Bitcoin

karkus30

Banned
Interesting article likening Bitcoins rise to the South Sea Bubble and the Tulip crash.

http://mises.org/daily/6401/Bitcoin-Money-of-the-Future-or-OldFashioned-Bubble

Its a stabilised view of the rapid rise of Bitcoin and how we shouldn't get too wrapped up in its newness as a solution to banking. It describes the damage that parabolic curves do to the market and how there always has to be a correction. Even Gold has undergone a correction.
 

SanPedro

Well-known Member
Just wished i'd bought some bitcoins 18 months ago... I'd be richer than Croesus by now.

The current price seems the very definition of the word bubble. Maybe it's all the oil speculators...

Or maybe it's the US treasury? By deliberately inflating the price and then destabilising the currency in the hope of discrediting it 😈. Just a thought...

By it's very nature, with only a fixed number being produced, won't this naturally inflate the price compared to traditional currencies?

It seems more like a share issue than currency.
 
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karkus30

Banned
SanPedro said:
Just wished i'd bought some bitcoins 18 months ago... I'd be richer than Croesus by now.

The current price seems the very definition of the word bubble. Maybe it's all the oil speculators...

Or maybe it's the US treasury? By deliberately inflating the price and then destabilising the currency in the hope of discrediting it dde08. Just a thought...

By it's very nature, with only a fixed number being produced, won't this naturally inflate the price compared to traditional currencies?

It seems more like a share issue than currency.

As they said in the article, its the newness of it, plus the anti authoritarian underground nature which has propelled it to prominence.

It is restricted by the technology, but that hasn't stopped it being over subscribed and hence driving up the price. As it said, a rapid rise is always followed by a rapid collapse. It cannot replace money but is fashionable. It has no intrinsic value and has spawned imitators as a result. That is a kind of natural inflation and therefore will eventually reduce its value.

The bit about Gold being valuable in itself and not reliant on confidence to give it that value. It can be moved from hand to hand and will always be valuable where as fiat currency requires a huge measure of confidence in the banking system and the Government to retain its worth.
 

Wild Weasel

Distinguished Member
They've shot up in value since the goings on in Cyprus, which is why they're getting more attention now. Max Keiser wont shut up about them. A lot of the price rise seems to be caused by Russians seeking other means of getting their money out of the potential clutches of their gangster government.

I heard about them a few years ago when I read an article about bitcoin 'miners'. They use powerful computers with multiple graphics cards to work on the mathmatical problems that unlock bitcoins as a reward. Originally, 50 new bitcoins were released a day, but that has now been reduced to 25 and will be reduced further as time goes on.

They're like an open source currency, free from the shenanigans of governments & central banks. It's very early days, but I also wish I'd bought a few when they were around $5 each. They're now about $160.
 

kav

Distinguished Member
They've shot up in value since the goings on in Cyprus, which is why they're getting more attention now. Max Keiser wont shut up about them. A lot of the price rise seems to be caused by Russians seeking other means of getting their money out of the potential clutches of their gangster government.

I heard about them a few years ago when I read an article about bitcoin 'miners'. They use powerful computers with multiple graphics cards to work on the mathmatical problems that unlock bitcoins as a reward. Originally, 50 new bitcoins were released a day, but that has now been reduced to 25 and will be reduced further as time goes on.

They're like an open source currency, free from the shenanigans of governments & central banks. It's very early days, but I also wish I'd bought a few when they were around $5 each. They're now about $160.

I looked into bitcoin mining when I was building my PC a couple of years ago, but I figured it wasn't worth the outlay. :(
 

karkus30

Banned
MikeTV said:
Or a commodity with a restricted supply, like gold.

Except it isn't. That was the idea, but now there are other companies doing the same. So the currency inflates beyond its borders.

Did you read the article ?

I was interested in Bitcoin, but realised it wasn't the solution. Just an interesting new fad with a limited lifespan. The currency has no intrinsic value and is rare. That makes it have all the problems of Gold and all the problems of fiat money and none of he advantages of either.

Like the article said, many Libertarians and free market advocates have been glassy seduced by its promise of anarchic trading but the reality is it presents no real answers.
 

SanPedro

Well-known Member
The bit about Gold being valuable in itself and not reliant on confidence to give it that value. It can be moved from hand to hand and will always be valuable where as fiat currency requires a huge measure of confidence in the banking system and the Government to retain its worth.

It's not that long ago that cowrie shells were used as currency. Surely the 'value' of gold is just historical ie it's been around for so long that it's just accepted to be valuable. At the end of the day does anything have any intrinsic value... isn't it down to what people (markets?) perceive something to be worth. Whether it be gold, tulips, cowrie shells or money.

It's just more convenient than lugging a couple of oxen around to trade for a new Ford ;)
 

karkus30

Banned
SanPedro said:
It's not that long ago that cowrie shells were used as currency. Surely the 'value' of gold is just historical ie it's been around for so long that it's just accepted to be valuable. At the end of the day does anything have any intrinsic value... isn't it down to what people (markets?) perceive something to be worth. Whether it be gold, tulips, cowrie shells or money.

It's just more convenient than lugging a couple of oxen around to trade for a new Ford ;)

Of course, but Golds scarcity makes it valuable. Its also very beautiful as a metal and has several useful properties. Its historic because it has always been the commodity of choice. Regardless of attempts by financial institutions to down play its importance, banks vaults are still full of it and it is regularly bought and sold on the local high street.
 

Trollslayer

Distinguished Member
Follow the crowd. Straight over the cliff.
 

Wild Weasel

Distinguished Member
Aristotle said that money should be durable, portable, divisible and have intrinsic value.

Other than precious metals, it's very hard to find something that meets all these requirements.
 

pragmatic

Distinguished Member
Gold's vale is still 'a confidence trick', just a more widely accepted one, its 'intrinsic' value still rises and falls daily and often for very little reason.

At least gold cannot just be created or summoned up by the state, but its a property shared by quite a few things.
 

karkus30

Banned
gazbarber said:
Gold's vale is still 'a confidence trick', just a more widely accepted one, its 'intrinsic' value still rises and falls daily and often for very little reason.

At least gold cannot just be created or summoned up by the state, but its a property shared by quite a few things.

Like everything. The value of something is created in the mind. There is no value attached to the object.
 

karkus30

Banned
karkus30 said:
As it said, a rapid rise is always followed by a rapid collapse. It cannot replace money but is fashionable. It has no intrinsic value and has spawned imitators as a result. That is a kind of natural inflation and therefore will eventually reduce its value.

.

Well, don't say I didn't warn of it ;-) I'm doing the stock market next.

Anything that shoots up in a parabolic curve will end up with an equal and opposite adjustment.....if its lucky. Otherwise it will be a spontaneous collapse usually followed by many years of nice, slow moderate growth. Bet on the longs.

Housing markets, dot coms, tulips, houses.......anything that shows a rapid rise....be in it for the short term and liquidate.
 

pragmatic

Distinguished Member
"Markets can remain irrational longer than you can remain solvent."

Which is true of those who thought housing peaked in 2004 (traditional ratio's ect means it had). Prices continued to rose for nigh on another 4 years.
 

BomoLad

Well-known Member
Until now I've avoided knowing what this is save from vague knowledge that it's some kind of online currency thing.

Has it 'burst' already?

This is the reason why I paid no attention to the minidisc player.
 

Wild Weasel

Distinguished Member
It's too early to tell, but I think it'll be OK if you take a long term approach.

Minidisk was decent, but it was far too expensive to become mass market. Then MP3 players killed it off. I've still got a portable Sony MD around somewhere that I bought second hand.
 

karkus30

Banned
BomoLad said:
Until now I've avoided knowing what this is save from vague knowledge that it's some kind of online currency thing.

Has it 'burst' already?

This is the reason why I paid no attention to the minidisc player.

Looks like it.

MD did alright in the musicians market. Its still used to make demo discs.
 

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