CNBC now has a Bitcoin ticker
data.cnbc.com
data.cnbc.com
I can just imagine some lower Manhattan hedge fund guy shorting Bitcoins just because he's got 100k in fun money.
A bitcoin exchange is a place where the bitcoin is traded.
Obviously this is neither the only actual, nor potential use of bitcoin.
Or at least that's what we like to think.
On the other hand BitCoin fundamentally has no tangible asset backing it. Its price is driven purely by supplly/demand, rather than any sort of book value.
I don't know enough about macro finance to discern whether this is a good/bad/neutral thing for BitCoin, but it's a worthy distinction to make in comparing stock and Btc.
Not really. You can't recover the costs by "melting down" bitcoins, so it doesn't provide a support for the value of bitcoins the way that the use-value of gold might provide a support for the value of gold currency.
Clearly, if the cost to mine coins is less than the market value plus the expected transaction fees that can be earned by mining (mining is also transaction verification), there is no economic incentive to mine, but that doesn't operate as a price floor so much as a limit on the viability of the system.
As the value of the created coins go up, miners can afford to spend more on the effort in an attempt to capture a bigger share.
More precisely: Does the cost of making something have anything to do with the price it is sold at?
That said, it's by no means a floor, particularly on goods that stick around a while, since the things already in existence can more than meet the demand, which can drive the price arbitrarily low.
On the other hand, dividends are actually quite often the primary reason for owning stocks, just not typically the stocks we talk about a lot here. Stocks in large, well established companies are often pretty stable, growing only with the market at large, to the point that the dividend can certainly be the bulk of the payout for owning the stock.
It is my understanding that common stock typically does have voting rights.
So, if you view bitcoins as a stock, you are right, the fundamentals aren't there, but its not a stock. As a currency, the fundamentals are there, but until you can quant the demand for alternatives to gov based currencies and the transacitonal demand, it will be tough assigning a "correct" price for bitcoins and thus the market will be volatile.
Of course, there are ways to deal with it, and there are even ways to profit from it. But for average users of currency - used as currency, not as means of gambling - bitcoin right now is absolutely wrong. I would go even further and say any business that accepts it and doesn't do it for the tax/law enforcement evasion reasons is doing it for PR reasons only.
>>>> As a currency, the fundamentals are there
I don't understand what you mean by this. Currency as such needs no fundamentals as long as there are people willing to accept it. But currency as money is different from currency treated as an investment commodity. Confusing the two is a dangerous mistake IMO. And I see no fundamental reasons driving recent rally in bitcoins - could you name one? Please don't talk about weakening USD - if that would be the reason we'd see rallies in all traditional physical commodities used as hedge against fiat currency - such as noble metals, and we'd see other commodities raise at least in similar manner, and we'd see it in relation to other currencies too. While modest raise in bitcoin could be explained by weakening dollar, it's no way even near what we see here. So any other ideas?
When I say "fundamentals" I am using the financial form of the word, as in the method of valuation that contrasts to "technical" analysis by trying to examine what actually comprises the price of something rather than just looking for patterns in how it behaves. A good discussion of the "fundamentals" of a normal currency can be found here (most of which don't pertain to bitcoin, but just try to think analagously): http://www.investopedia.com/articles/trading/04/031704.asp
I think you may also want to look into the "functions of money". As I was describing in my post, money doesn't serve just one purpose and while bitcoin is terrible at some of these, such as "unit of account", which all of: "predict your profits, give forecasts to investors, make long-term plans" fall under. On the other hand it actually functions fairly well as a means of exchange due to the fact that as prices fluctuate so can the value of the currency, something that physical currencies have a harder time doing. It isn't perfect and long term deals may require hedging, but as you allude to, there are ways to deal with this.
Hopefully this clarifies some of my points.
edit:some grammar
Nobody knows how useful it is, how much people will like it. However, they are guessing that in the future, as more people hear about it, more people than now will use and like it.
At some point this growth curve of speculative investment will peak. The utility-for-transactions curve will "catch up with" it.
Of course, that stability will in and of itself make it more viable and hence more valuable, so it is all told quite a complex dynamic, as that affect will need to be factored in by investors ahead of time.
Wall Street has had its own nerd contingent for a long time:
You're probably more likely to find jocks in the mega-banks, particularly in the flow trading and sales departments.
Breaking News! Bitcoin loses 75% of its value! Bitcoin Rallies! Bitcoin hits all-time high! Bitcoin down on fears of IRS scrutiny.
"As we head into the noon hour, we have a panel of experts in studio to discuss what this afternoon holds for bitcoin"
I would expect this to get back down under $50 again (and I think even down to $30-$40) before it makes any kind of real recovery.
But of course, I'm guessing as much as anyone. I just wish I hadn't been busy at a trade show this week, or I would have sold when they were in the $150-$200 range.
My guess is that there's going to be a last minute scramble to buy before the trading fees get reintroduced probably pushing the price up a bit. When trading fees go in there might be slightly less liquidity, compared to yesterday and today.
Entirely speculative on my part, but plausible anyway.
There two good news for me - I was able to buy bioshock infinite and tomb raider for 20 euro both from people that bought miners 7970, and I am looking for a quad crossfire when they decide to unload the cards and cut losses.
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