Bitcoin cracks $1B

goldpelican

goldpelican

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http://spectrum.ieee.org/tech-talk/computing/networks/bitcoin-hits-1-billion

Bitcoin, the world's first open source cryptographic currency, which has been on a tear since the beginning of this year, set a new record for itself yesterday afternoon as the price listed on the largest online exchange rose past US $92. With nearly 11 million Bitcoins in circulation*, this sets the total worth of the currency just over one billion dollars.

For a bit of perspective, that's how much Facebook spent on its acquisition of Instagram last April. But Bitcoin is not a company. It's a digital currency that runs on a global peer-to-peer network without the backing of a nation or any other central authority. The recent ascent has traditional economists scratching their heads.

"It's something of a mystery that Bitcoin has a positive value at all since it wasn't launched in the way a new currency is typically launched," says Lawrence White, an economist who teaches the history of banking and money at George Mason University.

"Typically, if a country wants to introduce a new currency, they make it redeemable for the old currency at a fixed exchange rate and then after a while they cut off the link and retire the old currency. But they launch the new currency by giving people a sort of firm expectation of what it's worth. Bitcoin didn't do that. It just launched itself by its own bootstraps and we don't really understand how that worked, as economists."

Recent events suggest that many of the people who are using Bitcoin don't want a re-iteration of these old models. Much of the new interest in Bitcoin is coming from places like Cyprus whose desperate proposals for economic reform threaten to plunder the savings of its people.
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Look out for bitcoin2, bitdollar, bitbill, bitbuck, bitcent, bityen .....
 
trew said:
Look out for bitcoin2, bitdollar, bitbill, bitbuck, bitcent, bityen .....
Click to expand...

That is one big problem that bitcoiners could face... as you say, absolutely anyone can decide to replicate bitcoin now. Now that bitcoins are gaining increasing attention I highly doubt other players will neglect to get themselves into this burgeoning market.

Even though bitcoin is established and would be the market leader for digital currencies, market leaders regularly get toppled by start-ups in the online world. Just like Facebook toppled Myspace, Google smashed Yahoo et al, Firefox superseded IE (then chrome and a bunch of others came came along and now its just a real bun fight).

It may be a long bow to draw to compare software/websites with a digital currency, but in the end they are both in the business of competing for users.

edit: and then there is the question of 'big brother' taking a hand and shutting things down. Megaupload and The Pirate Bay were allowed to operate and make money for quite a while until all of a sudden they began to get dumped on from high places...
 
"It's something of a mystery that Bitcoin has a positive value at all since it wasn't launched in the way a new currency is typically launched," says Lawrence White, an economist who teaches the history of banking and money at George Mason University.

"Typically, if a country wants to introduce a new currency, they make it redeemable for the old currency at a fixed exchange rate and then after a while they cut off the link and retire the old currency. But they launch the new currency by giving people a sort of firm expectation of what it's worth. Bitcoin didn't do that. It just launched itself by its own bootstraps and we don't really understand how that worked, as economists."

Recent events suggest that many of the people who are using Bitcoin don't want a re-iteration of these old models. Much of the new interest in Bitcoin is coming from places like Cyprus whose desperate proposals for economic reform threaten to plunder the savings of its people.
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I think the reason why it's such a mystery is because mainstream economics has been locked into one way of thinking for such a long time now, ie. government currencies, central banking, stimulus, inflation etc that there are few people in the profession capable of any true innovative thinking.

They've got all their textbooks and courses and massive numbers of people's livelihoods are now so dependent on that all being the gospel truth that it is no wonder they have been blindsided for the most part. Same kind of thing happened with books, music, movies, etc. Times change. Most people get left behind in old ways of thinking.
 
Are there any dependable statistics on the volume of transactions occurring in Bitcoin?

I wouldn't think so, given the emphasis of anonymity inherent to the design of Bitcoin as a decentralized transaction system.

If volumes are high against the, Bitcoins buyers could be operating in the 'Greater Fool Theory of Investing' territory.
 
Roswell Crash Survivor said:
Are there any dependable statistics on the volume of transactions occurring in Bitcoin?

I wouldn't think so, given the emphasis of anonymity inherent to the design of Bitcoin as a decentralized transaction system.
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Belay that last, just found Mt Gox. Volume figures/graph right up the top. Authenticity? Impossible to verify.
 
jparrie said:
It's completely decentralised so big brother can't do anything about it.
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None of us on here particularly like government, or think they are particularly bright (maybe just Big AD ;))

But one thing they are good at is messing with our money.

I can think of any number of ways they can mess with bitcoins.....

-The exchanges can easily be shut down, thus preventing you cashing bitcoins for official government currencies.
-By limiting the tradeability they then limit the ability of businesses to accept bitcoins as payment, further eroding their usefulness as an alternate currency.
-They can launch a campaign to 'criminalise' bitcoins... wheel out the media fear machine and label those using bitcoins money launderers, terrorists and drug dealers (already done to an extent).

Now I will be the first to admit I am no bitcoin fan, but I will not deny their success thus far - right now it is a working online currency system. You cannot just assume that this cannot change as governments are wily b******s and if they think they are missing their slice of the bitcoin pie they will find a way to get their fingers into it.... do not underestimate them.
 
trew said:
Look out for bitcoin2, bitdollar, bitbill, bitbuck, bitcent, bityen .....
Click to expand...

I'm thinking 'bubblecoin', 'tulipcoin', 'southseacoin', 'mississippicoin', 'realestatecoin', 'greaterfoolcoin'...
 
"...and we don't really understand how that worked, as economists."
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And yet they can recognise as valid a global illusory fiat monetary system now wholly and cynically based on debt rather than on underlying tangible intrinsic worth, directly related say, to gold?

Hmmm...

Curious that one... no wonder it's all gone down the pan with people like that on the team...

Oh - Bitcoin - yeah... Isn't that like, the same thing only much much much much much much much much much much smaller?

It's whatever you want it to be, man... like er, y'know - we just dreamed it up didn't we?!?

Barter's where it's at - that and free love... ;)

ps - It's a mystery of an enigma of a paradox of a conundrum... obviously.
 
Roswell Crash Survivor said:
Are there any dependable statistics on the volume of transactions occurring in Bitcoin?
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All transactions are publicly visible in the block chain, which anyone can analyse. See http://bitcoincharts.com for more than just the MtGox stats.

As to what they were traded for eg currency, goods, services, internal transfers between wallets, who knows?

You also wouldn't see off-chain transactions, eg trading a paper wallet for cash.
 
Dabloodymess said:
I can think of any number of ways they can mess with bitcoins.....

-The exchanges can easily be shut down, thus preventing you cashing bitcoins for official government currencies.
-By limiting the tradeability they then limit the ability of businesses to accept bitcoins as payment, further eroding their usefulness as an alternate currency.
-They can launch a campaign to 'criminalise' bitcoins... wheel out the media fear machine and label those using bitcoins money launderers, terrorists and drug dealers (already done to an extent).

Now I will be the first to admit I am no bitcoin fan, but I will not deny their success thus far - right now it is a working online currency system. You cannot just assume that this cannot change as governments are wily b******s and if they think they are missing their slice of the bitcoin pie they will find a way to get their fingers into it.... do not underestimate them.
Click to expand...

No, the exchanges can't be easily shut down. They are not like MegaUpload which was a centralised service, they are scattered worldwide, and that's just the one's you know about. I can walk down the road from where I live and exchange hard cash for Bitcoin and they can be in my encrypted wallet the same day, and I can do it completely anonymously. There are literally thousands of individuals willing to provide this service at this point in time, it isn't getting any smaller.

Shutting this down is in the realms of fantasy. 'They' can legislate all they like, just like they do for drugs, but they can't stop it.
 
I think you are underestimating the scum at the top of the fiat chain.

No doubt they will close down the large exchanges with sweeping regulations to have it outlawed.
Firstly, outlaw banks accepting deposits for Bitcoins.
Close down Mt Gox on the pretense of National Security.
Japan like all countries would fall into line.
Exchanges would drop like flies.

Even if they tried to include CreditCards deposits, it would still be met with the same regulatory response.

Make haste whilst the sun shines, but don't get left holding the bag.

ATM. Bitcoins is based on a portion for trading goods and services and the remainder is on speculation.
If the Pendulum shifts too much towards the speculative end rather than its supposed original concept as
an alternative to the fiat based system as a medium of exchange, I have no doubt it will come crashing down.

It hasn't reached the frenzy stage of speculation as yet which I am anticipating will take place as more of the media takes hold of it.

I'll stick with tangible assets such as gold and silver and watch from the sidelines.

Funny thing is, i remember the Dot.com boom very well especially with the search engine wars.
The funny thing I got from it was how analysts at the time had such difficulty in measuring a companies value based on PE Ratios well over 100:1
They tried their hardest to justify why companies like Yahoo, Looksmart, MSM were worth their value.
Rather than look like dimwits, instead they compared them on an industry based average which was still
monstrously over valued. Point of all this. Anyone can justify why something should be worth its value.
However, if the market is no longer able to justlfy the price for whatever reason it will come crashing down.

Caveat Emptor

Cheers markcoinoz
 
The madness of 21st century humanity. We place so much value on things that are mere concepts and constructs that don't actually exist. Max Keiser even talks about Bitcoins having intrinsic value. They have less intrinsic value than a bank note. It is another tulip mania in a world gone insane trying to create prosperity from fluff and fog. The economic "useless feeders" of Wall st. who produce nothing should have taught us a lesson but no, we want a part of the "make believe" action too where our virtual made-up Bitcoins can make us virtually rich.
 
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