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Comment by lpolovets | Hacker News Reader

I don't have a strong opinion on Bitcoin, but seeing the price double repeatedly over the course of 12 months gives me a physiological feeling that I can only describe as FOMO. I know it's irrational, and I'm not going to buy any Bitcoins just based on my gut feeling, but it's still disturbing that seeing a chart go up and to the right makes my brain think that I ought to be buying a piece before it's too late. I bet this is what it felt like to be in the middle of the Tulip Bubble.

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The price has gone up by 20% in 24 hours, not just doubled in the last 12 months - I think in twelve months (according to bitcoin charts) it has gone from around $10 to around $600 - 4900% increase. That's clearly unsustainable and yes it does look like a speculative bubble, particularly when people expect it to continue to grow indefinitely in price without a commensurate rise in usage as a currency.

It'll be interesting to see this play out as it's a great example of a completely unregulated market at work.

http://bitcoincharts.com/charts/mtgoxUSD#rg360ztgSzm1g10zm2g...

I don't see bitcoin becoming a world currency without some large changes to the protocol - for example to track users and link them with real world IDs, reversible transactions etc, and there are also political reasons which would make it very difficult - governments enjoy being able to fund deficit spending and control the economy by manipulating the currency, they won't easily give up that power.

I remember looking at it when it was below a dollar... at the time I had no money and told everyone I know to buy. I also managed to mine 50 coins, but have since lost the wallet.

Now, my brain melts when I see the current price.

Obligatory horror story from 'mcantelon: https://news.ycombinator.com/item?id=6687580

I was going to buy $300 worth when they were 30 cents each. I didn't, though, as it involved travel to a nearby town and I was working on a book and thought I should be practical and spend the weekend on that. Ah well, one less house.

what does it mean you lost your wallet? #noob_here

A Bitcoin wallet is a file that contains the private keys that allow you to transfer bitcoins from a certain address. If you lose that file, you can't use those coins, they'll just sit there forever.

#noob_here also

If the bitcoins in the lost wallet never get recovered, does that mean that the amount bitcoins available for trading has just decreased? My small understanding of bitcoin tells me that there only a limited number of bitcoin available once it has all been mined.

Yes.

so this should lead to an even higher exchange rate since there's even less supply. any estimates how many bitcoins are lost in oblivion?

Also brings in the question as to when bitcoin becomes useless as there are not enough bitcoin in the wild for useful trading.

This is pretty far away. Making some quick and dirty calculations:

The lowest bitcoin denomination is one Satoshi, which is 0.00000001 BTC. If one Satoshi would equal one cent, this means that one US dollar would equal 0.000001 BTC.

Given that the maximum number of Bitcoins is ~21 million, this amounts to a max capitalization of ~21 trillion USD.

That also assumes a nontrivial amount of lost wallets, which I have a feeling is not the case...

Bitcoin will never become useless because of such stupid reason. If people need smaller divisions than 1 satoshi (10^-8 of BTC), the protocol will accommodate that easily with small extension. But most probably, smaller transactions will be carried outside the blockchain on a decentralised clearing networks (where debts are cleared with real BTC transactions every day to limit the risks).

thanks for answering. So I guess you should always keep that file in dropbox :)

If you do upload your wallet to "the cloud", you should definitely encrypt it with strong encryption and with a password of appropriate entropy. Otherwise, you're just asking for someone to steal your coins.

in that case, what's the best way to protect your coins?

Encrypted paper wallets, probably. https://en.bitcoin.it/wiki/Securing_your_wallet#Paper_Wallet...

How feasible would it be to "guess" the private keys to a wallet? Could the computing power people dedicate to hashing be directed toward this?

I'm sure this question makes it pretty obvious I'm not a cryptographer, but I'm still curious.

Flipping the coin predictably 256 times in a row will require more time and space than available in the universe.

My sympathies. I do think the current price is due to speculation rather than real value, but what is the value of a currency? If it is simply what you can exchange it for, in the case of bitcoin that is a freely floating value based on confidence, which will go down as well as up.

Linking bitcoin to real world IDs is against the politics of bitcoin, remember nobody controls the currency

1. You will never miss out. Even if you never by bitcoins and it becomes world money, you'll benefit from it indirectly (and taking no risk in the process).

2. It's never too late. The bet is that Bitcoin becomes world money. If so, all the wealth stored in cash, gold, silver, bonds and other low-risk less liquid assets will go into Bitcoin. This will make it worth more than 10 million of today's USD per BTC.

2. The bet is that Bitcoin becomes world money.

It's also worth noting that the US government now owns 0.686% of all bitcoins that will ever be created. (They seized 144k coins in the Silk Road raid, and eventually there will be 21 million total coins.)

They must be motivated to preserve that wealth now.

I think they intend to sell it. Now seems like a good time for that.

It seems likely that they'll be required to AUCTION them off through an approved process rather than sell them themselves on an exchange.

And they probably won't do that until they've convicted "Dread Pirate Roberts"

> right time to sell it

And plummet the price back to sub dollar values

There are enough of private investors willing to buy without crashing prices on the open exchange. Financially, it'll be a good deal for both a buyer and a seller. I heard SecondMarket's BIT (bitcoin investment trust) can't buy new bitcoins fast enough from private hands to satisfy the demand.

And they have said that they will liquidate (sell) all of that back to USD, like they do any other seized asset.

Was there every any concrete evidence that they did in fact have access to the wallet DPR was using?

Supposedly these ones.

http://blockchain.info/address/1F1tAaz5x1HUXrCNLbtMDqcw6o5GN...

...all the wealth stored in cash, gold, silver, bonds and other low-risk less liquid assets will go into Bitcoin

This is rather utopic vision. None of the gold owners would sell significant part of their gold for btc - gold is used to store value for ages, bitcoin is a currency.

I personally know a gold owner who dumped all his gold (accumulated over past several years) for Bitcoin in February. Bitcoin has different risks than gold, but you can 1) move it cheaply and quickly to a safer location any time 2) you can buy stuff with it directly. Gold sits there and you always have to fear that government or someone else confiscates it, to makes it PITA to sell a portion of it.

Both are commodities and containers for wealth. If there's an arbitrage opportunity in exchanging one for the other, they'll likely be exchanged.

The thing about "store of value" principles is that the ascribed value of things changes. It generally has a floor of the marginal cost of production / extraction / acquisition, though sometimes it can fall below even that (viz: inflated currency literally not worth the paper it's printed on).

If someone's willing to pay more for bitcoin than gold, or you're betting that that the value of bitcoin will increase, trading gold for BTC makes sense.

In terms of tangible value -- Gold is more likely a persistent store of value than BTC, but where you need to move wealth quickly and easily (say, you're fleeing an unstable situation), a BTC wallet somewhere else might be a lot easier than smuggling out gold ingots. Even a (moderately) modest amount of wealth, say, $50m, would be somewhat over a ton of gold. Hard to run with that in your pockets.

If you want to limit yourself to a maximum of 45# of weight, you could carry slighltly under $850,000 at current market prices. Not insignificant, but depending on the loot you're trying to, well, loot, possibly less than you might hope.

Silver was demonetised in 20th century relative to gold, though it was used as a store of value. It can happen with gold too.

http://www.dailyreckoning.com.au/silver-a-brief-history-of-d...

It could be the S-curve https://www.youtube.com/watch?v=qHUPPYzzZrI&feature=youtube_...

It is already too late. You should buy when it's low, not when it's high. Wait for the next crash, and then buy, if you want.

I thought that last week when it was $300.

It's better to get out too early than too late. Quit when you're ahead, is the big rule of gambling. (Which is what this is.)

This reminds me of a story of Sir Isaac Newton and South Sea Company bubble. He got out early, then watched all his friends get rich, jumped back in again with both feet, lost a fortune. Even smart people are not immune to bubbles.

http://www.businessinsider.com.au/isaac-newton-and-the-south...

It's quite the opposite of gambling. In a casino, the odds are are exactly defined, and the ROI is negative. This investment has unknown ROI.

Okay, maybe it's more like a pyramid scheme. As long as more people keep flocking to it, prices will go up. But you don't know how long people will keep flocking to it.

Under this definition, every currency is a pyramid scheme

pyramid schemes backed by governments with police forces and militaries able to collect taxes in said currency.

Gold and silver were a currency and they weren't backed by government.

That's why I don't trust gold and silver either. They lack inherent value.

It's still gambling, even if it's the opposite of casino games.

It's OK, at the current rate tomorrow it will be worth $720, and the day after that $864 :)

Understand that no-one has any damn clue where the price is going. If you'd invested at the peak of the last bubble and held on to it, you'd have doubled your money. Work out a plan, write it down, stick to it regardless of price. Mine is investing £100 on the same day of each month, including this month, and selling in five years. Work out what your position is - mine is massive realization in five years - and then don't b swayed by the day to day.

This seems like a pretty good strategy. A bit of fun, low risk. I bet a heavy smoker spends more than £100 a month of cigarettes.

In the UK, £100 gets you about a week's worth of smokes for a heavy smoker.

Putting it in BTC rather than cigarettes is a sensible strategy because even if BTC goes up in smoke (see what I did there?), at least that smoke didn't end up inside your lungs.

I'm a smoker. I'm quitting. My cig spend will likely go on BTC. Maybe.

Haha, best of luck to you!

I noticed you're based in London, happen to work near Shoreditch? I'm in contact with Dishoom - trying to get them to accept BTC. Another reason to quit, eh? ;)

It doesn't matter if you buy when it's low or high, the only thing that matters is what will happen in the future [1].

There is absolutely no guarantee that low stock will rise [2].

[1] http://en.wikipedia.org/wiki/The_Art_of_Thinking_Clearly

[2] http://www.nasdaq.com/investing/5-stock-market-myths.stm

Price has gone up by nearly $200 since you posted this comment.

Still to late to invest?! :P

I feel exactly the time. I talked to a friend of mine when it hit $200 and I said I didn't think it was worth investing to make cash at this point.

Had I put $500 in then I would have $1500 now :(

No, you would have $1500 in bitcoins. This feels completely different to having the same in $, because you've already made the leap.

Only if you had invested and cashed out would you have $1500. And then you might feel exactly the same as you do now in a weeks time. Then again bitcoin might crash and you would feel good for getting out now.

If you want to invest you have to be entirely willing to lose all of that money. You can't lose money that you didn't invest so it is pointless thinking about the past.

Honestly I would withdrawl $1000 from it so you have that $500 again. You pull your winnings and keep your base invested. That's the safe play. Doubled your money, you have it secured. Let that extra winnings be the gamble. If you lose you still won.

I agree. Zero risk is excellent.

I just think that you should be willing to lose it all to get to a situation where you can zero your risk (whilst keeping a reasonable amount in).

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