Bitcoin reaches highest value since April, led by Chinese action
41 replies, posted
[QUOTE=Sobotnik;42592772]That is how bitcoins operate.
They have no intrinsic return or value in themselves. You can't "invest" into bitcoin normally. Instead all you can do is A: Mint, or B: buy coins.
Of course, here comes the problem. In order to give value to these coins, people must initially give wealth to them. In order to encourage people to do that, there is "mining" that lets you mine bitcoins.
So now you have bitcoins being created, but where is the wealth coming from? Well, a number of people do genuinely use bitcoins for rather clandestine activities, but this is small scale shit in comparison to the total volume of trade.
Where is all the money coming from? The answer is that people buy or mine bitcoins with the assumption that the price of them will rise. Given that most bitcoins in existence are held by tiny numbers of people, it's rather obvious whats going to happen. People buy bitcoins, prices rise, people begin investing into it on the basis that future people will invest into it.
The system is fundamentally flawed because it doesn't give any returns beyond what other people put into it, plus the fact it's not even being used as a currency.[/QUOTE]
Buying IS investing
The problem with this logic is that it basically ignores that
A. the currency itself changes in value over time
and
B. stocks are basically the same thing as bitcoin
and
C. Miners exist, which technically don't require any forward investment (which if it was a pyramid scheme, wouldn't even have this option with a 10-ft pole because it would undermine the whole scheme).
and
D. People do actually use bitcoin to transfer money between two people without having to deal with expensive and VERY slow international wire transfers.
You also say stuff like "most bitcoins are held by tiny numbers of people" which hasn't ever been proven anywhere (but lets be honest, there is a good likelyhood that people who got in early have a large amount if they never sold their bitcoin). While again, this is likely that the early birds have more of the pot, there has been countless more bitcoin created since those early days through mining to put enough into the ecosystem that I do not honestly think that more than 50% of all bitcoin are held by individual persons or groups of people. I can say with pretty much 100% certainty that bitcoins are not like USD in the US where a vast majority of the US wealth is held by an extremely small number of people (the so-called top 1%). The only reason why that could ever be the case now is if an early adopter bought in big early on and continued to buy in reguardless of what the price was all the way until now. That's pretty unreasonable to suggest.
Everything you are describing as a "flaw" conveniently enough also applies to USD, pretty much every currency on the planet and the stock market. Maybe you could argue that all of these things are really elaborate pyramid schemes, but trying to say bitcoin is one while those are not is really silly.
[editline]21st October 2013[/editline]
[QUOTE=Aphtonites;42592884]It's more like a get rich quick scheme for me, pretty much everyone who claims to be interested in it just wants to mine it and trade it off for tons of money and not actually buy and trade goods with it.[/QUOTE]
Just like stocks!
Also nobody mines anymore in any serious effort except hobbyists (who aren't making real returns from it) and people who have the server farm required to make any money mining it. This is because there is so much hashing power being mined alread and the mining difficulty is so high that there is pretty much nothing you can buy or put together iin any affordable means to casually mine bitcoins unless the price skyrocketed to a point where even microBTCs were valuble.
[editline]21st October 2013[/editline]
[QUOTE=Van-man;42594266]It's honestly a mix of both.
All fiat currencies are like that though.[/QUOTE]
Bitcoin is essentially a hybrid between gold and fiat currency
Gold, because it is often treated as an investement that gains in value over time, but a fiat currency since it can technically be moved around and act just like fiat currency except without having to deal with a bank to do it over the net.
Its useful because it lets you basically buy or send money internationally without having to deal with fees out the ass and long bank transfer times, its anonymous (unless people know an address is associated with you, since all transactions are public), etc. Its essentially like an international P2P paypal except instead of USD or whatever you send, its something that tends to gain value over time in the long term. And unlike paypal the fees are minimal, there aren't any limits to what you can send, theres no "chargebacks" or anything like that. Its basically like walking up to a guy in the street and handing him money, except over the internet.
Obligatory post saying that I could have made thousands if I didn't sell at $98
I invested a tiny bit the last time, and then doubled that. Then I lost everything, including my starting cash playing SatochiDice. I suck with money.
Yeah its easy to lose if you "over extend" and try to maximize profit. I've found its better to be safe than sorry, even if it means you end up buying in again at a higher price two days later and as such lose a small amount of money doing that (but you are gaining in the end assuming the price continues).
If you try and maximize your profit a lot of the time you end up panic buying/selling a lot where you end up pretty much losing your investment instead of holding through fluctuations. Of course some people can pull this off, I'd rather make a "secure" profit that isn't as high as it could have been if I was a trading wizard but avoid taking a big loss :v:
[QUOTE=KorJax;42595611]Yeah its easy to lose if you "over extend" and try to maximize profit. I've found its better to be safe than sorry, even if it means you end up buying in again at a higher price two days later and as such lose a small amount of money doing that (but you are gaining in the end assuming the price continues).
If you try and maximize your profit a lot of the time you end up panic buying/selling a lot where you end up pretty much losing your investment instead of holding through fluctuations. Of course some people can pull this off, I'd rather make a "secure" profit that isn't as high as it could have been if I was a trading wizard but avoid taking a big loss :v:[/QUOTE]
Would it be a bad idea to keep 0.1 coins back just in case it rises further?
I've got 1.3 in gox
[QUOTE='[EG] Pepper;42595746']Would it be a bad idea to keep 0.1 coins back just in case it rises further?
I've got 1.3 in gox[/QUOTE]
In all likelyhood its going to continue to rise for a bit so I wouldn't be too concerned about it dropping too soon. Take a look at the 1-day chart at [url]http://www.bitcoinwisdom.com[/url] - this is clearly just the beginning.
I'd expect a drop if a huge push comes in a short time, or if it stagnates for several days. Or if bad news happens, not that I'd expect any at this point.
Also I don't reccomend people go to gox at this point. Gox's price is higher than everyone else because its almost impossible to get USD out of gox right now, making it so the value of BTC is higher there as people can pretty much only just sit on their coins and trade with it. The only way to get money out of gox without paying a massive fee and waiting 2-3 months is if you send your BTC you have on gox to another exchange and sell there. But that'll come at a big loss on your part - you'll send 1.3 BTC worth (hypothetically) $200 there that you have been trading with to another exchange where its only worth $180 when you want to cash out. Essentually you pay a 10% fee on top of the actual trading fees you do on the exchanges by moving out of gox
So the Bitcoin was propped up by Chinese investment which is most likely for laundering.
So in other words, if China tanks, much like every other currency that relies on chinese economics the bitcoin will fall through the floor again.
I'll keep my investments in CAD thank you, I'm not edgy enough to wager it all on anarchy and people trying to ram a new currency down our throats.
[QUOTE=sam6420;42592227]Damn yo I remember when it was 15$! I hate my life![/QUOTE]
Bought 7.98 bitcoins when they were around $8.50 each, spent about $80 after conversion fees. never got around to spending them... Now I have $1,500 in bitcoin.
I was investing in Bitcoin before this however UK banks have since banned transactions to many Bitcoin exchanges.
[QUOTE=TamTamJam;42596466]Bought 7.98 bitcoins when they were around $8.50 each, spent about $80 after conversion fees. never got around to spending them... Now I have $1,500 in bitcoin.[/QUOTE]
This is why I'm never going to let my friends anywhere near me with money
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