Bitcoin Tops $1,000 For the First Time 371
An anonymous reader writes with this bit from The Next Web "Bitcoin hit a new milestone today, passing the $1,000 mark for the first time. The virtual currency is currently trading above the four-digit figure, with its highest at $1,030 on Mt. Gox, one of the largest exchanges. Last week, Bitcoin's high for the day was $632. That means its trading value has surged 62.83 percent in a week, assuming we're looking at just its high points. That figure could of course rise even further if Bitcoin continues to push further up throughout the day."
Re:Who wants to prick the bubble? (Score:4, Interesting)
I'm a bitcoin miner and I do agree they are overpriced at the moment. It should be $200-300 IMHO.
Re:Sell now. (Score:5, Interesting)
Great! Lets do a 100 dollar bet: if the price at January 1st is lower than now I pay you $100, otherwise you pay me $100. You're in?
Where is all of this money coming from? (Score:4, Interesting)
Or it's an attack on the system itself, maybe someone figure out a way to race the market and make money?
Re:Why do they call it a currency? (Score:3, Interesting)
I'm coming to the conclusion that there IS a fundamental basis for it: drugs, and other black-market items. They want an online currency, and there's a lot of demand for their product. Silk Road is shut down, but new ones will keep popping up. The demand is real, so even if you didn't have speculators there would be demand for the currency in which drugs are bought.
The one thing I don't quite get, though, is that Bitcoin is too traceable for a proper black-market currency. It's famously and explicitly pseudonymous rather than anonymous. Seems to me that's very dangerous for the buyers and eventually for the sellers. I'd expect somebody to come up with a less traceable model. That would be the real crash to Bitcoin.
And ironically, that would make demand for this currency even stronger and more stable. Which would, in turn, give more real-world markets an interest in accepting it. Right now, when somebody asks what the value of the dollar is, it's ultimately based in the taxes you pay for the services you receive as a citizen, even though that's very, very abstract. I don't see why it couldn't ultimately be "because a bunch of drug dealers are willing to accept it and trade it among each other": the demand for drugs is just as real a thing.
Re:Who wants to prick the bubble? (Score:5, Interesting)
We might encounter other problems though such as traders making BTC unproductive for people using it for goods and services. It could also crash if some large (or simply enough) players cash out and deplete various exchange's ability to convert BTC into other currencies, which could cause exchanges to close shop and thus reduce the utility.
Though historically there are plenty of examples of bubbles of easily subdivided items, even including things like gold. So you can not get a housing-style bubble with BTC, but that does not make it immune from the general pattern.
Re:Why do they call it a currency? (Score:3, Interesting)
Re:Sell now. (Score:2, Interesting)
There will undoubtedly be many more crashes before bitcoin price achieves parity with its fundamental economic value. I hope to buy many bitcoins at a severe discount during those crashes.
The fundamental value of bitcoin is determined by Fisher's quantity theory of money, PQ=MV. This is not an economic hypothesis. It is no less certain than the analogous law of physics, the ideal gas law. MV = 90,000,000. A very pessimistic estimate of PQ would include 50% of international remittances and 50% of the black market globally, which yields a figure in excess of 1 trillion USD. Do the math. Discount this future attractor value by 2 factors: 1) a risk-free interest rate, and 2) the distribution of estimate error.
I will sell bitcoin when the price meets or exceeds its discounted fundamental future fair value. I do not expect this to occur for at least 5 years.
Looks like deflation (Score:5, Interesting)
Re:November, 2013: (Score:4, Interesting)
Sometimes being able to buy stuff without being fucking tracked is not only perfectly reasonable, it's a damn good idea.
Like elections.
Except that several websites keep a running tally of who has donated to whom, and how much.
Sadly, the people buying elections have so much money and power that fear of discovery doesn't even cross their minds; hell, some of them are proud to be subverting the democratic process.
Re: Sell now. (Score:4, Interesting)
That's part of the problem. People are putting real value into the bitcoin market, value that the holders of old coins can come and claim whenever they feel like it. If any significant amount of old coins are cashed in, it's going to cause the mother of all crashes.
AFTER that happens, bitcoin might be a reasonably stable currency to do things with. It depends on whether the cashing in kills it or not.
If 10 people with 1000 bitcoins each now went to MtGoX and wanted to cash in their bitcoins, what would that do to MtGoX? I think they'd be fucked.
Seriously, this is empty speculation and there isn't the actual money invested in bitcoins to support this increase in face value. The system is fucked. Theres no way the bitcoins in circulation today could actually be cashed in for actual money.