Bitcoin hits year-high of $20 | Hacker News Reader

Bitcoin hits year-high of $20

bitcoincharts.com

132 pointsredegg68 comments

Waiting for tokenadult to repost his Bitcoin comment: https://www.google.com/search?q=site%3Anews.ycombinator.com+...

In all seriousness though, there is one interesting thing that is different now from last time. Last time being the previous frenzied Bitcoin price hype bubble that peaked at 31$. No one fears that Bitcoin will crash to 0/pennies anymore once the price stops climbing, at least not due to standard market forces. It's pretty well established now that there is some baseline demand that will form a price bottom (assuming no large network attack occurs). What effect that will have on this bubble (if one forms) is hard to say but it should be interesting and not a repeat of last time.

When you look at it in log scale, you also realise that the current growth rate is pretty tame compared to what occurred in the spring of 2011.

http://bitcoincharts.com/charts/mtgoxUSD#tgSzm1g10zm2g25zvzl

Sure many say that now. But what if public greed takes over again and prices rapidly approach say $60, then the price rise would be hyperbolic and crash back to somewhere below here.

... just along for the ride with the bitcoins I mined and am hoarding.

Well, you sell high, and buy back low, presumably.

I sold at $17 and don't regret it (bought at $14-15 earlier that week). But my typical use is of bitcoin is a as barter currency (where the other party only cares about dollar value), I'm no speculator.

Similar story here. Bought and mined about ~100BTC when it was around 5$/BTC and sold @ 10-15. I converted some to physical coins from https://www.casascius.com/ and keep those on my desk. I guess I should put them somewhere less obvious. Haha

Oh, for me it was more like 2-3 BTC. So not a big risk to me either way ;-).

wow thats a really neat gift/toy idea!

All else being equal, the more people who use Bitcoin (whether as a store of value or medium of exchange), the greater the demand for it -- and therefore the higher its price, because the supply is fixed.

This means that in the long run, Bitcoin's price will be positively correlated with its adoption.[1]

[1] My full thoughts on the matter: http://cs702.wordpress.com/2011/05/29/on-the-potential-adopt...

Of course all things are never equal. The problem with investing in bitcoins for the long-run is that eventually governments will make it illegal. Sure, they can't easily stop you from owning bitcoins, but they can ban businesses from accepting the coins, which would of course collapse the currency overnight. Governments don't like competition.

I'm still wondering why governments see it in their best interest (if it is in their best interest) to make it illegal. I know they can't track their citizen's activity on the network but when an individual cashes out, they would pay taxes on their earnings.

To me it seems to be a choice of what does big brother value more - money or information?

Banning a business from accepting bitcoin would be as hard as telling a business they couldn't give stuff away for free. I think they could shut down the exchange portals, but they couldn't keep people from trading goods for BTC.

its not the gov't who _wants_ to crush bitcoins (but they will probably be the one actually implementing the measures). A currency, and the subsequent control of it, will lend lots of priviledges and power over those who control it.

Currently, the central banks (the Feds, and the various EU central banks) control the currency (by control, i mean they are the only ones able to print more of it). Now, i don't really know who controls those banks, but i m willing to bet that they are some powerful vested interests there. These people do not like the gold standard, simply because having a gold standard strips them of their power they currently enjoy.

Bitcoin, being a good candidate for a digital gold standard, will be targetd just like the gold standard was targeted in the 70's in the US of A. I really wish bitcoin could become recognized by the normal peoples of the world, but i think it can't, because there is no force behind it. The monopoly on using violence is the only way to have a currency adopted, and i don't see bitcoin getting any of that. my prediction is that bitcoin will be relegated to being a niche currency.

My prediction is that Bitcoin will neither be illegal, nor will it replace the U.S. Dollar, like some of its proponents hope. Most likely, it will continue to be a useful vehicle for transferring money online.

I see it competing more with companies like Western Union and PayPal than with the USD.

Governments don't care if you use bitcoin or not. They can, and do, tax you based on whatever income you earn, in whatever currency it is denominated. Indeed, the US, Europe, and most of Asia already have tax laws for how to report income denominated in currencies other than the government's own currency.

Not reporting income denominated in bitcoin will simply result in prison time and financial penalties measured and payable in the government's currency.

At this point I believe that intelligence interests in the USA will prefer bitcoin to stick around, because it is not nearly as anonymous as most people think it is.

But it is as anonymous as those who want it to be want, no? Any links to studies on this besides the UCD one? I'd love to read more.

http://anonymity-in-bitcoin.blogspot.ie/2011/07/bitcoin-is-n...

Plus Avalon just started shipping the first mining chip ( http://blog.zorinaq.com/?e=70 ). And they announced they will only accept bitcoins as payment for the 2nd batch of 500 units @ $1500 ea, which starts selling tomorrow... That potentially means people buying $750k worth of bitcoins for a batch that will sell out really quickly. This will surely push the exchange rate even higher than $20.

Edit: there is no resistance upward right now on MtGox. $300k of buys would push to $24. $500k to $30. http://bitcoincharts.com/markets/mtgoxUSD_depth.html

I don't really understand economics at all, but with a $200M market cap (http://blockchain.info/charts/market-cap), wouldn't $750k of bitcoins be just a blip? Or is it about rate of exchange?

It's about the rate of exchange. Out of the $200M of bitcoins, only a small fraction is available for sale on exchanges...

Ahh, that makes sense.

No doubt a large amount has been permanent lost. All it takes is for one early adopter with 100,000 bitcoins to lose their wallet a few years ago. those are gone for good now.

I never thought much about the effect of permanent loss on Bitcoin. Unlike cash, encrypted wallets and the block chain make theft harder than just destruction of the money.

A virus which deletes wallets instead of trying to exfiltrate BTC seems much easier to implement and would be pretty devastating for the currency.

Damaging but not fatal. Bitcoins are divisible down to 8 decimal places so the value would just scale up according to the reduced supply. And 8 decimal places is a software limit; a revised protocol could increase that.

That's what backups (and brainwallets, etc.) are for.

Sounds like bitcoin requires a backup system by default, then. Because otherwise, the first virus written by some pissy kid that just deletes wallets will devastate a lot of people.

At least you can back it up... unlike a real cash wallet.

It has been estimated on bitcointalk that around 1-2% have been lost. That's not really a large amount. You can still divide bitcoins into satoshis (1E-8) or even further with a protocol change in the future.

Out of curiosity, does this estimate account for stolen wallets, or are these still considered viable?

I did some research:

Around 0.6% of all Bitcoin are known to be lost, so with unknown losses it could be 1-2%(https://bitcointalk.org/index.php?topic=7253.120)

Excluding the Pirate scam, 2.9% have been stolen. These are still viable, some are tainted since the receiver address is known. (https://bitcointalk.org/index.php?topic=83794.0)

I have a wallet with ~2,400BTC and I forgot my encryption passphrase. It was >400 chars and I know most of it but I'm making some mistake somewhere in my recall. If the value keeps going up I'm going to have to get serious about cracking that wallet.

I would think that roughly 50k USD would be enough incentive for most people to start remembering REALLY hard

I meant measures beyond remembering really hard. Writing software to brute force it with the bits I already know. Believe me I'm pretty unhappy about the situation.

Provisioning EC2 GPU instances and the like and writing the grammars.

a 400 char passphrase? dude, thats crazy.

If someone has the incentive to break into your wallet, all you need is a phrase long enough to make physical violence a better alternative for the attacker, and you're set, no need to make the phrase any longer.

It is about rate of exchange. Market prices mean, that at this price at least one buyer meets one seller. All the people thinking that the price is too low or too high, who therefore do not buy or sell, do not change the price at all.

Of course the reverse will be true as Avalon attempts to convert $750000 worth of BTC into USD. If they're smart they'll do it in small increments, but it will still have an effect

Likely they will convert a good chunk of it to CNY not USD. The price arbitrages will go back at USD and other currencies, but the effect is cushioned.

Also, being in China they are likely to keep a good part of the profit in BTC to use in services, since a lot is not allowed over there. This can kickstart a local BTC economy where it's needed the most.

If these ASICs are so efficient at mining Bitcoins I don't understand why Avalon doesn't just run them themselves rather than sell them?

Answer: http://news.ycombinator.com/item?id=5142307

During a gold rush, don't be the guy digging for gold. Be the guy selling shovels.

This. People like Slush who take 2% of each chain block are making a killing, while the rest are burning a hole in their video cards.

For their sake, I hope that's the only thing.

http://buttcoin.org/bitcoin-mining-rigs-fire-and-electical-h...

We're getting into the speculation game again. I don't think this is healthy for Bitcoin. Let Bitcoin grow at its own pace instead of promoting articles that say Bitcoin is now at $18..and now at $20..and now at $24.

If you keep doing that, it will crash again, at least down to $15.

Speculation is a part of the free market :)

and what's wrong with that? bitcoin is currently more like a stock as the market is waaaaaay too small, and thus you cannot expect stability from it. it will soar, and it will crash, many many more times. but more importantly, it will survive all that and grow steadily in the long term. long term investors are not affected by these bubbles anyway.

If the rising dollar volume crossing the blockchain outpaces the rising exchange rate, then it is sustainable. The blockchain output cannot be estimated with certainty though so that will always be a best guesstimate.

But certainly the bulk of the value remains from speculative interest rather than organic demand for the coins for use in commerce.

And that's exactly what I want, since I can buy low again. :-P

I find this one more useful: http://mtgoxlive.com/orders

Bitcoin has speculative bubbles, fraud, robberies, money laundering, gambling, and Ponzi schemes. I think that takes care of all the qualifications for a real currency. Am I missing anything? :)

Now you can add inflation to the list.

It's deflation. With inflation the amount you can buy with a set amount of your currency goes down (i.e. your currency is dropping in value). Right now the bitcoin is rising in value.

Perhaps it cuts both ways as the amount of stuff you can buy with bitcoin increases.

References to each of your claims.

Not OP, but I'll fill in the blanks for you:

(1) Bubble: http://www.economist.com/blogs/babbage/2011/10/virtual-curre...

(2) Fraud and Robberies: https://en.wikipedia.org/wiki/Bitcoin#Theft_and_fraud

(3) Money laundering: https://en.wikipedia.org/wiki/Silk_Road_(anonymous_marketpla... , https://en.wikipedia.org/wiki/Bitcoin#Taxation

(4) Gambling: https://en.wikipedia.org/wiki/Bitcoin#Gambling

(5) Ponzi Scheme: See "Bitcoin Savings and Trust" in https://en.wikipedia.org/wiki/Bitcoin#Theft_and_fraud

Almost all of that was found in the Wikipedia article for Bitcoin (with citations). Please don't be too lazy to do your own research…

I don't think api was criticizing Bitcoin. All these evil activities are very unfortunate, but on the other hand they are indicators that a currency is valued and liquid, which is a good thing in itself.

I was actually making a bit of humor, but it really is true. All these things are common to all forms of currency I know of, so it's sort of a sign of Bitcoin's coming of age.

It would be interesting to compare BtC not only to the USD, but also to a bag of currencies, to see if it relates to a USD devaluation 'compared to the rest' (usually JPY, EUR, GBP)

LOL, how interesting? It has been going up related to everything else, even gold & silver. I doubt that there exists a better-performing non-hedged asset.

I guess that, according to the efficient market hypothesis[1], you can expect the price of bitcoins in other currencies to be the same as the price in dollars adjusted by that currency exchange rate. Otherwise easy profit would be possible through arbitrage, and after some people took advantage of the price difference to make some money the prices would stabilize at a point where profitable arbitrage would not be possible anymore.

[1] http://en.wikipedia.org/wiki/Efficient-market_hypothesis

If no arbitrage profit is available, nobody will do it and the profit opportunity will return.

" according to the efficient market hypothesis[1], you can expect the price of bitcoins in other currencies to be the same as the price in dollars adjusted by that currency exchange rate"

You're right, apart from market inefficiencies that's right.

But I'm proposing something else, to analyse the variation (which, of course, for BtcGBP is effectively BtcUSD * USDGBP) against other currencies to see if it's (for example, in this case the price of BTCUSD rising) if it's a dollar devaluation or if it's BTC that's increasing in value

It'd be good to see it on the Big Mac index

(http://www.economist.com/blogs/graphicdetail/2012/07/daily-c...)

Your title isn't clear, and it's not even February yet, so I assume you meant "over the last year".

Anyone else think this looks like the Gartner Hype cycle? http://en.wikipedia.org/wiki/Hype_cycle

Maybe I need to get back in to bitcoin mining...

Yes.

Plug for my "fastest way to lookup bitcoin price" website:

http://bitcoinprices.org/

As long as we're plugging that...

http://preev.com

Liquidity is the major issue for the foreseeable future.

Bitcoin is highly liquid and only becomes more so each day.

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