Bitcoin just crossed $7.00.
mtgoxlive.com
mtgoxlive.com
That being said, it might be the right time to buy Bitcoins, and sell before the bubble bursts. However, for a more stable Bitcoin, we need a shorting system and enough traders.
Also, it's a really bad idea to use ad-hoc reasoning after-the-fact to explain why the price rose or goes down. There could be multiple reasons and multiple events why the price of bitcoin rose as it did. Sometime, there's no reason at all.
The price of Bitcoin started to raise since Bitcoinca ended operations. Certainly, it won't skyrocket in 24 hours. It'll take many days (and maybe weeks) to visualize the trend.
Leveraged trading is trading with partially borrowed money. If you buy something with leverage and the price falls, you're forced to sell. A wealthy trader can temporarily lower the market price by dumping a bunch of coins on the market at once, knowing that the price will recover when he buys them back; this costs him money, because he gets a lower price for his coins and buys them back at a higher price. But it also forces margin traders to sell out their leveraged positions, at the lower price, which those same traders can capitalize on.
These sorts of shenanigans depend on there being unsophisticated traders using leverage (a bad idea for any non-expert trader!), and they get harder as the number of traders in the market increases. Many of the rapid price oscillations we saw were a side effect of this strategy. (Not all of them, of course; the initial rise was caused by the wave of publicity, the fall by loss of confidence when some people lost their coins by storing them on insecure computers or giving them to scammers pretending to be "online wallet services".)
User pirateat40 is running a BTC investment scheme with super-high returns (BS&T: Bitcoin Savings & Trust, a name suggested by investors). So high, that the community is split between the believers who can't resist the ROI and the non-believers who are convinced that Pirate is running a Ponzi scheme.
But that's not the fun part. The fun part is that pirateat40 and another member have agreed to participate in a sort of bet to settle the issue, which involves certain payouts under certain conditions. Mostly it's a bet that pirateat40/BS&T will default within a couple of months. Both have put 5000 BTC, ie. roughly 30k USD on the line.
It's steadily risen back to $7 on a much more stable trajectory. The interesting thing this time is the relative stability over the last 6 months.
Personally I'm long on bitcoins, I do dollar-cost-averaging. Good way to do this is for example bitcoinbuilder.com, or 10-line python script will do the same thing.
Gamblers - it is still an opportunity for gamblers who can do the timing right.
Is it just that most exchanges somehow don't publicly publish such granular data?
Ignore the green curve for a second. The gold curve is the 'bid' curve. It shows, at any given USD value (horizontal axis), how many Bitcoins people are willing to buy (vertical axis). So it says that, based on the orders currently in the market's books, at the $6.00/Bitcoin price point, you could sell up to 23,282 Bitcoins to get $549,907. This trade could happen immediately, because the matching buy orders already exist.
Similarly, the blue curve is the 'ask' curve. It shows how many Bitcoins people are currently willing to sell at any given price. So right now, at the $8.00/Bitcoin price point, you could buy 19,242 Bitcoins at a cost of $144,682.
Obviously, you'd be stupid to do either of those trades because they're far from the market rate. The action happens where those curves meet, currently at $7.10362-7.18242. This means that, currently, someone could buy at least one Bitcoin at $7.18242, or sell one at $7.10362. If someone were to put either a buy or sell order in between those numbers, then it would sit there until a match came in.
Which brings us to the green curve. This is the trade history. Like the other curves, the horizontal axis is the price, but here the vertical axis is time. It shows, trade by trade, what prices Bitcoins have actually traded at. Right now, the most recent is $7.10110; this is what people quote as the market price.
The number of accounts is currently at about 22000, and the largest number of people online at any given time is 126 – a stable community, but much smaller than those who see Silk Road as being the single shadowy force keeping up the Bitcoin economy behind the scenes imagine. -- http://bitcoinmagazine.net/the-silk-road-report/
So I for one see no reason to use bitcoin to purchase anything other than products that can only be purchased via bitcoins
If you never use bitcoin, you wouldn't realize how convenient it is in some situation. For example, when I brought an album, I just sent some coins to the address and then it was a done deal. I don't have to enter my credit card information or enter my username/password.
If you aren't convinced about bitcoin but you have time, you should experiment and find if there's any usecases for bitcoin rather than just dismissing it outright.
Let also note that the security pressure by criminals have lead lot of bitcoin sites to adopt 2 factor authentication. Some figured out that they don't need their wallet online at all and can get away with just using the blockchain to process payment. This meant even if the server were to get hacked, there's no bitcoin to steal. The bitcoin team themsleves are also working on adding multi-signature transactions.
Every few months a bitcoin site gets lots of attention and boom they get hacked. Usually it is because the site is run by a teen or a college student wanting to make a quick a buck.
There are significant reasons why having a deflationary, digital currency (or commodity) would be quite useful, at least for certain people and use cases.
If there were no use case for Bitcoin, calling it a scam without presenting evidence would be much more reasonable. Given that there are use cases, calling Bitcoin a scam without presenting evidence is completely arbitrary.
To make an analogy - if I ask you to invest in my company that makes a brand new food item with no nutritional value or flavor, it's probably a scam. However, if I ask you to invest in my company that makes a tasty and nutritional food item, regardless of whether you think my food will do well in the market in the long run, it requires evidence to claim that it is a scam.
However, I would not bet on the direction of Bitcoin prices in the short run, because I have no advantage over the many short-term traders and speculators who make up the daily Bitcoin market. (As Warren Buffett says, “if you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.” I don't want to be the patsy.)
(EDIT: And by that I mean, say, something like .01%.)
1) Easy to make, easy to lose.
2) Whatever you are thinking of doing, so is everyone else. If you're planning on outsmarting thousands of other people, just remember, they are planning to outsmart you.
3) Any market with a high volume of flippers (buys to resell and make money) vs users (actually use a product or service) might be a bubble. High rise bubble, mortgage bubble, housing bubble, Miami condo bubble
4) The worst time to make decisions is when you feel like you're going to lose out on something spectacular. When you have visions of grandeur. When the emotional side of you is most active, the logical side of you is being repressed. Watch out for that.
5) "This time is different!" is bullshit (when relating to bubbles and re-occuring events). Each new generation brings the same humanistic flaws of the last generation. Doomed to repeat itself forever and ever. Humans will be humans the same way sharks will be sharks. We are cursed with a primitive instinct that might have worked thousands of years ago in a tribal society but now is working against us.
6) Whenever you take a gamble, ALWAYS assume you are going to lose. If you're ok with the outcome of losing and find the gamble to be worth it go ahead and take a risk.
I didn't lose too much money in bitcoin but lets just say it was money that I was saving up for braces. That was the deal I made with myself. I'm still angry that I lost, there's no point in lying, emotions will be emotions. But the way I see it, I didn't lose the money in bitcoin, I invested it in some really good "real world economics" classes at a good collage somewhere...
There are times when it is indeed different. When Columbus landed, it was genuinely different. (Especially for the natives.) When general artificial intelligence arrives, it will also be genuinely different. (Especially for us.)
Bitcoin is still the best investment I ever made. That's because I realized that I can't beat the market.
My comment has nothing to do with Bitcoin. Just want to point out that I am very tired of this old bromide. People do make mistakes, misjudgements, etc. However, humans do not have instincts (which are automatic pre-programmed behaviors). Moreover, humans individually and, particularly, as a society, can learn from past mistakes. Thus, there is just no valid comparison to, for example, a shark.
You're basically just repeating a secular version of "Original Sin" and it's no more valid than the religious version.
Wow. You just insulted over 100 years of psycological, biological study, observation, & evidence. Not to mention you're completely ignoring the fact that we are wired for sex from birth and all the evidence and research that has gone into that. The first instinct a human has is to start sucking as soon as something touches its mouth. Without this vital automatic pre-programmed behavoir we would not exist because children could not be breast fed. I'm not sure why you see instincts as something bad or what you're trying to protect by denying something so obvious and so well studied but I worry about your education.
If anything here's a start. http://en.wikipedia.org/wiki/Instinct
Not really, because there is no observation of or evidence for humans having instincts. :D
Not to mention you're completely ignoring the fact that we are wired for sex from birth and all the evidence and research that has gone into that.
That is precisely my point. Think about it. We do not have an instinct to have sex. We choose who to have sex with, and when. And our sexual desires are mediated by our preferences (which, in healthy well-functioning people, are chosen, although some people may not rise to that task). Sex is not an "automatic" behavior. Contrast this with the sexual behavior of, for example, sharks. There is a humongous difference there.
Now, in certain Muslim societies, it is considered a woman's fault if she is raped when she exposed some skin, because they believe that men do not have a choice about sex and cannot control themselves. That is abhorrent and wrong. But when you insist on humans having instincts, you are taking that side of this intellectual argument.
The first instinct a human has is to start sucking as soon as something touches its mouth.
It may be that pre-conceptual humans--that is, babies--have instincts. Since a lot of people use "instinct" sloppily, I'd have to think about it before I came down on either side. But when we talk about "humans," we really mean (at least primarily) "adult humans." So I would not say that babies having an instinct to suckle negates my point in the least.
I suspect it is more an "automatized reaction." Calling it an instinct just doesn't seem right to me.
but I worry about your education.
Haha :D. Well, I would say I've demonstrated a lot of rational, independent thinking here. So, for that reson, I am not worried about my education. (As a sidenote, I am very highly educated in the formal sense... but that is not as important as being able to think an a rational, independent way.)
I don't think it's going to hurt bitcoin, it's proven itself to withstand it and is here to stay.
Classic fallacy. "Those rules don't apply to me!"
Guess what? You are a speculator, no better or worse than any other speculator out there, be it in gold, houses or mortgages. Sorry.
[1]: http://www.irs.gov/businesses/small/article/0,,id=187904,00....
they are way too cumbersome to buy, why invest in a currency that the average computer user can't figure out how to buy?
The transactional friction is a reason the market is small. If it's easier to transact and more people can do it, the supply/demand curves will push the price up in the future. Assuming demand is proportional to the size of the market.
"They are" is the wrong pairing. The subsidy halves every 210,000 blocks (~4 years) as part of the innate core rules of the system enforced by every participant.
So it would be more accurate to say "They cut" (past tense as this was established years ago), or "The system will" (no human actor).
Also it looks like the halving will be early December to late November. (The block number is fixed, not the time, and because the difficult updates lag rapid increases/decreases in computing power can shift the date around a bit)
This might make a lot of GPU setups obsolete.
Edit to add more info: I'm told the expected generation output, from 1000000 Mhps, at current difficulty 1751454.53534068, is 574.2818 BTC per day or 23.9284 BTC per hour.
Even if this were the case, the gains from such a scheme would be short-lived, though, as the difficulty adjusted to compensate. Then you're competing with everyone else who has bought these, and fighting over the marginal cost of electricity vs. the upcoming reduction in the reward.
>Before investing significant amounts in mining equipment those operators who rent and plan to take advantage of utilities being included might wish to review the lease documents to become aware of any “commercial use” exclusions. Also they should be aware of the potential that a month-to-month lease could suddenly change where utility submetering or other cost transfer might be imposed.
With government bans on online gambling bitcoin could really take over(that market). And, of course, there is the illegal drug trade.
When people say that "it's not backed by anything" all they need to do is fire up tor and take a peak at silkroad. It's backed by one of the most in-demand products ever.
(btw. drugs & weapons are the second and third biggest international markets, food is the first.)
And yeah, it's backed by the Silk Road :)
The best part about this is that neither the buyer nor the seller needs to have the slightest interest in BitCoin and it doesn't matter at all if the value of the currency is reasonable so long as it's reasonably stable. Even better, neither side needs to know the other's bank details, just a throw-away BitCoin account number. This isn't just an IMT-killer, it's a PayPal killer as well.
Assuming the BitCoin market is more or less efficient relative to currency markets, and assuming those transactions could be cleared within ~1 day, you could absolutely kill the international transfer market (known for high fees, long delays and shitty exchange rates).
Example exchanging 500 GBP to EUR (via intersango at current rates):
Buy 104.6 BTC @ 4.76GBP Fees for instant trade: 0.95% = ~1 BTC. Balance: 103.6BTC
Sell 103.6BTC @ 5.8EUR = 600.88 eur Fees for instant trade: 0.95% = ~5.71. Balance: 595.17EUR
500 GBP went to 595.17EUR. Exchange rate: 1.19. (google tells me the exchange rate is about 1.26 at the moment, so this is quite poor)
Until then, there are a couple of mitigating factors:
- You may not get the market rate from anyone. The UK post office is only giving me a rate of 1.2260 to the Euro.
- If you need to pay a fee for a transfer it could be worthwhile for small amounts. The UK post office doesn't charge a fee, but it has a min transfer of £250. www.tranzfers.com charges £7 or $15AU. I've paid more elsewhere.
It's actually quite curious that Bitcoin was able to take off the way it did despite this lack of initial forced demand. I wonder which was more important: the fact that there are so many anti-government ideologues out there, the fact that Bitcoin can help with illegal transactions, or simply the fact that it's a neat technology. I'm certain all three played a role, perhaps to a different extent at different times.
I doubt that the 'neat technology' aspect contributes much to the exchange rate; or little more impact than coin and banknote collectors have on mainstream currencies. You don't need to put much money in, or participate in many transactions, in order to examine the technology itself.