Bitcoin price crashes

Daegerty

http://it.slashdot.org/story/11/06/19/2125252/Bitcoin-Price-Crashes

I remember a few lads on here promoting it as a way of making money not so long ago, and like with Eircom shares the more a thing like this is promoted the more you have to be weary of it.

The idea wasn't bad, having an online decentralised currency that was somewhat anonymous but the whole thing with leaving your computer on to mine bitcoins seems like a scam to make early adopters (kids in their mammy's basements wasting their parents elecricity to mine coins) rich.

Dravokivich

What I didn't get was, why would people expect the value increase when there's more of them? Surely the more there is, the less they'd be worth.

As it appears to be the case now. :pac:

Chuck Stone

Dravokivich wrote: »

What I didn't get was, why would people expect the value increase when there's more of them? Surely the more there is, the less they'd be worth.

As it appears to be the case now. :pac:

There will be a finite number produced but seeing as they are a virtual currency they are devisible to .0000+ which allows huge scope for their being used to trade online. It's possible that .0000001 of a bit coin could be say $1 if the value increased enough.

That's my (possibly flawed) understanding.

sbsquarepants

Wasn't there just an article in the papers, or maybe on yahoo, about them increasing in value 200,000% over the last few years or something crazy like that, and apparently being the currency of choice for high level drug deals?

Spunge

Read a forum post from last year, where some guy offered 10,000 bitcoins if someone delivered him a pizza, probably worth around $45.

Guy probably committed suicide

Spunge

sbsquarepants wrote: »

Wasn't there just an article in the papers, or maybe on yahoo, about them increasing in value 200,000% over the last few years or something crazy like that, and apparently being the currency of choice for high level drug deals?

Yeah i read its some site called Silk Road, where you could buy drugs, mainly used bitcoins because it was less traceable, i assume.

Mark200

Dravokivich wrote: »

What I didn't get was, why would people expect the value increase when there's more of them? Surely the more there is, the less they'd be worth.

As it appears to be the case now. :pac:

If demand increases quicker than availability then the value will go up.

Chuck Stone

Only 21 million bitcoins will be mined but they will be divisble to many decimal points.

Source

orourkeda

Is this a currency that geeks can have sex with?

bnt

Daegerty wrote: »

http://it.slashdot.org/story/11/06/19/2125252/Bitcoin-Price-Crashes

I remember a few lads on here promoting it as a way of making money not so long ago,
...

And there's the problem right there. It was supposed to be a currency, not "a way of making money". In a closed market, how do people make money? By taking it from someone else - from "punters".

Yes, I know that Bitcoin is not an entirely closed market, since you can "mine" your own, but that process is already difficult and is going to become progressively more difficult over time, by design. Great if you have the computing power and don't care about electricity bills. Anyone have access to a university compute cluster? :cool:

orourkeda wrote: »

Is this a currency that geeks can have sex with?

No. That only happens in the movies, so ... you're not screwed.

old_aussie

Symantec spotted the malware just a day after news that one Bitcoin user had seen as much as $500,000 wiped from the wallet on his hard drive.

http://www.pcauthority.com.au/News/261025,symantec-warns-of-trojan-targeting-bitcoin.aspx?eid=19&edate=20110620&utm_source=20110620&utm_medium=newsletter&utm_campaign=daily_newsletter


Time to tighten the security on your Bitcoin wallet

Mantel

It doesn't help too much that people can nick your entire stash of bitcoins by just copying one file off your computer.

I've seen more and more people talking about how to make money off bitcoin rather than trying to use it as a currency. It's looking more and more like currency exchange sites will be the death of it rather than helping it thrive as people try to ride the market changes and make some money out of it.

red menace

I imagine the safest way to keep your bitcoin safe is to keep the wallet on a hardened system with no access to the Internet or better yet off the network completely.

Stand alone machine with an account that has no admin privileges would be a help

hatrickpatrick

Now's the time to invest, methinks...

Fremen

It was an interesting experiment, but the initial method of distribution doomed the thing. Without the support of a bank or government, it'd be very hard to get something like this off the ground.

Chuck Stone

Fremen wrote: »

It was an interesting experiment, but the initial method of distribution doomed the thing. Without the support of a bank or government, it'd be very hard to get something like this off the ground.

But doesn't this also have an upside in that there is a finite number to be produced so that they can't be devalued by over-issue?

I guess ultimately it is a fiat currency because it's not backed by anything tangible.

donutface

Chuck Stone wrote: »

But doesn't this also have an upside in that there is a finite number to be produced so that they can't be devalued by over-issue?

I guess ultimately it is a fiat currency because it's not backed by anything tangible.

Its backed by past work - it takes energy to produce the currency and you cant just make it up. Think of it as any other commodity such as gold, theres a limited amount of gold on this planet and the more thats mined, the harder it becomes to find more. Thus its not a fiat currency :-)


I got bit by this one as I was trying to ride the currency fluctuations and unfortunately my money was in bitcoins and not USD when this happened. Fortunately I haven't spent any of my own money on it, rather the money they gave me originally.

What people are getting confused about though is that this has nothing to do with the BitCoin currency itself, but rather a market trading site. It's like AIB being compromised instead of the Euro. There are plenty of other market trading sites that will probably take off now which will offer the currency some stability in value.

Tar.Aldarion

so eh what is it basically? /lazy

donutface

Tar.Aldarion wrote: »

so eh what is it basically? /lazy

Its a digital currency thats run on a peer to peer network. I can mine BitCoins or buy BitCoins that have been mined already. You could sell me something, and I can send the coins over to you without any banks.

You can use those BitCoins to either buy something else, or go to a market and exchange it back for real money.

Think of it as a Paypal replacement. The only catch is theres generally a small fee involved in converting to BitCoins and back from BitCoins. If you don't mind keeping them as BitCoins though transactions are free.

BitCoins are much more like cold hard cash than bank transactions too as there is no reversing transactions. If I give you a BitCoin, the only way I'll get it back is if you send it back to me.

Tar.Aldarion

What is mining? Why can't people mine a lot?

Spunge

Tar.Aldarion wrote: »

What is mining? Why can't people mine a lot?

Dont really understand it myself, but with a lot of processing power , usually done by the graphics card you can mine the coins, by running a program on your computer which connects to a big pool of other users all who's computers are doing some processing trying to decrypt a coin, then each person given a percentage of that coin. The difficulty to mine increases over time until there will come a point where no more coins can be mined, in something like 2018.
That's probably no help, but thats all i get from it at the moment.

I ran my comp mining for about a week, made half a bitcoin, which i assume is worth far less than the electricity it cost to run it for that time

Chuck Stone

Tar.Aldarion wrote: »

What is mining? Why can't people mine a lot?

Bitcoins’ are a form of online currency that can be earned, spent, traded and used for anonymous transactions, and popularity in use has soared 399,900% in the past year. Bitcoins are “mined” by computer users running high-end graphics cards to solve complex math problems. When a problem is solved, the user earns a “bit,” which is worth 50 Bitcoins. The machines needed to find bits are expensive and complex; far outside the range of a normal PC. One bit is created every 10 minutes, and every time one is solved the problems get harder, requiring more system output, and thus controlling a finite currency. Fad or no, a single Bitcoin valued at half a penny last October now hovers around $20.

One of the reasons they have value is because they are difficult to 'produce'

http://www.nuwireinvestor.com/articles/bitcoins-online-currency-popularity-surges-57404.aspx

donutface

Tar.Aldarion wrote: »

What is mining? Why can't people mine a lot?

Mining is converting electricity into the maths equations that make up a bitcoin. Instead of paying someone for a BitCoin, you can spend some time and pay ESB for the same value.

hmmm

Bitcoin might not be intended as a scam but its effect is the same. The only people who will make money in this are those who "invested" their money/mining time early (similar to a pyramid scheme).

The primary targets are technically literate people who have listened to too much guff about fiat money and the world ending tomorrow, and who don't understand the basics of money and central banking. Successful currencies are always backed by something, even fiat money.

Turnover on the bitcoin exchanges is practically non existent, so small quantity changes can cause big price fluctuations. Once people figure out that Bitcoins can't be used to buy anything of any importance, the price will rapidly collapse - most people are hoarding their coins because they can't spend them.

donutface

hmmm wrote: »

Bitcoin might not be intended as a scam but its effect is the same. The only people who will make money in this are those who "invested" their money/mining time early (similar to a pyramid scheme).

The primary targets are technically literate people who have listened to too much guff about fiat money and the world ending tomorrow, and who don't understand the basics of money and central banking. Successful currencies are always backed by something, even fiat money.

Turnover on the bitcoin exchanges is practically non existent, so small quantity changes can cause big price fluctuations. Once people figure out that Bitcoins can't be used to buy anything of any importance, the price will rapidly collapse - most people are hoarding their coins because they can't spend them.

This is a topic that comes up time and time again. At no point did the creators of BitCoin or the large majority of the BitCoin users promise anyone that they'd get rich by using BitCoin. All it is is exactly what it is. Its about as much of a scam as is centra that accepts pieces of paper for tangible goods.

The fact that you can buy real currency with it is enough to make it viable. As far as I know, Wikileaks accepts Bitcoin donations after Mastercard cut them off because of their leaks. This is a great way to send money without necessarily having to depend on the banks to approve where the money is going to/where its coming from.

You can buy webhosting, Amazon gift vouchers and drugs. Doesn't seem like an immediately obvious scam to me, just a very clever way of getting online transfers out of the hands of the bankers and into the hands of the people.

The fact that the original creators might get rich from it makes as much difference to you and me as what Bill Gates's wealth does. In fact it matters even less as they wont be earning interest on those coins.

hmmm

donutface wrote: »

Its about as much of a scam as is centra that accepts pieces of paper for tangible goods.

Proving my point, as long as you think your makyuppy currency has the same validity as the "pieces of paper" Centra accepts you're living in some techie fantasy.

The fact that you can buy real currency with it is enough to make it viable.

You can't buy real currency with it. What you can do is sell your bitcoins to some eejit who will give you real money for them.

As far as I know, Wikileaks accepts Bitcoin donations after Mastercard cut them off because of their leaks.

Unless Wikileaks are selling milk and bread that's not much use. I'd say Wikileaks will accept seashells if you donate them.

You can buy webhosting, Amazon gift vouchers and drugs.

Amazon are accepting bitcoins? Bull. And drugs, yeah that's going to help when they are considering whether to make bitcoin illegal (like all the other digitial currencies).

Doesn't seem like an immediately obvious scam to me, just a very clever way of getting online transfers out of the hands of the bankers and into the hands of the people.

"We're an anarcho-syndicalist commune". I don't care if you lot lose money, I worry that some "ordinary" people might get sucked into your scheme.

The fact that the original creators might get rich from it makes as much difference to you and me as what Bill Gates's wealth does. In fact it matters even less as they wont be earning interest on those coins.

That's the same as saying that you don't care how much the founders of a pyramid scheme makes, just as long as you get your cut.

donutface

You can't buy real currency with it. What you can do is sell your bitcoins to some eejit who will give you real money for them.

How is this any different from going to a bank and buying USD for your Euros?

Unless Wikileaks are selling milk and bread that's not much use. I'd say Wikileaks will accept seashells if you donate them.

That statement is just ridiculous. Wikileaks sell the Bitcoins for real money which is used to fund whatever they need funding for. Seashells won't allow for this.

Amazon are accepting bitcoins? Bull. And drugs, yeah that's going to help when they are considering whether to make bitcoin illegal (like all the other digitial currencies).

I never said anything about Amazon accepting BitCoin. You can buy Amazon giftcards with BitCoins from a third party vendor. Drugs is not a reason to make BC illegal. What other digital currencies are illegal?

"We're an anarcho-syndicalist commune". I don't care if you lot lose money, I worry that some "ordinary" people might get sucked into your scheme.

Its up to the ordinary people to decide how they want to spend their money.

That's the same as saying that you don't care how much the founders of a pyramid scheme makes, just as long as you get your cut.

Its not a pyramid scheme. There is no one person that the money has to be transferred to. Nobody promised anyone anything about becoming rich. It's just another way of transferring money from A->B.

hmmm

donutface wrote: »

How is this any different from going to a bank and buying USD for your Euros?

The Euro and USD are backed and regulated by the European and US governments. Bitcoins only value is what bitcoin users think it is. Seashells.

You can buy Amazon giftcards with BitCoins from a third party vendor.

In other words, someone sells bitcoins to eejits who pay real money for the digital seashells, and in return they give you stuff they buy with the real money.

Drugs is not a reason to make BC illegal. What other digital currencies are illegal?

E-gold is the last digital currency I remember and that hasn't ended too well. I remember over 10 years ago being involved with the Cypherpunks mailing list who were trying to create an anonymous digital ecash system which didn't end so well.

Governments retain monopolies on currency for good reasons. Saying that you can buy "drugs" as a plus for bitcoin is hardly going to endear it to them.

http://venturebeat.com/2011/06/08/government-crackdown-on-bitcoin/

And I never said it was a pyramid scheme.

Standard Toaster

The name's Lanley. Lyle Lanley. And I come before you good people tonight with an idea. Probably the greatest.....Aw, it's not for you.
It's more of a Shelbyville idea.

Orando Broom

donutface wrote: »

How is this any different from going to a bank and buying USD for your Euros?


That statement is just ridiculous. Wikileaks sell the Bitcoins for real money which is used to fund whatever they need funding for. Seashells won't allow for this.


I never said anything about Amazon accepting BitCoin. You can buy Amazon giftcards with BitCoins from a third party vendor. Drugs is not a reason to make BC illegal. What other digital currencies are illegal?


Its up to the ordinary people to decide how they want to spend their money.


Its not a pyramid scheme. There is no one person that the money has to be transferred to. Nobody promised anyone anything about becoming rich. It's just another way of transferring money from A->B.

Donutface, PM if you want to be unburdened of any assets or money. I'll waive my Acquisition & Acquirement fee.

Cianos

Why do the coins get progressively more difficult to mine? Is that by design or necessity or both?

Daegerty

Cianos wrote: »

Why do the coins get progressively more difficult to mine? Is that by design or necessity or both?

So nobody can use mining as a way of making money after it has become established. the fact that you can mine coins now entices a lot of people in.

hardCopy

The thing I don't get, is what's to stop somebody creating a new system based on the same premise?

How does the fact that there's a finite number of coins help anything when people can just jump ship to get in at the groiund floor of the next big digital currency?

donutface

hmmm wrote: »

The Euro and USD are backed and regulated by the European and US governments. Bitcoins only value is what bitcoin users think it is. Seashells.

The backing by governments is irrelevant. The value of the currencies are still mostly determined by supply and demand which is no different to BitCoin

In other words, someone sells bitcoins to eejits who pay real money for the digital seashells, and in return they give you stuff they buy with the real money.

Yup. And you know what? In the end you can buy real things with those BitCoins that you've been paid with. Just like I need to go to a post office to get real money from a postal order.

E-gold is the last digital currency I remember and that hasn't ended too well. I remember over 10 years ago being involved with the Cypherpunks mailing list who were trying to create an anonymous digital ecash system which didn't end so well.

Currencies not ending too well doesn't make them illegal.

Governments retain monopolies on currency for good reasons. Saying that you can buy "drugs" as a plus for bitcoin is hardly going to endear it to them.
http://venturebeat.com/2011/06/08/government-crackdown-on-bitcoin/

And crackdown due to drugs is just codeword for crackdown due to lack of control. They're hardly going to say well we can't really see how much people are sending and receiving which makes taxation difficult and expect people to be sympathetic to their cause.

And I never said it was a pyramid scheme.

My bad - I thought you had implied it like many other people are repeating.


I'm not telling anyone to go and sink their life savings into the currency. If online vendors accept it as another form of payment it can only be a good thing. I can send you BitCoins and you can exchange it for real currency. It doesn't matter which eejit is paying you or what his or her IQ level is. It doesn't matter who backs it either - its a decentralized currency. All thats required is for someone else to attach value to that which you have. And thats exactly whats happening already.

hardCopy wrote: »

The thing I don't get, is what's to stop somebody creating a new system based on the same premise?

How does the fact that there's a finite number of coins help anything when people can just jump ship to get in at the groiund floor of the next big digital currency?

Supply & Demand. You can actually go and modify the open source BitCoin currency and start your own one today. You can have millions of your own BitCoins - but you'll need to convince people that they want to use them more so than the one thats there already. With no demand and plenty of supply your currency will be worthless.

judas101

"This is not one of those shady pyramid schemes you've been hearing about. No sir. Our model is the trapezoid"

donutface

Governments retain monopolies on currency for good reasons. Saying that you can buy "drugs" as a plus for bitcoin is hardly going to endear it to them.

Most governments also do not have monopolies on currency. Think gift vouchers, casino chips, credit cards etc are all alternate forms of currency in use today. They might have a euro value attached to them, but thats for the benefit of the user not because of government regulation. In NI there are shops that accept euros as well as pounds - hardly a sign of a monopoly on currency by the UK.

I remember Zimbabwe banned the sale of USD and EUR for a while as the Zimbabwean dollar died a horrible death (supply & demand) but I don't think thats the case over here.

ArphaRima

http://www.economist.com.hk/blogs/babbage/2011/06/virtual-currency?fsrc=rss

hardCopy

donutface wrote: »

Supply & Demand. You can actually go and modify the open source BitCoin currency and start your own one today. You can have millions of your own BitCoins - but you'll need to convince people that they want to use them more so than the one thats there already. With no demand and plenty of supply your currency will be worthless.

The bit in bold is how I see bitcoin, I really don't get it.

donutface

hardCopy wrote: »

The bit in bold is how I see bitcoin, I really don't get it.

There is demand for it - you can sell 1 bitcoin for between $10 and $30. Worth in everything is calculated by how much your neighbour wants what it is you have.

Spunge

Who actually buys Bitcoins to use them as currency ?
I can only assume its people using that illegal Silk Road drug website.
I mean what other use is there ?

Inverse to the power of one!

Now that the story has finally broken on boards, I predict bitcoins will reach a yoremallion USD by the end of the day! BUY BUY BUY!

Now pay for my timely advise!
1AdQVu2L3uMD4G2tiTZbco3JEgYH8jvHHE


On a more serious note.....
The arguments have been done to death, and to save a few Kb of text, I'd recommend just having a look on google. Even as someone who's been enjoying the whiteknuckle ride, I'd be surprised if Bitcoin V1 survives in to the future, but I know for definite the concept will survive regardless.

If your really wondering what the value of bitcoin is.....look at the address above, with that simple hash you can send me a unit of value that can't be counterfeited or respent and all without the need to use some bank or intermediaries codes, registrations and costs.....simplicity!
That is the value of BTC as a singular unit......what humans attach as value to a single BTC is something else altogether as evidenced by the arguments and interwebs drama.

Also regardless of Bitcoin, other uses such as Namecoin are only starting to come in to view, the capacity of this as a system to capture computing power in a way that cycles can be exchanged for value might have some interesting side effects in the future.

Capt'n Midnight

donutface wrote: »

Its backed by past work - it takes energy to produce the currency and you cant just make it up. Think of it as any other commodity such as gold, theres a limited amount of gold on this planet and the more thats mined, the harder it becomes to find more. Thus its not a fiat currency :-)

The NSA could devalue it tomorrow.
IRS could have it made illegal, patriot act / encryption as munitions and forbid it's use to US citizens or websites or those who trade with them.

What people are getting confused about though is that this has nothing to do with the BitCoin currency itself, but rather a market trading site. It's like AIB being compromised instead of the Euro. There are plenty of other market trading sites that will probably take off now which will offer the currency some stability in value.

How valuable would money be if you couldn't trust any banks or trading site ?


Bitcoins are very volitle and a large chunk of the bitmoney that will ever exist is already in the hands of a relatively small number of people.

Then again if someone figures out a short cut through the algorithm...

Daegerty

donutface wrote: »

There is demand for it - you can sell 1 bitcoin for between $10 and $30. Worth in everything is calculated by how much your neighbour wants what it is you have.

or a few cents now.

LighterGuy

from the official site ^


can someone still explain what bitcoin is?!
how on earth can it be worth something? ... how can then I buy something?
I "mine" coins? ... but the coin is nothing.

im so confused
help?

Retrovertigo

LighterGuy wrote: »

can someone still explain what bitcoin is?!
how on earth can it be worth something? ... how can then I buy something?
I "mine" coins? ... but the coin is nothing.

im so confused
help?

Try reading the thread?

Daroxtar

We're exactly 18 months away from 21 dec 2012. I say forget about virtual money, stock up on Fur, Flint, Fuel and Fishing hooks and something that makes rotten meat taste nice. Now is the time to invest

LighterGuy

Retrovertigo wrote: »

Try reading the thread?

I have,
I cant seem to understand how the process of mining (aka, leaving your pc run a program etc) turns into cash? or a "bitcoin" in this case?

Daegerty

LighterGuy wrote: »

I have,
I cant seem to understand how the process of mining (aka, leaving your pc run a program etc) turns into cash? or a "bitcoin" in this case?

it runs for a certain length of time, and by chance comes up with a 'bitcoin' which you can then trade into real money with an exchange place

LighterGuy

Daegerty wrote: »

it runs for a certain length of time, and by chance comes up with a 'bitcoin' which you can then trade into real money with an exchange place

thanks man.
I've been watching stuff on youtube and reading on google since I read this post over an hour ago.

I know a bit more. But... I still dont understand why people believe in it. Its nothing. It doesnt exist. Its like me creating 200 copper coins and saying they are now worth 2000 euro each... by what is it backed up with?

I know one can say the same about the money we use. But thats legal tender.

I think it's a good concept ruined by speculation.. At the moment, bitcoin is just a share price with no underlying asset. People aren't buying anything with it lately with the price fluctuations. When it or another online currency somehow gets past that hurdle, it will start being used as it was meant to.
I'm still not sure why it wasn't tied to another currency.. Or maybe the user could choose to keep their savings based on various currency options. People would trust that 1 bitcoin really was worth 1 dollar and then the benefits of the currency would come true.

LighterGuy

I've actually looked on youtube. People are running serveral pc's together in order to "mine" bitcoins.

I guess with anything, there comes shady actions.