Value of Bitcoin "Crashes" 709
souravzzz writes with an update on the state of Bitcoin. Quoting the Ars Technica article: "Bitcoin, the world's first peer-to-peer digital currency, fell below $3 on Monday. That represents a 90 percent fall since the currency hit its peak in early June."
That's still three times its value in April 2011.
Bitcoin (Score:5, Insightful)
Re:Bitcoin (Score:5, Insightful)
You may have lost money on it, but somebody gained. Currency speculation has been around a long time. Most currencies aren't as volatile because there is a government making a monetary policy to control it. Bitcoin is a real opportunity for speculators.
Re:Bitcoin (Score:4, Insightful)
Oh, that's nice. I can give my money to speculators! Let me get right on that.
Winner: ATI (Score:5, Insightful)
Crash? More like correction. (Score:4, Insightful)
It seems more like a correction to me. The idea that a BTC was worth $20 or more seemed too good to be true, probably because it was.
I think BitCoin is a great concept, but it needs more of a real economy and less currency speculation. I suspect that will come once the hype dies down. Maybe now that the value has gone down, that'll happen soon.
Valuable lesson in currency... (Score:5, Insightful)
All currencies are fiat. No matter what they're backed by. Currencies have to exist inside of a strong ecosystem that encourages their trading rather than hoarding.
...and nothing of value was lost (Score:2, Insightful)
Re:STOP WITH THE SLASHVERTISEMENTS FOR BITCOIN (Score:3, Insightful)
It is a new ecconomic model (Score:1, Insightful)
Re:Crash? More like correction. (Score:2, Insightful)
Sorry, but Bitcoin is only good for speculators.
A real currency needs to be widely used, and largely stable. High volatility is going to chase away anyone who intends to use them for actual currency.
Re:Crash? More like correction. (Score:5, Insightful)
I think BitCoin is a great concept
Except that decentralized digital cash is inherently flawed, since the tokens will always grow linearly in the number of transactions they are used for. In other digital cash systems, this problem is solved by having an issuing authority (bank, government, etc.) that accepts old tokens and issues fresh tokens. In the case of Bitcoin, no such authority exists, so the tokens are just going to keep getting bigger, and eventually they will be too large to be useful.
Not that the technical problems are going to be what kills Bitcoin. In terms of economics, Bitcoin has a shaky basis to begin with: people only accept Bitcoin because they believe that they can exchange their Bitcoin tokens for some other currency. Eventually people need to make that exchange, in order to pay their taxes, but there is no similar need to obtain Bitcoin tokens. The gap in demand is not really filled by Bitcoin's utility as a digital cash system, which is questionable to begin with because of the technical limitations on Bitcoin.
Even if somehow that did not become a problem, there is the fact that Bitcoin is an inherently deflationary currency. This creates problems with hoarding (which we are already seeing), and makes it harder to repay loans (loans are crucial to a functioning economy, despite what those "occupy" protesters tell you).
In short, the odds are against Bitcoin being successful. Really, more traditional cryptocurrency is needed, where a bank issues tokens but the tokens can still be transferred anonymously. Sadly, Bitcoin's failure will make it even harder to start a digital cash bank, since everyone will associate digital cash with Bitcoin and think that all digital cash systems suffer the same problems.
Re:Bitcoin (Score:4, Insightful)
Re:Speculation (Score:2, Insightful)
Best one out there? Handwritten IOU notes and shiny sea shells are both more stable and more useful currencies for actual use.
Bitcoin objectively worse as a currency then any other in current use.
Economic Experiment (Score:4, Insightful)
...And nothing of value was lost. (Score:5, Insightful)
Seriously, what did you expect?
Re:Bitcoin (Score:2, Insightful)
Re:Valuable lesson in currency... (Score:5, Insightful)
Gold was already valuable before it was actually useful. If a large fraction of the value of gold was based on it's technical uses, the gold price should be more stable IMHO. The gold price is more based on a circular logic: It's valuable because everyone thinks so.
Re:Bitcoin (Score:3, Insightful)
They can do what they want as long as I can get back what it says on my balance. Are you seriously this [redacted]ing stupid?
Hmmm, how to put this...let's say TechLA put 1000 BitCoin into the BitCoin bank on Friday. Then on Sunday he withdrew 1000 BitCoin from the BitCoin bank. In other words, the BitCoin bank payed out what it said on the balance. TechLA's complaint is that he could only buy about half the stuff with that 1000 BitCoins on Sunday as he could on Friday. A similar thing can happen with other currencies. Take the United States dollar as example. One of the highest recent inflations occurred in the late 70's and early-to-mid 80's. So, suppose you put 1000 USD into a checking account in 1977. Let's ignore the Negotiable Order of Withdrawal stuff for a bit, and any service charges. Then in 1987 you could withdraw 1000 USD. However, in 1987 you could only buy about half of the stuff (actually about 0.518) with 1000 USD as you could with 1000 USD in 1977. According to some theories of economics, that change was partially caused by the change in the amount of money; and, in the United States, the amount of money is controlled by the Federal Reserve System in coordination with the various banks in the country.
So I would have to say, no, MareLooke isn't quite as stupid as you might have thought.
~Loyal
Re:Winner: ATI (Score:5, Insightful)
During a gold rush, sell shovels.
Re:Bitcoin (Score:5, Insightful)
Re:Bitcoin (Score:4, Insightful)
I don't understand why people feel so strongly that a currency needs to be a commodity first.
Not the point which was made. Currency being a commodity is *one* way to back it. Bitcoin doesn't have that. Another way would be lots of people using it for trading goods, by having a significant power structure (like a country) standing for it etc. As far as I can tell Bitcoin doesn't have backing in the form of the named examples, or in any other form.
its value cannot be manipulated by a central group of people in the same way as fiat.
Unfortunately that's not correct, a small number of people who got in early own most bitcoins. That's not technical problem of currencies like Bitcoin - but it is one Bitcoin has, specifically.
Even worse - the Bitcoin supply itself is finite and very small (compared with economies of entire countries). So it has no chance to ever become stable, and even if it did it would suffer the same problem the gold standard had, i.e. being inherently deflationary.
Bitcoin is interesting because it makes you think about how currencies work, but unfortunately it's not set up to become a viable currency. Either because someone didn't think enough about how currencies work, or because becoming a viable currency wasn't actually the goal.
Re:Bitcoin (Score:2, Insightful)
No, the real problem is that (other than silk road) there is no bitcoin economy, there are just exchanges, speculators and hoarders, plus a few folks who realised they could 'mine' and pay for hardware that way.
Hoarders wait on a rise, they do not contribute to an economy.
Miners who are not hoarders just sell as they generate.
Everyone else is either a drug dealer or a speculator.
Oh, and there have been a lot of fraudsters too. And yes, I'm deliberately ignoring the 0.01% of people who have a genuine bitcoin business idea. It's unfortunate that there are so few of them, and all the businesses just seem to be "existing business" + "bitcoin!!!"
Re:Bitcoin (Score:5, Insightful)
In other news, there are no "sure things" in this world. If Vladimir Putin goes nuts and unleashes Russia's nukes, clean water and non-radioactive food is going to be a worth a whole lot more than dollars, bitcoins, or gold. In the meantime, comparing Bitcoin losing half it's value in 2 days to the chance that you won't get your federally insured deposit money back is absurd.
Re:Speculation (Score:5, Insightful)
Excellent point, and in fact Bitcoin may be one of the cleverest moneymaking scams in recent memory.
No one knows who Satoshi Nakamoto, the purported creator of the Bitcoin protocol, really is. Assuming Bitcoin ever achieved widespread adoption, he and a handful of early adopters would become the richest people on earth by default. When I pointed this out to a Bitcoin "true believer", his response was along the lines of "Well, he's a genius and deserves it." Yes, but if in fact "Mr. Nakamoto" is simply a syndicate of very clever scammers, then we would effectively be turning over a huge portion of the world's wealth to a criminal enterprise. No government is EVER going to allow that to happen.
No cryptographic currency is ever going to gain any traction if it makes early adopters obscenely wealthy just by default. Consequently, the only way anyone will ever make money from Bitcoin is via speculation. The people pushing Bitcoin are appealing to the same mentality (and lack of logic) you see with believers in gold currency. Given the long history of scams involving precious metals, there is clearly no lack of potential victims willing to throw away their money.
I assume the early Bitcoin adopters are cashing in before the entire house of cards collapses. If that was Satoshi Nakamoto's intent from the start, then my hat is off to him for committing what is essentially the perfect crime.
Re:A small Bitcoin success (Score:3, Insightful)
So in other words, you run an illegal online casino hidden under the guise of a game.
Interesting.
Re:Bitcoin (Score:5, Insightful)
You mean Bitcoin is directly comparable to the currency of an unstable currency like Zimbabwe's that I also would never dream of transferring any of my comparatively rock-stable $US to.
I do believe you are completely correct in that.
Re:Bitcoin (Score:4, Insightful)