Bitcoin price crashes

Daegerty · 20-06-2011 08:29AM #1

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 · 20-06-2011 08:42AM

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 · 20-06-2011 09:58AM

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 · 20-06-2011 10:23AM

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 · 20-06-2011 10:30AM

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 · 20-06-2011 10:39AM

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 · 20-06-2011 10:43AM

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 · 20-06-2011 10:50AM

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

Source

orourkeda · 20-06-2011 10:50AM

Is this a currency that geeks can have sex with?

bnt · 20-06-2011 11:07AM

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 · 20-06-2011 11:30AM

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 · 20-06-2011 06:01PM

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 · 20-06-2011 06:53PM

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 · 20-06-2011 07:01PM

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

Fremen · 20-06-2011 07:06PM

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 · 20-06-2011 07:11PM

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 · 21-06-2011 06:08AM

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 · 21-06-2011 06:27AM

so eh what is it basically? /lazy

donutface · 21-06-2011 06:46AM

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 · 21-06-2011 06:47AM

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

Spunge · 21-06-2011 07:03AM

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 · 21-06-2011 07:05AM

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 · 21-06-2011 07:07AM

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 · 21-06-2011 07:51AM

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 · 21-06-2011 08:04AM

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 · 21-06-2011 08:23AM

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 · 21-06-2011 09:24AM

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 · 21-06-2011 09:39AM

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 · 21-06-2011 10:07AM

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 · 21-06-2011 10:46AM

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 · 21-06-2011 11:24AM

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

Bitcoin price crashes

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