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Comment by gerhardi | Hacker News Reader

I'm along your lines. If I happened to have a stash of bitcoins in my pocket, I'd be very careful about actually buying anything with them today, as the next week they would be more and more valuable. So I think the deflation is the main reason why I don't feel comfortable with idea of using bitcoins as a currency for buying anything - selling might be a different story.

edit: How large volumes of selling bitcoins for USD/EUR/etc. is enough to have significant effect on the value of bitcoin? For example if I had VERY URGENT need to sell 100 000 bitcoins by tomorrow in exchange for USD.

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Cashing out 100 000 BTC would crash the market down to 0 - right now the MtGox has exactly 105 708 BTC in the order book.

Cashing out 100 000 USD however is a different story. It actually happened a few hours ago, you can see the impact for yourself[1].

[1] http://i.imgur.com/cjI9ZaT.png

> Cashing out 100 000 BTC would crash the market down to 0 - right now the MtGox has exactly 105 708 BTC in the order book.

All demand is not reflected in the order book. In fact, most demand is not. The more sophisticated a trader is, the more likely he is to use limit orders to manipulate the market instead of the rather stupid move of telegraphing demand.

If the market went down 10%, a flood of buy orders is not unlikely to appear.

If the market went down by 50% however, and then stayed low for an extended period (maybe two days), then a flood of sell orders will definitely appear.

It works in both directions, people who are speculating on Bitcoin will be easily spooked by a medium-term crash.

Of course. Not my point though.

midnightsine is pulling his numbers from limit orders posted on MTGox. I'm saying that's not an accurate measure of what it would take to send Bitcoin to 0.

A more sensible approach would be to take advantage of TradeHill's "dark pools" which enable very large BTC transactions to take place outside of the public order book.

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