It's almost like everyone was trying to get rich quick and sold when they saw some profit.
The dollar certainly has had 30% "shocks" in a year compared to gold, which is the usual standard. Most famously, obviously, 1971, but there have been more normal years with such changes as well.
You could also say that the US dollar is really backed by the US economy. Well, the US economy is S&P500 + a few percentage points. Well that has dropped, and gained more than 30% in a year as well (depending on the foreign currency you use to measure this, or if you're talking in gold price, we've seen 60% drops happen. Of course the S&P 500 is worth more than all the gold in the world, so ... this is a bit of an artificial thing to do. Truth is that if someone started buying the S&P 500 using large quantities of Gold, that wouldn't work, so perhaps that is actually right).
Shocks is between quotes because they weren't really shocks. Everybody in finance was perfectly aware of the "real" price for the US dollar, in 1971, but political hubris and re-election factors did not allow the government and congress to admit to this, until every other avenue was exhausted, including lying, cheating (not charging the same price to everybody despite their own laws demanding they do so), fraud, and so on.
Or to put it another way, one might even make the comment that the dollar lost such amounts against gold for the worst possible reason : a refusal by the US government to settle debt for the agreed price (specifically, as has come out, the refusal of the US government and the congress to honor the agreed-upon exchange rate the French government demanded they pay). Surprisingly when I tell my bank that my loan is now only against half my house, such flexibility is not extended to me, and congress in fact has laws preventing this ... weird, since they clearly see it perfectly moral & valid to do this themselves, and even to do it to pay off (their favored) banks.
30% changes in the value of the dollar have happened before, and in all likelihood, will happen again. Granted, it's been a while.
I wonder what happened when the dollar was 10-20 years old though. Can't seem to find good info anywhere.
None of these things, paper or earth metals, really have any intrinsic value. You can't eat gold. You can't put euros in your car. I guess you can burn money to keep warm, which is what happened to German Marks once people lost confidence in their currency prior to WW2.
The value of money is based off belief systems. When a very large scale economic or state collapse happens, the most important thing to have are a community of people around you who believe in each other.
But isn't that one of the hopes of cryptocurrency -- that it can survive a state collapse, because the relatively normal currency manipulation leading up to said collapse would be less (or not at all) viable? I feel like that was the spirit of OP's tongue in cheek remark and it's going over everyone's heads.
Also (this is pedantic) but many metals _do_ have intrinsic value (ex copper wiring or gold plated connections). It's slightly meaningful because (among other things, like its relative scarcity) has helped those metals be used as relatively stable currency in the past.
I've always wondered about this argument. It seems to me that a state collapse would be accompanied by the collapse of things that make bitcoin possible: electrical grid, Internet, mobile networks, and so on.
So let's say BTC difficulty drops 10x (China cracks downs on farms or simply miners moving to a different more profitable coin, who knows)
Currently this would be ruinous, as difficulty adjustments are every 2 weeks, so that would be 140 days until things get back to normal.
The demand for USD is cyclic in nature (IANAEconomist, I just made that term up), in that, I need money to buy food, my employer needs me to make them stuff, my employer's customers need my employer's product for their processes, etc.
Also, why does our currency need intrinsic value? It represents a debt owed and can be exchanged for things with intrinsic value. The reason dollars, yen, pounds, euros, silver, metal and gold have value is both a social and a legal contract. Cryptocurrencies may have some social contracts that give them value but they lack the legal contract. That's why I think they are doomed unless they open themselves to regulation.
Bitcoin can do none of these things.
I tend to believe those who say bitcoin will not last are right, but right not it is a currency. Not the most useful one, but there are countries with a real currency that is not very useful.
Like, what accountant would be capable of planning finances for a business where every single liability is denominated in a super-volatile asset? The whole thing is nuts.
Nearly all large and even mid sized companies have customers who use a different currency and have to deal with it. Big companies hedge foreign currency risks. It is common for the press release for a companie's earning to say "we made $x per share driven in part by foreign currency values and ..." Which is to say when looking at a press release they believe their investors (perhaps a legal requirement?) will want to know that a significant factor wasn't sales but just currency trade.
Now bitcoin is super-volatile. That isn't relevant to a general discussion, but it is a major factor when discussing bitcoin in specifics. There are other foreign currencies that have similar considerations at times though, it isn't unique to bitcoin.
Even the value of the dollar is significantly in the social contract with Saudi Arabia (not sure if "social" is the right word, but it's definitely not legal, as both sides are sovereign and thus free to change any law or contract between them)
Seems to work well, for the most part. Granted, on occasion disasters happen.
Cryptocurrencies can have all that, but they need to have a high transaction volume (tens of thousands / second), regulation, protected / monitored exchange value, etc. Which defeats the original purpose of an "open source", unregulated currency.
But you get what you ask for.
I'm no crypto-anarchist, but plenty of currencies do not meet this definition, and have failed as a result. Indeed, it's a time honored method of spurring growth to simply create money, and it's a time tested cause of instability. Certainly a well managed central bank is an asset, but it's hardly a reliable method of keeping currencies useful. There are plenty of reasons to be concerned with bitcoin's deflationary nature, but arguing that it's not as inflationary as government backed currencies is an argument that can damage both side of this debate.
^ Worth noting, that this is relatively modern history. It's usage stopped as a currency in the mid 20th century. At the beginning of the 20th century, some african countries still accepted it as taxes
1. strong entity circulates and
2. wants back
is fundamentally valuable.
> American dollars have value because the US Government taxes things, like land, and if you do not pay those taxes they will send you mean letters (trust me) before resorting to other means (trust Al Capone). You pay these taxes in US dollars. You just having dollars does not make them valuable. And dollars are not valuable because they are backed by gold or silver or sea shells. What makes dollars valuable is that the government wants them back.
https://hackernoon.com/the-guns-of-bitcoin-1f779309a718
Ways to destroy the US dollar value: Destroy the US tax collecting power, or have the US ask for taxes in a different currency. If the US started collecting taxes in Euros, the value of the US dollar would disappear instantly.
The US is a strong entity and has no incentive to ruin the value of the dollar. It will not start collecting taxes in Euros. Or Bitcoin. Why would it give all that power away? More likely is that Bitcoin gets made illegal or very difficult to use. At the end of the day, if you have US-protected assets, you will have to pay US dollars to the US gov and this will continue to give USD value.
Bitcoin has no such strong-entity backing, so it has no fundamental value. Bitcoin people are obsessed with the idea that mere possession is important. It's not. Ask people with loads of marks or Zimbabwe dollars.
hard to forge tokens can be used to denote things that are otherwise used to denote (such as ownership, and chain of custody).
being electronic, this makes Bitcoin quite useful.
There are a ton of electronic currencies that are difficult to forge, for example Flooz, Beenz, and the gems in clash of clans.
You cannot invest into a currency. If bitcoin rises by 30% is there a corresponding increase in fundamental value real value? No. It's a zero sum game. If somebody wins that also means someone else loses. It's pure speculation yet people treat it like a get rich quick scheme and think bitcoin cannot ever fall in price.
On the other hand you can invest into a stock. A stock will increase in price by 30% because the company has made 30% more profit or owns 30% more assets. Everyone who holds stock wins.
11500 and not stopping. I wonder what fees are needed to execute a trade in the next hour. Probably countless people lined up.
If only the coins were the only things that continued to crash in this saga.
The payday comes when you actually liquidate your position, and you get the funds out of the exchange.
Lot's of people were way up on Mt. Gox.
If you goal was to buy a house and house prices suddenly increase, even after you cashed out your bitcoin, you might still be disappointed.
Nothing wrong with taking risk, but dont pretend you're not gambling.
This likely isn't the end of Bitcoin just as its numerous other 30%+ corrections didn't stop its rise. Whatever happens, I'll be proud to have participated in such an important new technology while avoiding the leagues of cold and timid souls who jeered from the sidelines.
Buying it now is fairly reasonable. Though, I wouldn't be surprised to see it crash yet again, even harder, but it felt like buying on that upswing to 20k was suicide.
In 2011 (or something, I'm going by memory) it rose to $30 before crashing back to about $5. In 2013 (still the days when all people had to do was spam a few forums) it reached $10, $100, $200 before stagnating until MtGox and Willybot pumped it up to $1k.
ISTR some people back then were predicting $10k BTC by the end of the next year (end of 2014). Instead it was about $500 or something, and BTC didn't reach $1k again for about three years (the start of this year or end of last year).
I'd wait few months. If it is actually crashing not just backing up before next silly raise then you'd be better off waiting till it settles after the crash. It usually takes few months or a year.
If you don't want to gamble, bitcoin is rather long term investment.
Anyway I invested the $100 and I am down, but whatever it's like going to the casino and gambling/losing it all.
It will either very gradually climb from there or stay steady for 3 years or so and then experience next crazy ride up.
Then most of the guys who bought for 15k will sell.
The point is, people buy bitcoin with money they don't need anyways so they can go long and most of them will because bitcoin apparently can't die no matter how many bubble popping it experiences.
>Please don't comment about the voting on comments. It never does any good, and it makes boring reading.
Most times not because I was downvoted (and then only to ask for an explanation IIRC) but because it seems like people are misunderstanding or IMO abusing the downvote feature.
What? No 100% interest is normal. Do you want free money or not?
No don't worry about the breaking your legs part, just remember to pay it back when you're rich again.