Bitcoin just broke 400 USD | Hacker News Reader

Bitcoin just broke 400 USD

coinbase.com

69 pointsbmilleare105 comments

To all those in this thread regretting having sold bictoins earlier because of some feeling. Don't be depressed, a lot of people did, and that's OK.

You can still trade, but you have to switch your mindset to a trader's one, and regretting a "missed" opportunity and feeling "tempted" to buy while the asset is on the rise is impulsive. Learn how to trade, there are countless resources around, even though this is not only math, learning seriously can protect you from impulsive behavior.

I'd say, if you want to invest in bitcoin, unless you're a serious believer (and that's fine, but in this case you probably already have some), do it like poker players manage their bankroll, use some money you can really afford to lose, so you can sleep at night and not feel too bad then the coin drops 25% over a day.

Anyways, what I think is that we are on HN, where people make money using their skills and by creating value. Investing $10k by creating your company today might not only make more money than the same investment in some cryptocurrency, but also create something of value in the meantime.

Want to join the bitcoin ride the hacker way? Build a service that uses the currency, or help people to use it.

Disclaimer: I have nothing against bitcoin, I just think it's a little sad to regret not making a quick buck on something you have no real control on.

> regretting having sold bictoins earlier because of some feeling

They turned a risky as hell deflationary asset into a low-risk slowly-inflating one :)

Hindsight is 20/20. At any time, Bitcoin could experience... a problem. Which affects its value, badly. By selling, you simply dodged the cost of that risk, which is real.

There will be Senate hearings soon on Bitcoin. The guidance coming out of this alone could boost the value even further... or slam it.

http://www.economicpolicyjournal.com/2013/11/bitcoin-senate-...

And if it slams it, you should buy, as Bitcoin is a global phenomenon and is incapable of being controlled by the US Government no matter how they propose to deal with it. :) Germany and China are already quite positive on it.

low risk? We'll see.

Perceived low risk :)

BTC is a nice hedge against that. I think people are beginning to realize that.

Bitcoin Average and Bitcoin Charts are two sites that provide much more information about the latest price than Coinbase's chart.

Bitcoin Average does a volume-weighted price average across major exchanges.

https://bitcoinaverage.com/#USD

Bitcoin Charts gives you some historical information like the 30-day average for each exchange/currency pair.

http://bitcoincharts.com/markets/

If you want to look at candlesticks to track the latest price action, Bitcoinity tracks multiple exchanges.

http://bitcoinity.org/markets

There's also http://bitcoinwisdom.com

Looking at the bitcoincharts link, why is the going rate a MtGox (~440) so much higher than BitStamp (399)?

It is notoriously difficult to get USD out of MtGox. I've heard that often the process will take weeks or even a couple months. The price there reflects that people are less willing to sell Bitcoins on MtGox.

Right now, the market cap is nearly $5 billion. An eventual market cap of $1 trillion or higher, however, is very realistic, if global banks pick it up as their default method of exchanging wealth. It effectively replaces risky physical shipments of gold and cash, and solves the (also risky) reliance on corporate/government credit worthiness for digital transfers of ownership.

Banks don't exchange wealth with physical shipments of gold and cash. Large scale digital transfers of money is nothing new.

No, they do. Collateral for many debts require some percentage of physical (lower risk) assets as opposed to a contract holding that carries ove risk from a third party. Physical assets get moved around all the time.

how far away is this very realistic $1 trillion market cap? 2 decades, longer?

Does anyone have an explanation for why the price is going up so high so fast? Is there something legitimately pushing the price up or is it pure speculation?

Is there a difference?

There isn't much depth to the market. I have some bitcoins, but since I've already made 50 times my original investment I'm holding the rest.

Some people have super fat stacks though (10s or 100s of millions of dollars worth) they are trying to use the money by spending it because they are trying to build up the bitcoin merchant community.

That Cryptolocker virus demands payment in Bitcoins.

China discovered Bitcoin, I believe it was featured on its state news recently, and the main Chinese bitcoin exchange (which is only 2 months old or so) is already the largest in the world. China has been hurting for any kind of financial investment vehicle of late, and historically they are big savers.

This is what happens with global phenomena. The soil (global internet) is already there, anything that will grow in that soil (like bitcoin) can spread VERY quickly like a wildfire.

What happens when India discovers it is perfect for remittances? What happens when Africa discovers they can exchange payments with just a mobile phone without even having a bank or credit card or any credit period? What happens when parents the world over realize this is a perfect way to give their kids money to buy stuff online with? Or for online retailers to be able to sell to the unbanked and to those who don't have good credit or a credit card? Anywhere in the world, to anyone with BTC? What happens when new uses for Bitcoin that haven't even been thought of yet, are?

Trivia: The head of the Chinese exchange is a Stanford graduate and his brother invented Litecoin.

Since such an exchange can circumvent Chinese monetary policy it is unlikely that it can keep doing so and become popular.

Wouldn't a country lose by placing restrictions on BTC if BTC became widely used in a global setting?

Countries place all kinds of restrictions that don't exist in other countries, they don't end up "losing".

My very speculative theory is that lots of "bandwagon miners" who started GPU mining after the price spike of April were unloading their coins as quick as they were making them therefore keeping the price sort of stable.

But now, with mining being 50+ times harder only serious miners with their multi-TH rigs are earning any significant amount of coins and they are likely holding to them.

Deflation. The volume of transactions has droppped and the price per unit has increased.

Which trading exchanges allow you to withdraw money easily and promptly and have low liquidity and credit risk?

All of you talking about investing in bitcoins, why aren't you trying to earn bitcoins instead? To some extent you'd be able to establish your own exchange rate, or at least not be tossing money in at an inopportune moment, and instead throw time/materials into some project and grow the bitcoin economy. And, by growing the economy, you'll help to ensure that BTC's value might mantain, rather than diminish, when speculators pull out or toy with the market.

I wonder how much of the recent BitCoin run up is driven by CryptoLocker?

CryptoLocker demands 2 bitcoins (10 after initial deadline has passed) and there are only around 12 million BitCoins in circulation. I haven't seem any good estimates of how many people have been infected but it seems like it is quite a few. This additional demand could easily drive the price up although eventually the CyptoLocker extortionists would sell those BitCoins driving the price down.

They'd be apt to hold on to the bitcoins if the CryptoLocker infection is exponential.

Technology is amoral.

If you think Bitcoin is genuinely new technology which might find a niche, it pays to throw a little money its way.

If you think the fact that people using a technology for nefarious purposes is a strike against that technology, then you should probably never handle cash, ever.

I doubt it's much, since from what I've read, virtually nobody is paying the ransoms in bitcoins. Makes sense - if you have some already, you aren't likely to be the type of person who gets infected by that. If you don't, well, the deadline for payment is like 3 days. I've bought bitcoins already multiple times, and I don't think I could buy some in 3 days reliably. Somebody who doesn't know much about bitcoin already doesn't have much chance of making a purchase before the deadline.

Right, question time:

Market cap is now $5 billion. Wealth can't be created, so where has that money come from? Have other currencies fractionally devalued?

The cost of mining has been negligible until recently.

Other currencies are fractionally devalued, because the total money supply in the world (across all currencies, including Bitcoin) has increased, and because money is just a demand on all non-money products and services. More money demanded against the same amount of global products and services==devalued money.

Other currencies are proportionally less useful and demanded and bitcoin becomes proportionally more useful and demanded.

Minor nitpick:

> Wealth can't be created

Yes, it can. Since money is just a demand on all other kinds of value, printing money or creating a new currency redistributes the ability to claim those other values. But if you actually create those other values---e.g., if you invent a Cyclotron or Google or are the next Bill Gates or you grow fruit or catch fish or cut hair---wealth is being created.

EDIT: I should be clear that I think that wealth redistribution via creating a new currency is completely just and proper. It is an implicit reward for creating a better way to trade, and it can only be obtained if you actually do create a better way to trade (and this is what Bitcoin speculators are, hopefully, doing). Wealth redistribution by printing money (a la the Fed) is evil.

Wealth can certainly be created; that's HN 101 if there is such a thing.

See http://www.paulgraham.com/wealth.html, especially "Money is Not Wealth."

Why can't wealth be created? Value (of which wealth is a store) is entirely subjective, and is not at all a zero-sum game.

If John Lennon wrote a poem on a sheet of paper just before he died, that paper would now be worth a vast amount of money. Considerably more than the 1c value of the sheet of paper alone. Nobody had to pay anything to create that poem.

Bitcoins are currently valuable, precisely because (and frankly, only because) people put a value on them. That means that if I'm willing to spend $400 on a Bitcoin, and someone is willing to give one to me at that price, that is how much it's worth.

That single transaction may be zero-sum, in dollar terms, but next week I might sell the same Bitcoin for $500 or $300 in another (dollar-terms) zero-sum transaction. The Bitcoin is the same. The price (value) is all that's changed. Just like the price of the sheet of paper containing John Lennon's last poem after he wrote on it.

If you're thinking about trading bitcoin, I would suggest you don't use MtGox. It has problems with withdrawals of USD, and hence has an inflated bitcoin price compared to other exchanges [1]. Once your money is in there, the only fast way to get your money out is to withdraw bitcoin, hence the disparity.

[1] http://www.cryptocoincharts.info/#jump-btc-usd

So what exchange should you use? And what type of assurances do they have in terms of not losing your money?

Funny that I almost invest in Bitcoin ten days ago...

Really, I always feel it's a good moment to invest when I look at the last 3 days chart...but then I look at the 2y chart...Big Bubble.

For the optimistics, I would suggest you to read that http://www.forbes.com/sites/timothylee/2013/04/11/an-illustr...

Look at the 2y chart. Then look at the oil price chart from 2000. This spike will have a matching downspike with recovery.

I bought some at $30 and sold at $260 right before the last crash (literally, 2 hours before). I felt all smug…

haha yeah me too, I bought in at $40 and progressively sold out up to about $240... I too felt smug. :)

So I see different rates in different websites. What prevents me from buying in one and selling in another? Do these automatically account for the exchange rates? from a quick look it doesn't seem so - I am wondering if short term trading is a bad idea. (With tiny amount of money of course).

Nothing prevents you from moving bitcoins between exchanges, but moving dollars between exchanges turns out to be much more difficult than you might expect. Banks and governments introduce all sorts of roadblocks, charges, and delays. In order to arbitrage effectively, you need to be able to transfer dollars as well as bitcoins.

You can't withdraw your money before months on some platform, and that's why the exchange rate is higher. http://www.coindesk.com/withdrawals-from-mt-gox-growing-pain...

This graph is helpful:

http://blockchain.info/charts/bitcoin-days-destroyed-cumulat...

I sold my remaining BTC when it was 140.. I thought that was high...

If it makes you feel better, I sold mine at 90€ ($120) :/

This points to a problem with the idea of early adopters getting an unfair advantage. Say you are an early adopter and you bought at $0.10. Should you cash out at $10? How about $100? At any point along the path an early adopter could cash out and a late adopter could get in.

This does not point out a problem with early adopter advantage.

BTC still appears to be a deflationary currency, which fundamentally favors the early adopter (though they may still screw up and lose that advantage). In a deflationary currency, over time, the cost of goods and services will trend towards smaller increments of the currency. Assume that the BTC economy stabilized, that it has a nearly consistent deflation rate similar to our nearly consistent inflation rates in other currencies.

If you receive a salary of 100BTC this year, at a 10% deflation rate you would expect your salary the next year to be about 90BTC, and about 81BTC the year after. 7 years into the job (barring other pay raises) your pay is cut in half (in absolute terms), but can still purchase the same amount each year. Now, assuming a modest 30% savings rate, after about 15-16 years you'll have saved up more than you will earn over the next 15 years. So now my kid is grown and entering into the economy, in his first 15 years he'll have earned what you saved, but have a fraction of your wealth. 15 years after him another kid has grown and entered the market and faces the same dilemma.

Today, BTC is unstable, the value fluctuates wildly, "early adopter" is a fuzzy term because BTC is still young. But this is the fundamental problem facing deflationary currencies over an extended period. The deflation rate, similar to the inflation rate for other currencies today, has to be tempered. If it's allowed to get out of hand it'll wreck the economy it's meant to facilitate.

Already have been discussed https://news.ycombinator.com/item?id=6724548

Things should get interesting when the Winklevoss' Bitcoin ETF is created. I wonder what the implied volatility will say about the cost of puts and calls...

Bought some at the April bubble at 235, dropped the next day . So happy that it finally got back up but sad that I didn't buy more when it was at 40-75

Dear Hackers, Do something to produce a crash so I can buy more Bitcoin… please?

FUCK. Is all I have to say. When it was $200, I said "Fuck, I should probably wait". Same thing when it was $300. I'm so on the fence in investing in bitcoin. I feel like it's going to reach $10k/btc and I'll be living in a lifelong depression of "what could have been".

Tempted to drop like 5k into it...

I truly don't know what to do at this point. I could wait and see a drop that may or may not come, and I'll constantly be in the state of indecision that I feel ultimately will cripple me in the future.

I think I'll buy 1BTC/mo and see where it goes from there.

There are many people who bought real estate in 2006 with this same mindset.

And this is why:

* It's referred to as "speculation".

* You don't "invest" more than you can afford to lose.

The more speculation changes, the more it stays the same...

As always don't invest more than you are willing to lose. There are a million ways that bitcoins could drop to nothing.

Yeah... well I somehow managed to sell a couple days ago at 275.... right at the bottom of the quirky crash - and I feel ... depressed.

Did you sell for personal reasons, or because the drop scared you off, or what?

I decided to sell at 350. I sat down on my computer, and put in my sell order at 352.Then it started to drop. Then suddenly, it crashed, 2 dollars a second. I watched it get down to 275, and then I just lost my nerve.

Basically, it was incredible, incredible bad luck. As I havent really "watched" the price, for about 2 years.

tl;dr; Bad luck can actually happen to you

Hang on, that sounds like a serious limitation in the trading platform if you can issue a sell order at one price and have it fulfilled at a different one?

Every trade platform I've used provides two options: sell at current market price, or sell at a specific, unchanging price. So it sounds like he misunderstood the option he was selecting, or something.

That reads like (s)he was sitting at the computer with the intention to sell at $350, and happened to be there to see it quickly drop to $275, got nervous and cashed out. The unlucky was that (s)he never would have thought to sell it except for seeing the price crash in real time.

That's how every trading platform works. You can put in a limit order where you buy or sell at a certain price, but it's not guaranteed to go through because there has to be someone else willing to take that price. You can also put in a market order, which will always go through, but the price will be whatever is available on the market at the time.

One advice: ALWAYS use a Limit order with bitcoins. Both limit buy orders and limit sell orders. That way you're guaranteerd to buy/sell for the specified price instead of the next best offer.

I know it's a cliché to bring this up but even with BTC being (arguably) instruments for speculation, it helps to keep Ben Graham's "Mr. Market" in mind when you're worrying about what the current exchange rate is. If you went to a store and they discounted your favourite [grocery item], would you rush home and sell all that you had in your cupboard, or buy it up while you can?

If you were to wake up tomorrow and realize all the money you put into Bitcoin vanished into thin air, how much would that amount be that it wouldn't ruin your life? $100? $1,000? That's a good way to figure out how much you should invest. But with Bitcoin, think long-term.

Rule of thumb: Don't make speculative investments unless you know something that everyone else doesn't know.

How many other people are thinking the _exact same thing_ right now?

I bought when only programmers knew ($4 / BTC) buying now would be buying when only techies and finance people know ($400 / BTC) if bitcoin continues to succeed and starts to get used for say, people sending money home to Pakistan it will be AT LEAST ($40,000 / BTC) and probably much much more depending on its usefulness. But the bet now is that it becomes very successful, not that it gains some momentum.

Out of curiosity, how much did you buy at $4/BTC?

Out of even more curiosity, have you unloaded, if not, why is a 10000% return insufficient?

Re: 10000% return...that's sort of a reverse-sunk-cost fallacy, isn't it? (Found gold fallacy?)

Whether or not bitcoin is a good investment is an orthogonal matter.

I don't share that online, but I have sold about 80% of what I bought at different levels. I'm holding on to the rest in case bitcoin gets north of $10k. I'm not a bitcoin millionaire, please don't kidnap me and force me to send you bitcoins :(

> Don't make speculative investments unless you know something that everyone else doesn't know.

Bitcoin has not caught on in the general worldwide population.

Simply knowing of its existence and understanding it at this point in time could be the hallowed knowledge you speak of here.

You're not comparing your knowledge to the median human - that would be insane. In five minutes you can become vastly more informed than the median human on any specific given investment, because there are millions of possible investments and most people spend most of their time on other things.

You're comparing your knowledge to the smartest, richest people looking at the same possible investments as you, because the market has already priced in their predictions.

That's just the kind of advice that could lose some keen programmers (with no financial background) a lot of money.

It's not advice at all, and I'm not sure why anybody would take it to be.

Fairly obviously because you're saying those in this thread have some kind of inside track on the future of BTC.

Taking fairly random speculation on the internet from a stranger--which contains no suggestions whatsoever on whether to take any financial action at all--as personal investment advice is the sort of behavior that could lose some keen programmers a lot of money.

I'm glad we agree :)

Eventually bitcoin will crash again. The big question is when. Some people will win, some people will lose. That's just how it is. There are many advantages and disadvanteges to bitcoin - non-centralized, not controlled,but also volatile, prone to hoarding right now, etc. To have a more stable currency a few wrinkles will need to be addressed.

"it may or it may not crash soon, it has many advantages and disadvanteges, there's stuff to be adressed"

Indeed, less verbose, but also less artistic :)

Yeah, I vividly remember in April 2012 (when it was ~$5) whether I should buy a couple K worth of bitcoins and then decided not to.

Speaking as someone who owns more than a few bitcoins, there are still many threats that could drop the value to near 0 in a matter of hours.

1. An exploit or bug in bitcoind that either takes down the network or allows theft of coins.

2. Discovery of a weakness in the underlying cryptographic primitives, or their specific implementation in bitcoind.

3. A hack of several mining pools at once that allows a 51% attack.

4. A crippling hack of multiple of the main exchanges or wallets at once: Mt. Gox, BTCChina, Coinbase, and BitStamp.

5. Regulatory action threatening to outlaw or severely restrict bitcoin.

6. Real brute-force 51% attacks may still be possible by an attacker with access to cutting-edge semiconductor fabs and a very large budget.

I think it's clear by now that the general concept of digital currency has a bright future, but betting on bitcoin specifically is still a risky investment.

Don't be sorry, you're looking at executing a buy high, sell low strategy.

When you want to buy bitcoin is when it's just experienced a big drop, you're too late to the party, when it hits $50 again, buy.

Pick a price point, make a buy order, as soon as your buy order executes pick another point, make your sell order. Don't time the market, price the market.

On a related note: Is the bitcoin infrastructure mature enough to support short selling in a sane way yet? I've yet to find a decent way to do this.

I use BTC-E. Too bad I'm an idiot and traded over 50BTC for litecoins. I'm legitimately stressed.

I refused an offer for my house in Aug 2007, don't sweat it.

Go into trades with a clear head not thinking about the past. Whatever you did you did, stressing about it will not help you make better trades in the future.

If you think BTC is going up, cut your litecoin losses and trade, if you don't stick with litecoin or something more stable til BTC reaches your price.

Hey, I remember first hearing about them on 4Chan /g/ back in late 2011, when they were maybe $6 a pop. We used to call them "Buttcoins" and laugh at all of the people mining them.

Of course, we look pretty stupid at this particular moment, but who's to say it won't all go to shit next week?

Easy, friend. There will be many more waves to ride.

> On a related note: Is the bitcoin infrastructure mature enough to support short selling in a sane way yet?

I work in finance so I'm very familiar with shorting but I don't know what you mean by "a sane way".

What way's sane or otherwise are you referring to?

Normally for shorting. you do the following: 1) borrow the stock from a broker 2) put in your short order 3) get your order filled 4) continue to pay a borrow each day for the stock you borrowed to short 5) buy back your stock 6) return the borrow and settle with your broker

You can't borrow bitcoin right now.

The only way to go short is to use sketchy futures and options exchanges.

That's fair but I highly doubt it will drop that low. I really, really hope it does though, wouldn't mind popping a few grand into it.

By not buying, you're betting that the price won't go up. Good luck with your strategy of not investing in exponentially growing, disruptive technologies.

That's the whole problem though. It's going up, but who's to say it won't crash?

Want to buy my webvan stock? They're disrupting safeway!

Exactly what is bitcoin disrupting? Those who want to take 10 minutes to buy a cup of coffee? Africa's stranglehold on unstable currencies? Thieves being able to steal your electronics and money all at once?

It's disrupting gold, money transfers, credit card fees, foreign exchange, and online gambling at the same time.

LOL. That's about all there is to say to that.

It's a hoarding scheme for libertarians. Good luck with that.

I think you forgot pump and dump OTCBB stocks, pink sheets, and pyramid schemes.

https://news.ycombinator.com/item?id=6728463

Regarding the 10 minute coffee... You can leave as soon as you pay, at some small risk (which could easily be absorbed by the payment provider), you don't necessarily have to wait for the 10 minute confirmation.

> Africa's stranglehold on unstable currencies?

You misspelled "insanely inflating". At least BTC is deflationary, albeit unstably.

> Thieves being able to steal your electronics and your money all at once?

If you're irresponsible (weak passwords, no backups, leaving things decrypted, using Windows... hehe), sure. If you keep your money at somewhere like Coinbase (where they keep 90% of their funds offline in cold storage) and use 2 factor authentication, very unlikely.

Funds in BTC can't be kept 'offline', if you know the private key you can spend the coins.

So the key is never to keep the private key decrypted, anywhere. And to make it extremely hard to brute-force.

https://en.bitcoin.it/wiki/BIP_0038

You could also split/shard it into pieces where M of N pieces are required to reconstitute the original key.

http://point-at-infinity.org/ssss/

It will drop, but you would not have guts to buy it at $50, because you would be scared of the downtrend.

My recommendation for you is to stay away from trading (whether bitcoin, stocks, FX or anything else).

This is why I invested 1k at ~$100. If it goes to zero...well, it's not that much money that I'd really care. And it will have been fun to watch all the ups and downs.

But if that $1k ends up being worth $50k and I didn't buy in...I would be so pissed.

Definitely don't invest anything you're not okay losing.

You're thinking of Bitcoin like a stock. It is not a stock. Everyone agress that it is likely to either go up my orders of magnitude, or not do that.

"Not do that" includes local price fluctuations that aren't predictable anyway, which is what you are trying to predit--like a stock.

Either invest in it because you want to invest in something that will either be the next HTTP or will be the next Gopher, OR don't invest in it because you don't want to invest in high-risk obsenely-high-return vehicles.

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