Author Topic: Bitcoin: An Interesting Case of a Classic Bubble?  (Read 74465 times)

Rich M

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Bitcoin: An Interesting Case of a Classic Bubble?
« on: April 03, 2013, 02:05:44 PM »
Anyone else watching this like a car accident about to happen?

http://money.cnn.com/2013/04/03/investing/bitcoin-price/index.html

http://bitcoincharts.com/charts/mtgoxUSD#tgSzm1g10zm2g25

In case you don't know what Bitcoin is,

http://en.wikipedia.org/wiki/Bitcoin

http://www.businessinsider.com/presentation-what-is-bitcoin-2013-3#lets-begin--1

It's one of those things where you might have bought a $100 worth in 2010 (2000 bitcoins) and sold them today for $250,000 or you could have lost it all because it went no where.  Looking back it would have been worth the risk, but losing a $100 would make you look like a fool.  Be interesting to see what happens now as it looks like massive bubble and people getting in now are really risking a lot.  My opinion of course.

The thing that I find interesting, just like in a gold rush where the shops that sold supplies are the real money makers, there are a bunch of companies selling super fast computer hardware to mine bitcoins.  You would think if the computers mine the coins so efficiently, it would be better to build them and run them rather than sell them.





tooqk4u22

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #1 on: April 03, 2013, 02:42:00 PM »
All I can say is that I DON'T UNDERSTAND THIS AT ALL.  Fiat currency is bad enough, but putting your hard earned fiat currency into an ever increasing supply, as programmed and could be worse if it is changed, of fake currency.  My goodness what is this world coming to.

If someone out there can explain it to me like I am a two year old as to why this makes any sense - please try to do so.

Khao

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #2 on: April 03, 2013, 02:47:27 PM »
I threw a little under $200 at bitcoins nearly two weeks ago, it's now worth closer to $300. I think Bitcoins have a shitload of potential so even if it crashes and burns, I wouldn't mind losing this small amount (in my mind it's already lost, not really an investment!)

Anyone else watching this like a car accident about to happen?

It's all speculation, but I think Bitcoins finally got some attention that was well deserved, hence the crazy price spike. I've been following it for a few years and boy should I have bought sooner! (Just like AAPL or GOOG stocks, right?)

The thing that I find interesting, just like in a gold rush where the shops that sold supplies are the real money makers, there are a bunch of companies selling super fast computer hardware to mine bitcoins.  You would think if the computers mine the coins so efficiently, it would be better to build them and run them rather than sell them.

They are building custom chips and doing lots of R&D for this, it's not consumer-grade hardware. Since this costs a lot (R&D and the actual production) they needed to raise money first and they did so by pre-selling units. They did it just like people on Kickstarter do : pre-sell to get cash, use cash to build your product and ship it to people who pre-ordered, then sell it normally with a profit. 

Personnally, I used my bitcoins to buy stocks (valued in Bitcoins not in fiat currency) which give dividends (also in Bitcoins!). So I basically used my bitcoins to fund a bitcoin mining company which gives back Bitcoin dividends. I'm holding them for the long run and I'll see if it was only stupid in a couple of years! If it does crash, I'll probably throw another $100~$200 at it when the price is much lower. I know it's a gamble, but I don't mind using pretty small amounts of cash on things like that.

Bitcoins are still in their infancy (4 years old) and I believe it will seriously stir shit up so it can go crazy both ways (will it be worth $10,000 in a couple years or $5?)

Rich M

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #3 on: April 03, 2013, 03:07:24 PM »
All I can say is that I DON'T UNDERSTAND THIS AT ALL.  Fiat currency is bad enough, but putting your hard earned fiat currency into an ever increasing supply, as programmed and could be worse if it is changed, of fake currency.  My goodness what is this world coming to.

If someone out there can explain it to me like I am a two year old as to why this makes any sense - please try to do so.

There is a limit to the amount of bitcoins, 21 miilion to be exact.  They are created by being mined using a cryptographic algorithm and the amount currenly out there is near 11 million bitcoin.  It can take a desktop computer years to find a bitcoin, or with some of these super fast GPU or FPGA processors, a few days.

The idea is like gold.  It's mined (it takes work) and as it gets depleted, it's gets scarcer. which gives it value.  Another thing that gives it value it that many people are willing to accept it as payment.  It's also anonymous and initial transactions on the web included illegal things like drugs.  All bitcoins are unique and when you use them as money, the person accepting it can verify it's validity easily using a math algorithm but it's (nearly) impossible to counterfeit because it's encrypted.

So now that it's a currency, it's part of a secondary market when people can acquire it via buying it, mininig it, trading for a good or service....I suppose you can even steal it if you can get the encryption key.
« Last Edit: April 03, 2013, 03:10:08 PM by Rich M »

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #4 on: April 03, 2013, 03:19:45 PM »
I've been skeptical of them from the onset.  There's been a few booboos where bitcoin exchanges have been exploited... and there was that whole version 7 -> version 8 thing where the chain split and everyone that held bitcoins on a version 8 system lost them.  (It wasn't huge, but a few days worth of mining just evaporated.)

Mining is also a bit of an ugly underworld.  Much of it is done by botnets -- where nice folks take over thousands of computers and use someone else's cpu power to scam bitcoins.

For a few hundred bucks... it might be fun.  But I would not put real money into this. 

tooqk4u22

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #5 on: April 03, 2013, 03:36:06 PM »
All I can say is that I DON'T UNDERSTAND THIS AT ALL.  Fiat currency is bad enough, but putting your hard earned fiat currency into an ever increasing supply, as programmed and could be worse if it is changed, of fake currency.  My goodness what is this world coming to.

If someone out there can explain it to me like I am a two year old as to why this makes any sense - please try to do so.

There is a limit to the amount of bitcoins, 21 miilion to be exact.   They are created by being mined using a cryptographic algorithm and the amount currenly out there is near 11 million bitcoin.  It can take a desktop computer years to find a bitcoin, or with some of these super fast GPU or FPGA processors, a few days.

That is what I meant as programmed and why couldn't that simply be changed to 50 million.  There is nothing backing this - even though countries, including the US, rely on fiat currency there are still resources and productivity to back it up and inflation to true it up against the rest of the world. 

So I still don't get it but if someone wants to put a small amount on the table then so be it, no different then going to the casino or movies or whatever it is more for entertainment value.

The idea is like gold.  It's mined (it takes work) and as it gets depleted, it's gets scarcer. which gives it value.  Another thing that gives it value it that many people are willing to accept it as payment.  It's also anonymous and initial transactions on the web included illegal things like drugs.  All bitcoins are unique and when you use them as money, the person accepting it can verify it's validity easily using a math algorithm but it's (nearly) impossible to counterfeit because it's encrypted.

So now that it's a currency, it's part of a secondary market when people can acquire it via buying it, mininig it, trading for a good or service....I suppose you can even steal it if you can get the encryption key.

I still don't understand, how can something that doesn't exist in any form and is created out of thin air get depleted. Then again to your reference about gold, it makes no sense why we place such value in something that has almost no productive use and is simply a hangover from when cavemen were enamored by some shiny rock.


Khao

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #6 on: April 03, 2013, 03:42:55 PM »
It provides :

  • No chargebacks : Once a transaction is approved by the network, there is no way to revert it
  • No fees or really small fees : You can make a transaction at 0 fees, but it might take more time to be validated (a couple hours/days). If you want instand validation, fees as small as 0.001 bitcoins can be added to any transaction
  • Anonymity : Bitcoins addresses are just a random bunch of characters so it's impossible to say "Hey, this is Bob's account!" without bob willingly disclosing that it's his account

And these a ways in which it is disrupting the normal banking system. It is extremely relevant in the case of online purchases where a buyer would receive a digital good and request a chargeback with their bank or credit card company to fuck over the seller.

Cecil

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #7 on: April 03, 2013, 03:48:31 PM »
All I can say is that I DON'T UNDERSTAND THIS AT ALL.  Fiat currency is bad enough, but putting your hard earned fiat currency into an ever increasing supply, as programmed and could be worse if it is changed, of fake currency.  My goodness what is this world coming to.

If someone out there can explain it to me like I am a two year old as to why this makes any sense - please try to do so.

There is a limit to the amount of bitcoins, 21 miilion to be exact.   They are created by being mined using a cryptographic algorithm and the amount currenly out there is near 11 million bitcoin.  It can take a desktop computer years to find a bitcoin, or with some of these super fast GPU or FPGA processors, a few days.

That is what I meant as programmed and why couldn't that simply be changed to 50 million.  There is nothing backing this - even though countries, including the US, rely on fiat currency there are still resources and productivity to back it up and inflation to true it up against the rest of the world. 


It's built into the mathematics of the system that there can't be more than 21 million bitcoins. It's not a coded limit in software, it's part of the fundamental meaning of what it is to be a bitcoin. Think of a bitcoin as a number that matches very specific cryptographic criteria. Turns out there are only 21 million such numbers, and they take a lot of computing power to find.

If your number doesn't match those criteria, it isn't a bitcoin.


randymarsh

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #8 on: April 03, 2013, 04:23:28 PM »
Some guy on Reddit a month ago claims he bought 30K of bitcoins. I think with a 401k loan!

Turning out to be quite a good gamble at the moment. I hope he at least repays the loan soon.

Rich M

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #9 on: April 03, 2013, 04:33:41 PM »

Then again to your reference about gold, it makes no sense why we place such value in something that has almost no productive use and is simply a hangover from when cavemen were enamored by some shiny rock.

First, I agree.  But when you say it makes no sense to value gold highly, Maybe you really mean as an investment, not as a  currency?

I would have no problem using gold as money if it was the choice.  But fiat is more convenient money.

Note fiat currency is not really limited and we place value on it simply because others are willing to accept it (and are told to by the govt).  As a money, it's more ridiculous than gold.

I personally like commodities that have intrinsic value other than as currencies, like almonds!  ;) ...I can eat my almonds if nobody wants them.

But if we want to talk about investing, I don't invest in currency and have as little as possible in the bank.  I invest in property and stocks--items that can make me money because they produce income.  The only way currency makes money is through risky speculation---or the dude who gets a fee for the exchange.

...and that is exactly where I see Bitcoin.  People are suddenly not buying it to make transactions such as buying dope or internet services, they are buying it on speculation that it will go up---which might be more valuable than dope at the moment.

How many Semper Augustus tulips can you buy per Bitcoin?




 

« Last Edit: April 03, 2013, 07:11:52 PM by Rich M »

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #10 on: April 04, 2013, 03:39:26 PM »

strider3700

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #11 on: April 04, 2013, 04:36:23 PM »
not bad considering the first official transaction if I remember correctly was 50 bitcoins for a pizza delivered.

Daley

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #12 on: April 04, 2013, 04:59:31 PM »
not bad considering the first official transaction if I remember correctly was 50 bitcoins for a pizza delivered.

Actually, it was 10,000 for two pizzas.

Most absurd thing I've seen in a while, and I've been paying attention to North Korea's insane ramblings about war. It's like watching a slow motion trainwreck. Don't know about any of you, but I'm looking forward to the next security breach that deflates the value again and people realize how absurd and volatile it really is. Any "currency" that can increase in value ten fold in less than three months is not what a sane person would call stable.

plantingourpennies

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #13 on: April 04, 2013, 05:47:46 PM »
Just to be clear-the security breach was somebody stealing passwords to bitcoin accounts, not an act of counterfeiting, correct? If somebody robs a bank, it doesn't mean we stop using dollars; we just store them more securely against thieves.

I think we're in the early stages of the market finding out exactly how valuable this new type of currency is. The advantages listed by Khao are both significant and very disruptive. Lots of disruptive technologies (and this is a big-T technology!) go through periods of fluctuation in value.

In a world where banks are simply seizing deposits in the EU, crypto-currencies don't seem so irrational.

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Mr. Pop

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #14 on: April 05, 2013, 08:01:35 AM »
I threw a little under $200 at bitcoins nearly two weeks ago, it's now worth closer to $300. I think Bitcoins have a shitload of potential so even if it crashes and burns, I wouldn't mind losing this small amount (in my mind it's already lost, not really an investment!)

How did you 'throw' a couple of bucks at bitcoins? sorry, I am really stupid when it comes to investments/stocks, etc. But can you buy these from the TSX? Or another stock exchange? How do you buy these?
thanks

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #15 on: April 05, 2013, 08:44:46 AM »
It's like watching a slow motion trainwreck.

+1.  It'll pop when you hear a non-techie mention BitCoin.  We're nearly there, with the recent press it's getting.
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Khao

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #16 on: April 05, 2013, 09:32:54 AM »
How did you 'throw' a couple of bucks at bitcoins? sorry, I am really stupid when it comes to investments/stocks, etc. But can you buy these from the TSX? Or another stock exchange? How do you buy these?
thanks

Lots of options (depends where you are also) but mostly are wire transfer, cash or direct deposit : http://howdoyoubuybitcoins.com/

Nobody in their right mind would accept Paypal or Credit Cards to sell bitcoins because Bitcoin transactions are irreversible (once the Bitcoins are sent, there is no chargeback) and using Paypal or Credit Card, a seller would get bazillions of fraud with chargebacks.

I Love Cake

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #17 on: April 05, 2013, 09:42:51 AM »
How did you 'throw' a couple of bucks at bitcoins? sorry, I am really stupid when it comes to investments/stocks, etc. But can you buy these from the TSX? Or another stock exchange? How do you buy these?
thanks

Lots of options (depends where you are also) but mostly are wire transfer, cash or direct deposit : http://howdoyoubuybitcoins.com/

Nobody in their right mind would accept Paypal or Credit Cards to sell bitcoins because Bitcoin transactions are irreversible (once the Bitcoins are sent, there is no chargeback) and using Paypal or Credit Card, a seller would get bazillions of fraud with chargebacks.

thanks. I'm in Canada

Daley

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #18 on: April 05, 2013, 10:24:04 AM »
Nobody in their right mind would accept Paypal or Credit Cards to sell bitcoins because Bitcoin transactions are irreversible (once the Bitcoins are sent, there is no chargeback) and using Paypal or Credit Card, a seller would get bazillions of fraud with chargebacks.

Gosh, it's like having all the disadvantages of real cash in a digital transaction... I can't believe more people aren't using it already!

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #19 on: April 05, 2013, 12:14:00 PM »
I also have just not found much use for them.  The dark-ugly-underworld-of-illegal-stuff uses them.... but ... that's really not on my radar.  Yeah, I can jump through hoops to buy something off Amazon with them... but I can also just go "clicky-click" and buy stuff with a credit card and get all the various protections that go with it.

I do understand why cash is cool.  I understand there are times you might not really want the world following your breadcrumbs.  I just don't have that many times when that's important to me.  If it is, I use folding paper money.

chucklesmcgee

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #20 on: April 05, 2013, 06:28:53 PM »
Fiat currency is bad enough, but putting your hard earned fiat currency into an ever increasing supply, as programmed and could be worse if it is changed, of fake currency.  My goodness what is this world coming to.


All fiat currency is in an ever increasing supply. The Federal Reserve is constantly creating new dollars with no limit at a rate that gets changed based on whatever it feels like. With Bitcoin there IS a limit to the amount of currency, currency is created at a predictable, but decreasing rate. There will never be more than 21 million bitcoins and it cannot be changed.

I really don't know what will happen with Bitcoin. It's essentially anonymous and can allow for massive amounts of wealth to be transferred inconspicuously and stored offline in ways that prevent it from being seized. It could become the currency of choice of drug-lords, displace demand for gold as a way of storing wealth or become the world reserve currency. Or it could collapse.

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #21 on: April 08, 2013, 07:22:56 AM »
Had a rather fun little article flit across the feeds for me today from AFP to read while the Bitcoin exchange has peaked at $191USD:

As Bitcoin virtual currency soars, bubble fears do too

My favorite quote:
Quote
Cotton sees similarities between Bitcoin and Napster, an early online file-sharing service that ran into legal difficulties and was eventually closed, though it was soon replaced by numerous other file-sharing services. Even if Bitcoin doesn't last, other virtual currencies will surely rise in its place, he said.

Finally! 2013 shall be the Year of the Linden!
« Last Edit: April 08, 2013, 07:26:41 AM by I.P. Daley »

mobilisinmobili

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #22 on: April 08, 2013, 10:48:00 AM »
Had a rather fun little article flit across the feeds for me today from AFP to read while the Bitcoin exchange has peaked at $191USD:

As Bitcoin virtual currency soars, bubble fears do too

My favorite quote:
Quote
Cotton sees similarities between Bitcoin and Napster, an early online file-sharing service that ran into legal difficulties and was eventually closed, though it was soon replaced by numerous other file-sharing services. Even if Bitcoin doesn't last, other virtual currencies will surely rise in its place, he said.

Finally! 2013 shall be the Year of the Linden!

Apparently there's a bunch of blackhat hackers building up botnets via Skype viruses and using zombie networks for massive mining operations. They're building a bitcoin bubble, jacking up prices so they can sell quickly before there's a crash.

That's probably the most futuristic sounding sentence I've ever written.

Daley

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #23 on: April 08, 2013, 10:56:55 AM »
Apparently there's a bunch of blackhat hackers building up botnets via Skype viruses and using zombie networks for massive mining operations. They're building a bitcoin bubble, jacking up prices so they can sell quickly before there's a crash.

That's probably the most futuristic sounding sentence I've ever written.

Yeah, I'd noticed that myself the past few days but opted to not bring it up.

I'll refrain from any truly scathing commentary about people making investment in a "currency" that has no regulation or securities behind it, can vanish from your "wallet" through simple data corruption (or theft) never to be recovered again, and can be created/generated by black hat skiddies with zombie botnets to pump and dump the value... because frankly, the facts alone don't need much help.

If this is truly the future of currency, I'm reverting to the barter system.

mobilisinmobili

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #24 on: April 08, 2013, 11:07:00 AM »
I wouldn't mind putting 50 bucks into it to play around with, but no way I'd be sinking serious money into it, for sure.

Daley

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #25 on: April 08, 2013, 11:09:47 AM »
I wouldn't mind putting 50 bucks into it to play around with, but no way I'd be sinking serious money into it, for sure.

Then wait until after the pending crash to invest. As with the stock market, buy low, sell high. Now's the time to sell.

mobilisinmobili

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #26 on: April 08, 2013, 11:12:09 AM »
I have more pressing financial things to deal with.. I'm not planning on buying fancy techno play money anytime soon. Though the computer geek would like to.

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #27 on: April 08, 2013, 11:57:53 AM »
Had a rather fun little article flit across the feeds for me today from AFP to read while the Bitcoin exchange has peaked at $191USD:

As Bitcoin virtual currency soars, bubble fears do too

My favorite quote:
Quote
Cotton sees similarities between Bitcoin and Napster, an early online file-sharing service that ran into legal difficulties and was eventually closed, though it was soon replaced by numerous other file-sharing services. Even if Bitcoin doesn't last, other virtual currencies will surely rise in its place, he said.

Finally! 2013 shall be the Year of the Linden!

Apparently there's a bunch of blackhat hackers building up botnets via Skype viruses and using zombie networks for massive mining operations. They're building a bitcoin bubble, jacking up prices so they can sell quickly before there's a crash.

That's probably the most futuristic sounding sentence I've ever written.

This isn't new.   (Only the Skype part is new).  Botnets have pretty much been the center of all the bitcoin mining since the beginning.

AccidentalMiser

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #28 on: April 10, 2013, 04:59:41 AM »
I am a computer and investing geek from way, WAY back.  I read about bitcoin a year ago in Wired magazine and was amused and intrigued.  While I was tempted to spend a hundred bucks on a lark (as an early speculator), I just didn't follow up and forgot about the article until a couple of weeks ago.  If I had bought in, I would have just sold early and then regretted it so I'm glad I didn't!

I think that the initial run up was driven by fear.  Fear of the fed, fear of inflation, fear of economic collapse, etc. etc.  Once fear got prices moving fast in the upward direction, greed took hold (tulips) and the speculators entered the market to make a few easy bucks from the next, greater fool.  Finally, the general population notices and someone writes a story, the speculators head for the back exits as soon as the "I just bought a bitcoin, look at me!" crowd gets in the front door. 

It's interesting to watch but the story hasn't changed.  Human nature, printed on a price chart.  BTW, if you own any of these things, I would recommend you sell immediately.  As Rebel Spy said, the non-techies are now noticing the bubble.   The crash can't be far behind.

Now, where did I put my $100000000000000 Weimar Republic note?  I need to buy an egg.....

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #29 on: April 10, 2013, 07:36:01 AM »
Keep in mind that this is not the same as a typical investment bubble. Bitcoin is a technology, not a company, so the rapid expansion we are seeing right now could potentially be an example of exponential adoption of a new technology, as this is a common pattern in adoption of new technologies (See smartphones, tablets, VHS, Internet, etc.)

There is no question that currencies like this are going to create major competition with existing currencies. What other currency allows you to transfer money to anyone, anywhere in the world, nearly instantly for next to nothing in cost? The question is simply which digital currencies are going to be the most widely adopted, as the value of something like Bitcoin is derived entirely from the amount of people that find it useful. It seems to me that the capital controls started in Cyprus and the possibility of this being replicated in other nations is the spark for people to move their money away from centrally controlled currencies to currencies that are more universal and decentralized.

I think right now could either be a fantastic time to buy Bitcoins, or the worst time to buy them. I am planning on putting some money into Bitcoins, but no more than I can stand to lose. We just have to remember that this is a currency, so it only has value if we use it to transact.

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #30 on: April 10, 2013, 11:06:03 AM »
An interesting (to me) criticism of bitcoin...

http://market-ticker.org/akcs-www?post=219284

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #31 on: April 10, 2013, 12:07:19 PM »
An interesting (to me) criticism of bitcoin...

http://market-ticker.org/akcs-www?post=219284

The author's use of bold, italics, and underline makes this really difficult to read.

Also I have a personal judgement bias against someone who writes like that - to me they seem slightly unbalanced (if you just scroll quickly down and look at the page without reading the words, that's the sense I get).
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
If you want to know more about me, this Business Insider profile tells the story pretty well.
I (rarely) blog at AdventuringAlong.com. Check out the Now page to see what I'm up to currently.

smedleyb

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #32 on: April 10, 2013, 01:15:50 PM »
Has the crash arrived?:


Daley

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #33 on: April 10, 2013, 01:39:04 PM »
An interesting (to me) criticism of bitcoin...

http://market-ticker.org/akcs-www?post=219284

Good article, even if it was a little difficult to read due to over-formatting as Rebel pointed out. (I'll admit, I feel like I'm guilty of that myself sometimes.)

My favorite bit:
Quote
Bitcoin exhibits irreversible entropy.  A coin that is "lost", that is, which the current possessor loses control over either by physically losing their wallet or the key to it, can never be recovered.  That cryptographic sequence is effectively and permanently abandoned since there is no way for the entity who currently has possession of it to pass it on to someone else.  This is often touted as a feature in that it inevitably is deflationary, but whether that's good or bad remains to be seen.  It certainly is something that those who tout the currency think is good for the value of what they hold, but the irreversible loss of value can also easily lead people to abandon the use of the currency in which case its utility value to express goods and service preference is damaged, quite-possibly to the point of revulsion.

That was something that got me early on with Bitcoin, all it takes is a single hard drive failure or another Carrington Event and part of the total base of currency is lost forever, leaving the "holder" with nothing... but those are only the sorts of things that always happen to other people, right?

Has the crash arrived?

TIM-BERRRR!

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #34 on: April 10, 2013, 01:42:29 PM »
I guess I was bothered by the catch-22 of:

1) if you feel the extreme urge to be anonymous... you have to go to extremes to keep from creating an irreversible chain of forever-traceability.
2) if you go to extremes to keep from being traced... you're in violation of federal law for tax evasion.

I'm thinking: cash is okay.

Cecil

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #35 on: April 10, 2013, 01:51:10 PM »
It's dropped from $266 this morning to $108 as I write this. That's a drop of 60% in 6 hours.

It hasn't been that low in over a week!

smedleyb

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #36 on: April 10, 2013, 01:59:35 PM »
It's dropped from $266 this morning to $108 as I write this. That's a drop of 60% in 6 hours.

It hasn't been that low in over a week!

I remember the good ole' days of late March/early April 2013 when you could get a bit for under a bill.  Seems so long ago.


Daley

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #37 on: April 10, 2013, 02:15:54 PM »
It's dropped from $266 this morning to $108 as I write this. That's a drop of 60% in 6 hours.

It hasn't been that low in over a week!

I remember the good ole' days of late March/early April 2013 when you could get a bit for under a bill.  Seems so long ago.

Kids these days, right? They don't know how hard it was on us six months ago when a bitcoin barely paid for lunch.

GET OFF MAH LAWN, WHIPPERSNAPPERS!

dragoncar

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #38 on: April 10, 2013, 02:44:44 PM »
I seriously considered throwing 5-10k into but coins a few years ago as a totally speculative play.  The price was around $0.2.  However, liquidity was so terrible I decided it wasn't worth the effort.  I did get a few for free.  Of course in theory I could have made $12 million with that purchase.  Doh.  I'm sure I would have sold long before it went parabolic though, and might have gotten out at a loss because there were many years of ups and downs.

smedleyb

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #39 on: April 10, 2013, 02:57:12 PM »
I seriously considered throwing 5-10k into but coins a few years ago as a totally speculative play.  The price was around $0.2.  However, liquidity was so terrible I decided it wasn't worth the effort.

Or to borrow from Keynes, "markets can become irrational long after you choose to remain solvent."
« Last Edit: April 10, 2013, 03:05:01 PM by smedleyb »

Daley

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #40 on: April 10, 2013, 02:57:59 PM »
Aah, it's back up to $189! Are we getting to see a classic dead cat bounce off this? *grabs popcorn*

chucklesmcgee

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #41 on: April 10, 2013, 03:33:47 PM »
2) if you go to extremes to keep from being traced... you're in violation of federal law for tax evasion.

Well no. You have to also not reporting income to be committing tax evasion. Though bitcoin is admittedly an excellent avenue to further tax evasion. If merchants accept bitcoins instead of dollars it makes it very easy to "forget"  to pay income tax on it.
« Last Edit: April 10, 2013, 03:36:26 PM by chucklesmcgee »

chucklesmcgee

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #42 on: April 10, 2013, 03:40:27 PM »

That was something that got me early on with Bitcoin, all it takes is a single hard drive failure or another Carrington Event and part of the total base of currency is lost forever, leaving the "holder" with nothing... but those are only the sorts of things that always happen to other people, right?

It's kind of the same thing with cash- once it's gone it's gone. You can always backup and encrypt a Bitcoin wallet and put it in a million places.

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #43 on: April 10, 2013, 09:00:44 PM »
2) if you go to extremes to keep from being traced... you're in violation of federal law for tax evasion money laundering.

Well no. You have to also not reporting income to be committing tax evasion. Though bitcoin is admittedly an excellent avenue to further tax evasion. If merchants accept bitcoins instead of dollars it makes it very easy to "forget"  to pay income tax on it.

Fixed that for me.  You're right.  I was thinking one thing and said another.

kudy

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #44 on: April 10, 2013, 09:32:14 PM »
I.P. - I'd love to hear your thoughts on the next Carrington Event, and the repercussions.

dragoncar

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #45 on: April 10, 2013, 11:41:04 PM »

That was something that got me early on with Bitcoin, all it takes is a single hard drive failure or another Carrington Event and part of the total base of currency is lost forever, leaving the "holder" with nothing... but those are only the sorts of things that always happen to other people, right?

It's kind of the same thing with cash- once it's gone it's gone. You can always backup and encrypt a Bitcoin wallet and put it in a million places.

That was something that got me too... yes I have a pretty robust data archival system with (at least) monthly snapshotting, parity/ecc, and physical storage in multiple diverse locations.  On the other hand, I've boneheadedly and unrecoverably deleted a number of important files in my time. 

I just don't trust myself.  At least with cash, I've never accidentally destroyed a significant amount.  Even running a $20 through the washing machine yields spendable currency.  And the more places you store your keys, the more likely they are to be stolen.

A big player on the exchanges would also be a prime target for hacking.  This can be overcome with obfuscation of your transactions, but it's a consideration.  You also have risk with any third-party websites (unregulated) which you might use as an intermediary.

I wouldn't be surprised if a significant amount of bitcoins have been lost forever.  I got a few for free back in the day when they were worth $0.20**.  I did not back them up and lost them in a drive failure (this was pre-archival scheme).  It didn't seem important then, but now I find out I threw away almost $1000?  Just as many baseball cards were lost/thrown away/destroyed before they were worth much, I suspect early bitcoin players were not very cautious with their relatively inexpensive toys.

**Something like this (crazy right?):  http://web.archive.org/web/20100703032414/http://freebitcoins.appspot.com/
« Last Edit: April 10, 2013, 11:46:10 PM by dragoncar »

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Daley

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #47 on: April 11, 2013, 09:18:31 AM »

That was something that got me early on with Bitcoin, all it takes is a single hard drive failure or another Carrington Event and part of the total base of currency is lost forever, leaving the "holder" with nothing... but those are only the sorts of things that always happen to other people, right?

It's kind of the same thing with cash- once it's gone it's gone. You can always backup and encrypt a Bitcoin wallet and put it in a million places.

Dragoncar pretty well covered the major points already, but I'd just like to add the following:

With bitcoin, making multiple copies and archives of the "money" to "prevent" an accidental loss is a necessity. With cash, that sort of behavior would be considered counterfeiting and regarded as logically absurd. Linen money is also a bit more durable than a hard drive, and will be replaced for free by the Federal Reserve if a serial number and part of the bill can be recovered  (not to mention doesn't require electricity, an internet connection and a third party broker to spend), and at least if my electronically stored real money vanishes from the bank due to theft or data failure, there's government-backed insurance to replace that loss.



I.P. - I'd love to hear your thoughts on the next Carrington Event, and the repercussions.

To keep it short and sweet, I have little doubt that we're in for another massive solar event possibly even dwarfing the 1859 event within the next 15-50 years, and it'll be immensely destructive... but by my frame of reference and understanding, the cultural impact of losing a great deal of the technology and infrastructure with that will be small potatoes in relation to the events that lead up to it and will follow, but I tend to frame my outlook in a more theological framework as opposed to purely speculative what-if scenarios. Truth is, we won't truly know the impact until it happens... but given how entrenched and dependent we've become upon electronics and electricity for even the most fundamental basics of life like water, if it were to happen, the consequences will be ugly.

I'd be happy to talk more in PM if you're interested, but I'd rather not derail this delightful thread further. ;)

I Love Cake

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #48 on: April 11, 2013, 10:47:42 AM »

That was something that got me early on with Bitcoin, all it takes is a single hard drive failure or another Carrington Event and part of the total base of currency is lost forever, leaving the "holder" with nothing... but those are only the sorts of things that always happen to other people, right?

It's kind of the same thing with cash- once it's gone it's gone. You can always backup and encrypt a Bitcoin wallet and put it in a million places.

Dragoncar pretty well covered the major points already, but I'd just like to add the following:

With bitcoin, making multiple copies and archives of the "money" to "prevent" an accidental loss is a necessity. With cash, that sort of behavior would be considered counterfeiting and regarded as logically absurd. Linen money is also a bit more durable than a hard drive, and will be replaced for free by the Federal Reserve if a serial number and part of the bill can be recovered  (not to mention doesn't require electricity, an internet connection and a third party broker to spend), and at least if my electronically stored real money vanishes from the bank due to theft or data failure, there's government-backed insurance to replace that loss.



I.P. - I'd love to hear your thoughts on the next Carrington Event, and the repercussions.

To keep it short and sweet, I have little doubt that we're in for another massive solar event possibly even dwarfing the 1859 event within the next 15-50 years, and it'll be immensely destructive... but by my frame of reference and understanding, the cultural impact of losing a great deal of the technology and infrastructure with that will be small potatoes in relation to the events that lead up to it and will follow, but I tend to frame my outlook in a more theological framework as opposed to purely speculative what-if scenarios. Truth is, we won't truly know the impact until it happens... but given how entrenched and dependent we've become upon electronics and electricity for even the most fundamental basics of life like water, if it were to happen, the consequences will be ugly.

I'd be happy to talk more in PM if you're interested, but I'd rather not derail this delightful thread further. ;)

I.P. I'd love to hear more about this theory. Are you talking about solar flares? I know you don't want to hijack this thread but I'm sure there are lots of us here who want to discuss this. Can you start a new thread? Maybe in 'off topic'? Please let me know

unitsinc

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Re: Bitcoin: An Interesting Case of a Classic Bubble?
« Reply #49 on: April 11, 2013, 11:33:41 AM »

That was something that got me early on with Bitcoin, all it takes is a single hard drive failure or another Carrington Event and part of the total base of currency is lost forever, leaving the "holder" with nothing... but those are only the sorts of things that always happen to other people, right?

It's kind of the same thing with cash- once it's gone it's gone. You can always backup and encrypt a Bitcoin wallet and put it in a million places.

Dragoncar pretty well covered the major points already, but I'd just like to add the following:

With bitcoin, making multiple copies and archives of the "money" to "prevent" an accidental loss is a necessity. With cash, that sort of behavior would be considered counterfeiting and regarded as logically absurd. Linen money is also a bit more durable than a hard drive, and will be replaced for free by the Federal Reserve if a serial number and part of the bill can be recovered  (not to mention doesn't require electricity, an internet connection and a third party broker to spend), and at least if my electronically stored real money vanishes from the bank due to theft or data failure, there's government-backed insurance to replace that loss.



I.P. - I'd love to hear your thoughts on the next Carrington Event, and the repercussions.

To keep it short and sweet, I have little doubt that we're in for another massive solar event possibly even dwarfing the 1859 event within the next 15-50 years, and it'll be immensely destructive... but by my frame of reference and understanding, the cultural impact of losing a great deal of the technology and infrastructure with that will be small potatoes in relation to the events that lead up to it and will follow, but I tend to frame my outlook in a more theological framework as opposed to purely speculative what-if scenarios. Truth is, we won't truly know the impact until it happens... but given how entrenched and dependent we've become upon electronics and electricity for even the most fundamental basics of life like water, if it were to happen, the consequences will be ugly.

I'd be happy to talk more in PM if you're interested, but I'd rather not derail this delightful thread further. ;)

I.P. I'd love to hear more about this theory. Are you talking about solar flares? I know you don't want to hijack this thread but I'm sure there are lots of us here who want to discuss this. Can you start a new thread? Maybe in 'off topic'? Please let me know

Yes please.

 

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