Bitcoin Price Soars Above $9

[Dissipate]

The price of Bitcoins surged this week, rising above $9 for the first time in almost a year. The increase suggests growing public interest in the peer-to-peer cryptocurrency.

Last month, we marked the one-year anniversary of the Bitcoin bubble popping. We noted that after plunging for the last six months of 2011, the price of Bitcoin had begun to stabilize around $5. But almost as soon as we published that article, the currency began appreciating rapidly. Today, one Bitcoin is worth about $9.20—a 40 percent increase in a month.

http://arstechnica.com/tech-policy/...-above-9-for-the-first-time-in-almost-a-year/

'Official' bitcoin site: http://bitcoin.org

It looks like Bitcoin is back stronger than ever. The price is now even higher than when this article was posted, going between the low 10s to the mid 11s. There are more exchanges, more places to spend them and Bitcoin mining is roaring along with new ASICs coming out soon.

Bitcoin isn't really a 'currency' yet. It is too volatile to have sticky prices etc. but I see the following use cases for it:

1. Online casino tokens. You can use Bitcoin to gamble online with instant payouts to your Bitcoin wallet.

2. International transfers. You can transfer any sum of wealth to anywhere in the world to bypass capital controls of a particular country.

3. Underground purchases. Bitcoin can be used to purchase illicit items such as drugs as well as grey market items where the purchaser would rather not leave a paper trail.

4. Long term wealth storage. This use case is kind of iffy because of the volatility, but if you can weather the volatility of Bitcoin, you can put a bunch of coins in 'cold storage' in an offline wallet where no government or thief can get to them.

There are online retail stores that accept Bitcoin, but this is not really a strong use case yet since there is still a premium charged to acquire Bitcoins. But if more retailers start accepting them and offer a discount for using them, Bitcoins could become the de facto currency of the Internet.

 

[wirednuts]

people have tried to make their own currency before... the government doesnt like it. i do like the idea of an internet currency, i just dont see the need

 

[CitizenKain]

Whats the countdown to the next embezzlement/theft/hack in the community that tanks the market. Again.

 

[nehalem256]

There are online retail stores that accept Bitcoin, but this is not really a strong use case yet since there is still a premium charged to acquire Bitcoins. But if more retailers start accepting them and offer a discount for using them, Bitcoins could become the de facto currency of the Internet.

Why would any legitimate retailer offer a discount for using a volatile "foreign" currency?

 

[Dissipate]

Why would any legitimate retailer offer a discount for using a volatile "foreign" currency?

Ever heard of http://bit-pay.com? It's a site that has merchant accounts that allow you to accept Bitcoin and sell them instantly for USD. The USD then gets deposited into your bank account. Therefore, there is no risk for the merchant. Of course there is a fee for this, but it's less than the fees for credit cards, plus there are no chargebacks possible with Bitcoin. That 'volatile foreign currency' becomes money in the bank with no chargeback or fraud to deal with.

Another site http://coinabul.com sells bullion for Bitcoin. Once again, they avoid volatility risk by selling the coins right away. However, they use a proprietary system that probably accesses the API of the Bitcoin exchanges to sell the coins.

 

[Dissipate]

Whats the countdown to the next embezzlement/theft/hack in the community that tanks the market. Again.

What's going on here?

Workers at Morgan Stanley and Goldman Sachs in London and New York have been visiting online Bitcoin exchanges as often as 30 times a day, according to documents seen by Reuters. Neither bank wanted to comment

http://www.reuters.com/article/2012/04/01/traders-bitcoin-idUSL6E8ET5K620120401

 

[Doppel]

There are various reasons why Bitcoin is a joke, but probably the biggest is that there is a max of 21M of them, so if it ever became anything more than something for internet fans to partake in there would be the inevitability of price deflation. That 21M limit is one of the many reasons it has no real future, it's a joke. That otherwise-intelligent people keep thinking otherwise is sad to be honest. Even if only every American went into it and all 21M were "mined" each American would be worth less than one Bitcoin and those early on who mined a whole bunch very quickly would be stinking rich. It's so stupid as to defy belief, really.

 

[CitizenKain]

What's going on here?



http://www.reuters.com/article/2012/04/01/traders-bitcoin-idUSL6E8ET5K620120401

Maybe they appreciate the show of watching people who dumped thousands of real money lose their shorts? Its why I follow the bitcoin market. Well, that and watching things like the guy who made bitcoinica steal 40,000 dollars from the people who bought it from him.

Why is "no chargebacks" considered a good thing? All it does is help perpetuate fraud by the seller.

 

[silverpig]

There are various reasons why Bitcoin is a joke, but probably the biggest is that there is a max of 21M of them, so if it ever became anything more than something for internet fans to partake in there would be the inevitability of price deflation. That 21M limit is one of the many reasons it has no real future, it's a joke. That otherwise-intelligent people keep thinking otherwise is sad to be honest. Even if only every American went into it and all 21M were "mined" each American would be worth less than one Bitcoin and those early on who mined a whole bunch very quickly would be stinking rich. It's so stupid as to defy belief, really.

They are divisible to something like 10 decimal places. It's really rather arbitrary whether it's 21M or 21 quadrillion.

 

[First]

Currency must engender trust first and foremost. The entire financial system is built on some form of trust. Bitcoin doesn't do that. For them to do it in the future, they'd have to somehow get the approval of governments around the world. Logically, that isn't going to happen and shouldn't, as competing currencies have shown to cause chaos, confusion, complexity and doesn't gain any trust ultimately as a result. Though it is an interesting idea...if you live on another planet.

 

[Dissipate]

Maybe they appreciate the show of watching people who dumped thousands of real money lose their shorts? Its why I follow the bitcoin market. Well, that and watching things like the guy who made bitcoinica steal 40,000 dollars from the people who bought it from him.

Why is "no chargebacks" considered a good thing? All it does is help perpetuate fraud by the seller.

True, there could be fraudulent sellers but I don't think chargebacks are a solution. They leave the merchant at the whim of the credit card companies that can close their merchant account if they get too many chargebacks that are out of their control. Also, for virtual services and goods like say WoW gold, chargebacks are a joke because as far as I know the CC companies won't investigate for those things. PayPal has ridiculous chargeback policies. 180 days for a chargeback, really??

The consumers, knowing that chargebacks aren't allowed will only shop with more trusted merchants and other kinds of escrow/dispute resolution services can be set up, rather than having the merchant at the whim of the terrible CC chargeback system that was never designed for the Internet in the first place.

The consumer benefits as well because they don't have to worry about giving their CC to a shady outfit. If the merchant is a scammer, they get scammed once, not multiple times. Also, they don't necessarily have to give any personal information to a merchant, all they have to do is send the coins. If they don't want to give up their home address for a shipment they can use a PO box as well.

 

[nehalem256]

Ever heard of http://bit-pay.com? It's a site that has merchant accounts that allow you to accept Bitcoin and sell them instantly for USD. The USD then gets deposited into your bank account. Therefore, there is no risk for the merchant. Of course there is a fee for this, but it's less than the fees for credit cards, plus there are no chargebacks possible with Bitcoin. That 'volatile foreign currency' becomes money in the bank with no chargeback or fraud to deal with.

Another site http://coinabul.com sells bullion for Bitcoin. Once again, they avoid volatility risk by selling the coins right away. However, they use a proprietary system that probably accesses the API of the Bitcoin exchanges to sell the coins.

https://bit-pay.com/accountingHelp.html

If you are converting immediately to US dollars it charges a fee of for $50

2.69% for bit-pay in US$
3.99% for bit-pay in Euros
3.20% for non-reward CC
3.70% for reward credit card.

There is not exactly a lot of incentive for using bit-pay.

 

[Doppel]

They are divisible to something like 10 decimal places. It's really rather arbitrary whether it's 21M or 21 quadrillion.

No it's not; that is irrelevant to its value. If I decreed tomorrow that the US mint will start issuing coins in 1/1000th's are you now 100X richer than you are today because the smallest form of currency now is a penny?

If I buy something from you for $100 does it matter if you receive a $100 note or 100 $1's?

Again, let's take some guy now who has $90 in bitcoins. He has 10 bitcoins. Now fast forward a few years when all 21M have been mined and each American is worth less than a 10th of a coin. If that guy today kept his coins he's now worth 1000X the average net worth despite the fact that today he only has $90 in them.

 

[Dissipate]

https://bit-pay.com/accountingHelp.html

If you are converting immediately to US dollars it charges a fee of for $50

2.69% for bit-pay in US$
3.99% for bit-pay in Euros
3.20% for non-reward CC
3.70% for reward credit card.

There is not exactly a lot of incentive for using bit-pay.

What about the hidden % of chargeback costs for the other options? Sounds like incentive to me.

 

[Doppel]

https://en.bitcoin.it/wiki/Deflationary_spiral

Bitcoin's answer to this is that yes it will be a deflationary spiral but hey it's ok.

 

[nehalem256]

No it's not; that is irrelevant to its value. If I decreed tomorrow that the US mint will start issuing coins in 1/1000th's are you now 100X richer than you are today because the smallest form of currency now is a penny?

If I buy something from you for $100 does it matter if you receive a $100 note or 100 $1's?

Again, let's take some guy now who has $90 in bitcoins. He has 10 bitcoins. Now fast forward a few years when all 21M have been mined and each American is worth less than a 10th of a coin. If that guy today kept his coins he's now worth 1000X the average net worth despite the fact that today he only has $90 in them.

except that he original 10 bitcoins will be not necessarily be worth $90. The $-Bitcoin exchange rate fluctuates. If it becomes more popular than it will be worth much more.

 

[Doppel]

except that he original 10 bitcoins will be not necessarily be worth $90. The $-Bitcoin exchange rate fluctuates. If it becomes more popular than it will be worth much more.

That's my point, they'd be worth millions, or rather would be if bitcoins were anymore than a fad, which they aren't.

 

[nehalem256]

What about the hidden % of chargeback costs for the other options? Sounds like incentive to me.

What about the costs(time) involved with setting up payment with bitcoins(which hardly anyone uses)?

What about fear of legal problems of accepting a quasi legal currency?

As a business who do you trust more VISA or bitpay?

What happens if bitcoins have a massive sudden crash? Does bitpay protect you?

Do you have to price things in bitcoins yourself or does bitpay take care of it?

 

[Dissipate]

What about the costs(time) involved with setting up payment with bitcoins(which hardly anyone uses)?

It may not be worth it for every business. But some businesses believe that it was worth it for them to start using bit-pay. In fact, bit-pay's client base is growing. However, as I admitted above, Bitcoin is not really a 'currency' yet because of the hassle and fees for consumers to acquire Bitcoin.

What about fear of legal problems of accepting a quasi legal currency?

That is a legitimate fear, but I imagine bit-pay is trying to do everything it can to stay legal and appease the bureaucrats. Obviously, they have relationships with banks, so that means something.

As a business who do you trust more VISA or bitpay?

I would trust bit-pay a lot more because I wouldn't have to worry about chargebacks, as I said above.

What happens if bitcoins have a massive sudden crash? Does bitpay protect you?

Since the Bitcoins are sold right away why would sudden crash matter?

Do you have to price things in bitcoins yourself or does bitpay take care of it?

This is answered on the site:

To calculate the exchange rate for US Dollars, we pull up-to-the-minute BID prices from several exchanges. We remove any outliers (in case an exchange is having issues) and use the high bid across the remaining exchanges. For larger orders, we will find a market clearing rate by examining the blended order book across the exchanges. If all of the bitcoins in a large order were sold at once, it would move the exchange rate lower (because the high bid won't accommodate the entire amount of being sold). Hence, the rate for larger orders will be lower than the high bid (generally not more than a few pennies). Generally speaking, the rate we use will be the equivalent of the blended rate if you sold your bitcoins into the exchanges, taking the highest bids across all exchanges. And there's no trade fee!

To calculate the exchange rate for currencies other than the US Dollar, we use the USD rate as described above and multiply it by the daily ECB ForEx rates compared to the US Dollar.

https://bit-pay.com/accountingHelp.html

 

[Doppel]

Bitcoin ponzi scheme, this article a year old, but still accurate:

http://www.hightechforum.org/bitcoins-a-crypto-geek-ponzi-scheme/

That means anyone who jumped in at the beginning in April 2010 and bought $1000 worth of bitcoins would theoretically have $9.6 million in bitcoins. That certainly sounds like a tempting bet, but be warned that it’s only a matter of time until the bubble pops and the value corrects itself to a tiny fraction of its peak.

Exactly what happened. And now it's gone up again, touted by geeks who don't even understand what deflation is (and it's hardly a tough concept).

These threads are always the same. One of the faithful trying to push Bitcoin upon the masses (for without others using it it's worthless, like any currency--and using that word for Bitcoin is highly suspect) and those who have spent even 5 minutes reading about currencies explaining what a farce it is.

 

[xj0hnx]

Bitcoin ponzi scheme, this article a year old, but still accurate:

http://www.hightechforum.org/bitcoins-a-crypto-geek-ponzi-scheme/



Exactly what happened. And now it's gone up again, touted by geeks who don't even understand what deflation is (and it's hardly a tough concept).

These threads are always the same. One of the faithful trying to push Bitcoin upon the masses (for without others using it it's worthless, like any currency--and using that word for Bitcoin is highly suspect) and those who have spent even 5 minutes reading about currencies explaining what a farce it is.

What about those that have been using it to buy goods and services?

 

[Dissipate]

Bitcoin ponzi scheme, this article a year old, but still accurate:

http://www.hightechforum.org/bitcoins-a-crypto-geek-ponzi-scheme/



Exactly what happened. And now it's gone up again, touted by geeks who don't even understand what deflation is (and it's hardly a tough concept).

These threads are always the same. One of the faithful trying to push Bitcoin upon the masses (for without others using it it's worthless, like any currency--and using that word for Bitcoin is highly suspect) and those who have spent even 5 minutes reading about currencies explaining what a farce it is.

So every investment vehicle that has ever been created is a Ponzi scheme? Gotcha.

 

[Mr. Pedantic]

No it's not; that is irrelevant to its value. If I decreed tomorrow that the US mint will start issuing coins in 1/1000th's are you now 100X richer than you are today because the smallest form of currency now is a penny?

If I buy something from you for $100 does it matter if you receive a $100 note or 100 $1's?

Again, let's take some guy now who has $90 in bitcoins. He has 10 bitcoins. Now fast forward a few years when all 21M have been mined and each American is worth less than a 10th of a coin. If that guy today kept his coins he's now worth 1000X the average net worth despite the fact that today he only has $90 in them.

It'd be, like, the Republican dream!

 

[bfdd]

orly? $9? maybe I'll offload some of the bitcoins that have idly been sitting in my wallet.... just have to remember where the hell I put the damn wallet.

 

[Doppel]

What about those that have been using it to buy goods and services?

Some people sell sh*t. Farmers buy it and put it in their fields, but it doesn't mean it's a valid currency.

So every investment vehicle that has ever been created is a Ponzi scheme? Gotcha.

This is really your retort to this thing's inevitability as a deflationary spiral if it ever became popular? That really nulls the math behind it?