Bitcoin is back: Price quietly jumps 80%
cnbc.com
cnbc.com
Caveat: I'm not an "active Bitcoiner", just a casual observer. And I can tell you that my view is now irreparably tainted.
The "normals" I interact with continue to not use Bitcoin for anything. It's even stopped coming up in casual conversation (likely because the tide of consumer news stories has slowed). From my perspective, the Bitcoin economy continues to be powered by people who have either mined or bought BTC and are just exploring new ways to spend their windfall (Overstock! 50 Cent's new Album! Dish Networks!)
There is still no incentive to get paid in BTC, no incentive to use BTC, and no incentive to hold BTC (as the recent spike shows, it's still incredibly volatile).
For now, I'm holding on my belief that the Blockchain is the real story here -- and we haven't yet discovered the killer app (which I _don't_ think is BTC).
How about no chargebacks? That seems to be a pretty big issue for anyone doing business on the internet.
From the most negative point of view, the chargeback mechanism could be seen as a sleight of hand marketing trick that was necessary to get consumers to accept new payment methods, by hiding the real costs.
I can't imagine that there are many business where the cost/benefit of only accepting bitcoin to eliminate chargeback losses makes sense.
Consumers like knowing they have an element of protection when buying something from a store they can not visit from people they'll never meet. As someone that has worked with ecommerce websites for the past 15 years and currently has $110 worth of bitcoin in my wallet, I don't think that is likely to change anytime soon. Especially not with the current pitch of bitcoin.
I get paid by clients in bitcoin. It saves me significant wire transfer fees.
I agree with the assertion there may be things plugged into the network which affect price in either a (unnatural?) negative or positive fashion. /r/bitcoinmarkets has been talking about China intentionally pushing the price down for months now by way of implementing marketing sentiment, China style. However, I believe there are far more positive connections being added to the network (as you mentioned in your comment) and these connections will bring added value and stability to the market by acting as dampener to value manipulation.
Overstock has real sales with BTC. Sure, they aren't much, but it's a good start for what is essentially the world's largest startup. The only reason we're not all circle jerking each other over Bitcoin like we would something like Instagram (photo sharing site sold for $1B? really?) is because of what cryptocurrencies in general represent for humanity: computed trust. Trust implemented by a thing that we all run and none of us can stop except maybe for the devs, which requires consensus. That's a POWERFUL and scary tool.
When something messes with trust, interest and fear, you get the AWE response from humans. This results in either great joy from trusting and being interested it, or anger from fearing it. This is why discussions around Bitcoin are so polarizing.
Killer apps bring trust in a widespread way. Killer apps for powerful tools aren't invented overnight. It takes conviction and hard work to figure out opportunities and it usually requires lots of experimentation. Resenting or judging based on the fact some will fail in a given time range is illogical. I do hear you when you say you think the blockchain is the real story. I agree, but in a much broader sense of any type of computed trust.
The keyword is "computed trust". This is a freaking awesome huge - never seen - feature. I just hope the tech behind is solid enough.
It's perfectly OK if they remain a primarily black-market phenomenon, the currency of System D [1]. Use dollars at Walmart, euros at the train station, and Bitcoin for remittances, VPNs and burner phones.
As repressive regimes restrict personal freedom in the "legitimate" economy, and as the global 0.1% extract ever more wealth from working people, System D will become larger, more sophisticated and globally connected.
Cryptocurrencies enable human freedom and dignity through System D. They provide independence from those who would control you and from parasites who profit from your labor.
Spend your dollars on consumer trinkets and meaningless entertainment. Save your Bitcoin for what matters.
[1] http://www.forbes.com/sites/jonmatonis/2012/03/19/could-bitc...
For those who, like me, thought of the init system and were very confused confused:
> System D is a slang phrase pirated from French-speaking Africa and the Caribbean. ... They say that inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes, are part of “l’economie de la débrouillardise.” Or, sweetened for street use, “Systeme D.” This essentially translates as the ingenuity economy, the economy of improvisation and self-reliance, the do-it-yourself, or DIY, economy.
Is this a common term in the Bitcoin world?
Keep in mind, there are a few different types of people interested in bitcoin:
1.) Get Rich Quick types 2.) Techies 3.) Crazy Extremist Libertarians
I'll let you be the judge who is who.
Nothing is stopping another exchange or malicious person from doing the same thing.
An Occam's Razor approach to understanding the data, is that the bot was performing legitimate buys for an institutional investor who would have made a deal offline, and directly, with MtGox. There is a perfectly plausible explanation to the bot that is not nefarious. So, please reconsider you "irreparable" decision, since its basis are far form solid.
There are many reasons to believe the rise is 'real', especially that the fundamentals are enormously more solid now than when it crossed $650 now than when it reached that price for the first time (in november).
Fundamentals, you say? I am afraid that there are more serious ways to learn about those than whether the "normals" you interact with are using it or talking about it just now. Your personal perspective might not necessarily provide the whole picture! I recommend you get your data from a site like http://www.bitcoinpulse.com/ check it, please, and tell me if you still stand by your arguments.
Also, 'volatility' is not argument enough to eliminate the reasons why people like to be paid in Bitcoin. I prefer Bitcoins over Dollars without hesitation, and I am very glad I have been paid in Bitcoin in the past. Other people just want to accept any kind of money their customers want to give them, and eliminate the volatility exposure by using Bitpay and the like.
If enough people believe it to be true, it will happen, at least temporarily.
[1] http://www.cryptocoinsnews.com/news/bitcoin-price-2014/2013/...
1 - Many efficient market theorists say there is no information is past price movement.
2 - There's a well known January effect in the stock market that's acknowledged by those who believe in #1.
I look forward to following this. And yes - log plots are the best way to look for these patterns.
In theory, traders search for asset prices that are higher or lower than fair value and profit by arbitraging back to fair value.
But in real markets, rising prices encourage more buying, which drives prices even further from fair value. Falling prices encourage more selling, pushing prices lower still.
Markets don't price to what traders think is fair value. They price to what traders think other traders will think the price will be.[1]
We have reached the third degree where we devote our intelligences to
anticipating what average opinion expects the average opinion to be.
I would be happy to lend you Bitcoin you can sell short (if you post sufficient collateral, of course).
How much do you want?
If someone has the cash, is able to withstand volatility, and the rates are low enough this trade is a no-brainer. BTCs have no intrinsic value and are propped up by speculators. Aside from speculative interest, they only have value in so much as they can be exchanged uniquely online, but they are just as useful for doing that at $0.0001/BTC as they are at $1000/BTC. Long-term I would not be surprised to see them go to 0 or some nominal amount.
ETA: Odds are nobody will loan you enough at a low enough rate to make this trade worth putting on. It's like how you can short leveraged long and short ETFs and make money due to volatility decay, but nobody will lend them cheap enough for it to be worthwhile.
Rinse and repeat for each leg up ... $32, $90, $240, $1100. Same arguments every time.
Given historical volatility, I'd say fair collateral for a short sale would be 300% of the current exchange rate in USD, EUR, CHF or gold, with a margin interest rate of 6% per month.
Since there is a fixed number, the more popular they become as a trading platform, the higher the price will go, since if many people, P, need to trade at the same time, and they need an average of $X worth at any given time, and there are B bitcoins available, then $X * P / B is the minimum price a bitcoin can be.
So, if the amount used for trade becomes somewhat stable and/or continues to grow, it means there is some real base dollar value for a bitcoin in order to support this. Given this base value, along with its other features of easily being kept safe and transferred across national borders, it then makes them attractive to store wealth, which increases the value much more. And then, given the group of people willing to store wealth in bitcoin, it makes people even more confident in it as a store of wealth. And so on and so on...
How hard is it to short Bitcoin? That will determine the susceptibility to manias and panics.
So it is likely not caused by past price movements but by repetitive events.
I don't believe the market is efficient, especially short term. I believe that in the long term it is efficient-ish. Value strategies try to take advantage of mispricing from short term thinking but stocks can stay mispriced for a very long time.
Sounds rather like Second Life. Linden dollars, the currency of the future!
Btc has recovered before from serious crashes and I'm pretty sure next Christmas could smash the current ATH... It really feels like last September/October or March '13.
I wonder what the financial gurus with bitcoin-is-going-to-10-predictions [0] say about that if finally their predictions fail...
[0] http://www.businessinsider.com/williams-bitcoin-meltdown-10-...
1 - When there's not a lot of volume, you can't trust price movements because it doesn't represent a critical mass of opinions.
2 - When there's too much volume, you can't trust price movements because it's a mania or panic.
I'm not sure if #2 is true in this case. It'll be interesting to watch.
Who knows, maybe it was us at QuickCoin? :D
I'm getting downvoted with a previous comment because it probably looks like spam but you can find me online if you want more details on who we are and what we make.
The "Bubble Watch" graphs have been updated daily for several months in anticipation of a future bubble. Bitcoin's market price has spiked seven times since its inception, every 220 days on average, and the above graphs overlay the previous bubbles with the current performance to predict when a bubble might occur.
Such charts may be a self fulfilling prophecy, though it's interesting to see how well the past bubbles align with the current spike.
To get another view of the past bubbles, go to bitcoinwisdom.com, set "Settings -> Scale -> Logarithmic", and change the view to 3d.
How does an asset with virtually no underlying value remain so remarkably stable for long periods? Then, how does that same asset suddenly experience such sharp increases in value and volatility?
There are those with huge holdings who have an interest in stability for the sake of its adoption as a currency, and its long-term value. They can easily manipulate the market towards stability. And, as we saw with Mt Gox, unsecured and unregulated exchanges can also be a vehicle for market manipulation and outright fraud.
I know that opinion is unpopular with some, especially without hard evidence, but many also believed the increase before the Mt Gox fiasco was organic.
I am not a Bitcoin hater, and have dabbled myself for a decent return. I just think its past time to secure it properly and earnestly acknowledge its vulnerabilities. That vs. pretending that any of this makes sense from a traditional market perspective.
Long periods? Long-term? When has ever Bitcoin experienced this? Looking at the graphs, I don't think I can find a single month where Bitcoin remains even close to stable.
Sure you can. And, even more so when you define stability relative to the degree of fluctuation during volatile periods.
Why is this suspicious?
I didn't say that it was "suspicious". I said it was manipulation. It appears that you agree?
But, maybe you meant to ask why such manipulation is bad, unhealthy, or similar?
In any event, my comment was directed at the general pontificating about why the price is on the move, which always occurs during periods of volatility. That discussion takes place as if we are talking about, say, an asset that is traded in a free market. But, my point is that it is not a free market and that the price is instead dictated more by manipulation and fraud.
I see Bitcoin as something like the 2nd-gen P2P file sharing systems (Gnutella, etc.) where a radical decentralization approach was taken to counter weaknesses of the earlier generation (P2P: Napster, Currency: E-Gold). In the P2P world we figured out that a small amount of centralization provides benefits and is acceptable (e.g., Bittorrent). I suspect that in the e-currency world we'll be going a similar route, where successors to Bitcoin will use Ripple-like concensus systems instead of proof-of-work [2]. This should not only allow to significantly reduce the cost per transaction, but might also allow to make the network more secure in practice (as the number of validators in a concensus approach will be much larger than the number of mining pools with signficant hashing power in the Bitcoin world).
[1] that's basically the cost of finding a new block divided by the number of transactions per block - see https://blockchain.info/en/charts/cost-per-transaction.
[2] Proof-of-stake is a nice theoretical approach but due to the complexity involved it will probably take some time until a solution is found that also works well in practice. Proof-of-stake as implemented in Peercoin is basically outdated, something like Slasher (http://blog.ethereum.org/2014/01/15/slasher-a-punitive-proof...) looks more like a viable solution.
EDIT: As there has been some confusion about the $50 transactions costs: I'm not talking about direct costs for the person who initiated the transaction, but about externalized costs that are paid by the whole network. See my responses below.
Edit: I don't know much about this stuff so please correct me if I'm wrong but wouldn't the cost of the "externalized price per transaction" be (price_to_mine-block_reward)/number_of_txs. price_to_mine and block_reward would approach each other over time.
This leaves us with two options:
1) Instead of being financed by the block reward miners will require higher mining fees in order to include transactions. With a decreasing block reward those mining fees will eventually approach the actual cost of a transaction (currently: $50).
2) There will be less miners so mining a single block will be cheaper. This will lead to a decreased security of the network and make the network more vulnerable to attacks.
Secondly, you're assuming that the mining pool is currently constrained by what is profitable. From what I have read about large mining operations, they are significantly into the green on profit margin right now, so there seems to be room for a decrease in profitability without losing significant portions of the mining network. Every time the mining difficulty changes this is tested already so we know that there is at least some wiggle room in the mining profit margins.
It just seems like you're oversimplifying a really complex equation with lost of potential outcomes. Perhaps this short comment style just isn't allowing you to explain everything. Have you written a blog or anything that details your thoughts on this?
I understand the equation of ([transaction fees] + [block reward])*[exchange rate] / [#transactions in block].
For more info see:
https://en.bitcoin.it/wiki/Transaction_fees
A 0 fee tx
http://blockexplorer.com/block/000000000002e0d610f875f5aa4fb...
That's a meaningless soundbite.
The figure you cite is a function of the current network difficulty/hash-rate, tx-rate and USD/BTC exchange rate. It's devoid of any meaning when looked at in isolation because it is by definition already factored into the exchange rate.
Revenue, not cost. The cost depends on the amount of energy expended multipled by the price of energy.
This was very confusing for me and it took me about 5 minutes reading the site before I could understand what I was looking at. There's so much information on that page that is irrelevant to a person following that link. Perhaps I could see this being valuable if people used it like pastebin, but why do people have to pay so much to post something?