telling us that next month the price will explode...month on month, year on year. Silver will rise when it will rise, and in the mean time, it is time to chase the postivies wherever it appears.
They said the same thing about the Internet 20 years ago...
...and PCs, and television, and steam shovels, and every other disruptive technology...ever.
No doubt some folks are saying the same thing about 3d printing right now.
Their loss.
bitcoin is starting to look like gold on it's first run to $2000
Two simple questions related to BTC. First, if its growth, value, and popularity continues to increase, then what is to prevent TPTB from supporting options/future trading to help surpress the price? No different than gold/silver currently given how aggressive parties have become in utilizing paper PM instruments (as I believe the claims to gold in the paper market are well over 100x and probably much higher when all of the leasing activity is unwound).
Second, what is the ulitimate counter claim against a BTC? It would appear to be the fiat currencies that are used to acquired BTC which of course raises the same fundamental concern as with a fiat currency. That is, for the USD, the ultimate claim is against worthless USTs and MBSs. For a BTC, isn't it ultimately the fiats being used to purchase them? To this point, BTC is no different than a USD, Yen, or Euro from a "faith" perspective (i.e., the faith that the currency will be accepted in exchange for goods and services). I understand BTC is not influenced/controlled by a government and in theory cannot be reproduced like the USD or Yen but while the right side of the ledger looks great currently (i.e., the value of BTC now above $500), the left side of the ledger (what real assets are supporting BTC) needs to be understood and made transparant.
My fear is that the real control of BTC will be consolidated in fewer and fewer hands that will ultimately lead to manipulation and well extraction from the masses. Remember, the financial industry and institutions have proven to be great at "transferring" wealth and poor at "producing" or creating wealth. In order for BTC to truly be successful, it must avoid the pitfalls of becoming just another financial tool/medium to transfer wealth.
I'll take a stab at answering:
"what is to prevent TPTB from supporting options/future trading to help surpress the price?"
The main thing is that you can't do naked shorts (or naked anything) in bitcoin.
Sure, they can set up futures/option markets -- in fact, they exist -- but they'll have to take place outside of the blockchain unless they actually hold bitcoin and transact in bitcoin. If it's outside the blockchain, it means nothing to bitcoin -- it's akin to sports betting: sure, there's lots of money at stake but it has no influence on the outcome of the game since there's no connection to what is being bet upon. If it happens with bitcoins actually held -- well hey, that's a real market, and probably reflects reality and isn't going to be very manipulated.
Ultimately that prevents TPTB is value at risk and transparency. Bitcoin isn't a free ride, if they want dump bitcoins into the market, they'll have to buy them. They can pony up $4B and buy the market, but that will launch the price to the stratosphere -- then they can turn around and sell and make it plunge -- but everyone will know who did what thanks to the blockchain. JPM can't just pretend to have 5 million bitcoins and sell them, and there's no way to get pretend bitcoins into the blockchain to sell.
Second: your question is one about money and currency, period, and applies to even gold as far as exchanging for goods and services on faith.
As far as the ledger and real assets -- bitcoin's value is set by the market, and what people are willing to exchange for it in terms of goods, larbor, and other currency. At the moment I'd say it's dominated by currency exchange. The only thing on the left side that you can really document tangibly is the time and power expense used to mine them, the rest is all intangible goodwill, which seems to be growing pretty fast. Bitcoin, like any other money, is worth what it gets you and nothing more.
Agree with your response to the second question as basically its faith and what BTC will buy at any moment in time. As for the first comment, I agree partially in that the party trading the options will have to buy some BTC to enable options/futures action. However as we've seen with gold, the amount you must "physically" own is only a fraction of the amount that's traded in paper so the same scenario could play out with BTC's. They may purchase 100,000 BTC's but trade 100x or more of this and use the same logic as with gold (i.e., in the end, the contracts can be settled with USD's). Just saying this could happen with BTC as you know these financial types on Wall Street will figure out a way to raid another cookie jar.
But if they hold BTC and don't settle in BTC, it has no effect on actual BTC demand. Unlike COMEX gold, the price is set by the bitcoin exchanges, not the futures/options markets. The best example I can think of would be if COMEX ran contracts on USD or currency pairs, but never settled in the target currency -- other exchanges dwarf them in size and utility. If anything I think this just emphasizes how screwed up the gold market is rather than highlighting a weakness in bitcoin.
I agree that they're trying to find a way to raid the cookie jar, but I don't think they've found it yet, and I don't think options/futures is how it will be done. The fact that the blockchain is public causes a lot of issues.
The main avenue I can think of is to try the fraction reserve game with it -- akin to what you describe, holding 100K bitcoins but taking in 100X the value in USD. They can't do it with bitcoin directly, but they can easily create a bitcoin "fund" that intercepts dollars intended for the bitcoin market, but prevents them from reaching it, along with a ledger entry that says "yup, you own bitcoins!" All of this would have to occur within their own ecosystem. Right now they'd be crazy to try it, since bitcoin is going up and they could wind up very underwater quickly, and I suspect people would want delivery of said bitcoins. Perhaps in a few years if prices stabilize they might attempt to enter this way, but I still think they're begging to be exposed since the blockchain makes things so transparent any client could easily ask for the addresses said coin was stored and the con would be explosed.
It's suicide to short and holding stock increases in value the longer you hold it. Then the plateau of 21 million is hit, then deflation. While shares hold the same line and increase in respect to their need for capital. Eventually it all gets spent somewhere though because that's the nature of fungible currency.
Psychological by product though is the shift to make better technology to the point of only working 10 hours a week and golf 30 because the natural market forces would shift the capital to the resource. Instead of the ass backwards model of subsidies of trying to grow pineapples in Canada to meet a quota (drives me crazy every time I hear about it).
Or leave the option open to those to be a farmer, or live in the woods, or whatever. Because there is always a funding option of mine a coin. The outcome of BitCoin is Participatory Economics. There is governance/law/all of it options to work at what you like to do. There's a point in a technological society where a threshold is passed and everyone jumps that line from working for a living to living to work on what they want to do.
This opens that door and all the interesting science fiction lining book shelves and it leaves room for some pretty cool ideas on developing business and anything else. Right now in history cash flow moves a milestone, can't do that without capitalization. If attempting authoritarian methods to get there, you tend to kill people that bring stuff to the table now and that possibility of a future is gone like ash. How do you get 7.2 billion people to reassess currency, you make it their interest to be part of it.
It would be the largest democratic experiment known in human history. People vote with their work and wallets to agree that they are going to start paying one another something of value in an exchange. Every BtC traded for goods and services is literally a thank you note tied to all transactions with no debt backing it.
It's a pretty cool concept on many levels.
And another curve ball to your consideration, with Gold and Silver subject to the ongoing FED's 100-year War and all manipulations, how can you be sure that Bitcoin is not manipulated already? What will be better for the undermined authorities than the success of Bitcoin which will Kill the idea itself? Just run it up to $2000 and crash it to $50 - you can put your own numbers here. Is it possible? We will see very soon.
http://sufiy.blogspot.co.uk/2013/11/bitcoin-rises-over-500-its-collapse....
+2.4% since posting
Just bought a few more bitcoins. The exchange rate changed while I was buying them. Wild.
(I do have gold and silver too. Now if they would do the same as bitcoin...)
I hate bitcoins- they came along at just the right moment in time to put silver and gold on the backburner, yet again.
Coincidental? Maybe. Good news for the cabal? yep.
All they need to do now is find a way to naked short them, put the leash on, and ruin everything. Or even ban them from the US using the internet gateways to enforce it combined with heavy sentences for the new 'offenders'.
India strangled gold imports easily with the stroke of a pen.
All that said, those bitcoins are lookin mighty shiny about now.
;)
Well you may hate Platinum if it takes the shine off silver and gold. Since the main article was published bitcoins have gone up 10 euro a coin on bitcoin.de.
The moral of the story is diversify and always keep alert to what is happening in the world of money. Those who don't wll never retire.
I already hate platinum. it's just nature.
Personally I love it. Ill sell the last of my silver before I part with the Jack of Precious Metals. (Queen = iridium, King = rhodium).
Blasphemy!
Go hum 'the Lone Ranger' theme song 10 times, and say 5 'Hi Ho Silver's!
and all will be forgiven.
Num plati, Dich Reinen Toren, platinum.
I love the smell of money on the sidelines in the morning...
Conan,
Please stop using the expression 'naked short' it is meaning less except under the rules of the NYSE----and stocks. I know everyone uses it, but it not valid----except for stocksc-----you sell with an agreement to maintain a certain amount of margin until the transaction is closed and then the differences are settled in cash + or-.
Thanks Conan----nothing personal----but, it is what it is and not what it is called---want to short bitcoin? Just find the opposite view and make a contract----that would be a proper 'naked short' and you can do it today----just find the other side and I am certain you'll find it at ZH.
When the old-timer gold bugs die off, what will their heirs do with the gold they inherit? Some might buy BTC? Also, consider that the Facebook generation's gold bugs might just be Bitcoin bugs, not gold bugs.