Buying bitcoins

Tearwave · 29-03-2013 2:32am

bren2002 wrote: »

An interesting article here. Thread cautiously.

http://www.newstatesman.com/economics/2013/03/bitcoin-what-bubble-looks

Actually an excellent article, short and straight to the point.

Bitcoins hit $95 today, when something is growing 10% in a single day (a lot of investors would consider a return like that in a year to be doing well) then something has to seriously give. Nothing is driving the price up except greed and hoarding. Kinda glad I'm not caught up in it but very interested in seeing how the market reacts over the next 3-6 months.

Amberman · 29-03-2013 7:15am

Let me add some flesh to the bones of your analysis.

In a free market what drives price in anything with relatively fixed supply, is demand. Nothing else.

Could some or all of that demand come from a spec bubble? Ofcouse.

Has it in this instance? I really dont think so. Let me explain.

I'd imagine its a mix of trend following speculation and a flight to safety...heavily weighted towards flight to safety.

Look at three things.

1. How many 10% and 20% drops have been mitigated by fresh buying during this run? What does that tell you?

2. Various Bitcoin apps in the iPhone marketplace soared from nowhere to top 50 or 100 in ONE day in Italy and Spain last week. To me, that strongly indicates that people en masse were trying to flee Euros in weak peripheral countries.

3. Shocking revelations from Eurocrats at all deposits are now fair game.

This price move looks unlikely to have been spawned by a handful of speculators.

http://blockchain.info/charts/my-wallet-n-users?timespan=1year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

The chart above shows that Bitcoin wallets have grown around 50 fold since April 2012 on blockchain.info

Jonny7 · 29-03-2013 12:28pm

Amberman wrote: »

Let me add some flesh to the bones of your analysis.

In a free market what drives price in anything with relatively fixed supply, is demand. Nothing else.

Could some or all of that demand come from a spec bubble? Ofcouse.

Has it in this instance? I really dont think so. Let me explain.

I'd imagine its a mix of trend following speculation and a flight to safety...heavily weighted towards flight to safety.

Look at three things.

1. How many 10% and 20% drops have been mitigated by fresh buying during this run? What does that tell you?

2. Various Bitcoin apps in the iPhone marketplace soared from nowhere to top 50 or 100 in ONE day in Italy and Spain last week. To me, that strongly indicates that people en masse were trying to flee Euros in weak peripheral countries.

3. Shocking revelations from Eurocrats at all deposits are now fair game.

This price move looks unlikely to have been spawned by a handful of speculators.

http://blockchain.info/charts/my-wallet-n-users?timespan=1year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

The chart above shows that Bitcoin wallets have grown around 50 fold since April 2012 on blockchain.info

I presume you're putting every penny you own into Bitcoins..

or are you holding back for some reason

Amberman · 29-03-2013 12:39pm

Jonny7 wrote: »

I presume you're putting every penny you own into Bitcoins..

or are you holding back for some reason

I would never put all my eggs into one basket...why would any knowledgable investor do something dangerous like that? I have more money in my poker account.

Bitcoin is an interesting and potentially explosive asset class. It's been added to my risk parity shuffle.

Tearwave · 29-03-2013 4:19pm

Amberman wrote: »

Let me add some flesh to the bones of your analysis.

In a free market what drives price in anything with relatively fixed supply, is demand. Nothing else.

Could some or all of that demand come from a spec bubble? Ofcouse.

Has it in this instance? I really dont think so. Let me explain.

I'd imagine its a mix of trend following speculation and a flight to safety...heavily weighted towards flight to safety.

Look at three things.

1. How many 10% and 20% drops have been mitigated by fresh buying during this run? What does that tell you?

2. Various Bitcoin apps in the iPhone marketplace soared from nowhere to top 50 or 100 in ONE day in Italy and Spain last week. To me, that strongly indicates that people en masse were trying to flee Euros in weak peripheral countries.

3. Shocking revelations from Eurocrats at all deposits are now fair game.

This price move looks unlikely to have been spawned by a handful of speculators.

http://blockchain.info/charts/my-wallet-n-users?timespan=1year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

The chart above shows that Bitcoin wallets have grown around 50 fold since April 2012 on blockchain.info

Has anything as explosive (as BTC has been in the last 6 weeks), in the history of investing ever maintained such levels without crashing? I'm asking sincerely as I'm not actually an investor and have quite limited knowledge, my interest in BTC is more technology-related.

brendan86 · 30-03-2013 4:12am

thanks for all the replys ive been reading up on them all but have had no comment as I may not know as much about them as some of you might

Anyway I have my wallet downloaded and my mtgox account verified took over a week and now bitcoins are gone up by $30

My question is if I upload 1k to mtgox and wait for bitcoins to fall (which they may never do but might) but if they done I wont be purchasing for $90 as it is now.. Can I leave my 1k in mtgox without purchasing for a month at least and if they done devalue can i just cash out without purchasing

Thanks for all replys

brendaN

neaideabh · 30-03-2013 4:31am

I wish I had money to make a quick buck from this bubble!

brendan86 · 30-03-2013 4:50am

its what i wanna do but i wont buy at $90 i wanna have money in mtgox and if it ever goes down to 70 i would like to purchase then... I wont purchase at $90 but i seen last night it was at a high of $95 then few hours later $75 then went back up to $90... I know its a risk but if I deposit to mtgox can I wait and leave my money there for weeks until I see the right price I wanna buy at? And its safe without purchasing?

bren2002 · 30-03-2013 8:18am

brendan86 wrote: »

its what i wanna do but i wont buy at $90 i wanna have money in mtgox and if it ever goes down to 70 i would like to purchase then... I wont purchase at $90 but i seen last night it was at a high of $95 then few hours later $75 then went back up to $90... I know its a risk but if I deposit to mtgox can I wait and leave my money there for weeks until I see the right price I wanna buy at? And its safe without purchasing?

I don't know if anyone can answer that. If there's a huge crash, how exposed are mt gox? If they become insolvent, you're screwed. These aren't regulated like stockbrokers for example.

Amberman · 30-03-2013 8:58am

Tearwave wrote: »

Has anything as explosive (as BTC has been in the last 6 weeks), in the history of investing ever maintained such levels without crashing? I'm asking sincerely as I'm not actually an investor and have quite limited knowledge, my interest in BTC is more technology-related.

Sure...plenty of stocks have doubled quickly. Cisco, MSFT, lots of tech stocks IPO's. Cisco for example, had many 50% plus crashes on its way to 15,000% returns. It is a legendary roller coaster stock.

Also, Gold and other commodities have double quickly in may places in local currencies, recently Zimbabwee and where devaluations/state sponsored have happened, like Venezuela, Argentina.

When commodities soar in value, or when currencies plunge in value, governments fingerprints are generally all over it.

As counter intuitive as this sounds, I personally don't think Bitcoin is soaring, I believe that the perceived value of other Fiat currencies is plunging. What makes BTC stand out is that there is no paper market in which to manipulate it. Its completely free from central bank manipulation.

Amberman · 30-03-2013 9:03am

bren2002 wrote: »

I don't know if anyone can answer that. If there's a huge crash, how exposed are mt gox? If they become insolvent, you're screwed. These aren't regulated like stockbrokers for example.

MF Global, Madoff, Libor, Lehman, Bear, and on and on...were regulated. Did that save the stock or account holders?

MTgox arent exposed to price falls as a market maker. It doesnt matter to them. They make money no matter what from bid/offer spreads.

Also, they are regulated and have recently domiciled in the US. They comply with US anti-money laundering regs...unlike HSBC.

Amberman · 30-03-2013 9:04am

brendan86 wrote: »

its what i wanna do but i wont buy at $90 i wanna have money in mtgox and if it ever goes down to 70 i would like to purchase then... I wont purchase at $90 but i seen last night it was at a high of $95 then few hours later $75 then went back up to $90... I know its a risk but if I deposit to mtgox can I wait and leave my money there for weeks until I see the right price I wanna buy at? And its safe without purchasing?

Its an exchange. Enter your bid price at whatever level you like and wait to see if your order gets filled.

milltown · 30-03-2013 9:58am

brendan86 wrote: »

its what i wanna do but i wont buy at $90 i wanna have money in mtgox and if it ever goes down to 70 i would like to purchase then... I wont purchase at $90 but i seen last night it was at a high of $95 then few hours later $75 then went back up to $90... I know its a risk but if I deposit to mtgox can I wait and leave my money there for weeks until I see the right price I wanna buy at? And its safe without purchasing?

I can't tell you it's 100% safe, but yes you can leave your Euros sitting in your MtGox account as long as you want. Alternatively you can place an order to buy at whatever exchange rate you like and wait to see if it is filled. Personally, I might use that method if I was hoping to buy at the low end of a typical daily spread. If you are hoping to buy at €20 less than the going rate I'm sure you'd like to be sure of the reasons for that type of drop before having your Euros converted. i.e. Is the price passing your €70 mark on a slide that ends at €50?

bren2002 wrote: »

I don't know if anyone can answer that. If there's a huge crash, how exposed are mt gox? If they become insolvent, you're screwed. These aren't regulated like stockbrokers for example.

I don't see how solvency should be a concern for MtGox like it would be for a regular bank. Regular banks expose themselves to risk by lending money they don't actually have to people they hope will repay them. All MtGox is doing is changing one currency into another and charging a small commission. AFAIK they don't do anything risky with your money while it's with them.

pH · 31-03-2013 4:22pm

Given that there can be only 21m bitcoins - and speculate they *do* take off and become a fully legitimate online currency then I think that values well over €1,000 euro per coin (Market value of all bitcoins then would be €21B) are achievable.

If all bitcoins in the world were worth as much as all $ currently in circulation then each bitcoin would be worth about $50,000.

As an "historical" aside - on May 21st 2010 a $25 pizza was bought for 10,000 BTC - if laslo had hung onto those coins - as of today he'd have $930,000

milltown · 01-04-2013 12:25pm

pH wrote: »

As an "historical" aside - on May 21st 2010 a $25 pizza was bought for 10,000 BTC - if laslo had hung onto those coins - as of today he'd have $930,000

I kind of know how he feels. When I started looking into Bitcoins last December they were just over €9. Every time I check back to see what the current rate is I ask myself why I didn't just pile a couple of hundred Euro into it as a gamble? €500 in December would have covered the family holiday to Orlando this year at today's rate.

Amberman · 01-04-2013 3:55pm

milltown wrote: »

I kind of know how he feels. When I started looking into Bitcoins last December they were just over €9. Every time I check back to see what the current rate is I ask myself why I didn't just pile a couple of hundred Euro into it as a gamble? €500 in December would have covered the family holiday to Orlando this year at today's rate.

That doesn't mean they can't go up another 10 fold from here. A Cypriot IT company that had 700k seized in the banking mess is relocating to the Carribean and is considering using bitcoins to hold its working capital and pay suppliers. These are the sorts of customers that could send bitcoin to the moon.

With Canada, NZ and Australia now openly telling depositors that they will be bailed in, I can only see this type of demand increasing.

Roonbox · 01-04-2013 5:55pm

http://www.zerohedge.com/news/2013-04-01/bitcoin-hits-101-doubles-cyprus

Roonbox · 01-04-2013 5:56pm

Amberman wrote: »

With Canada, NZ and Australia now openly telling depositors that they will be bailed in, I can only see this type of demand increasing.

Can you tell me where you heard this? That's major news.

Amberman · 01-04-2013 7:13pm

Roonbox wrote: »

Can you tell me where you heard this? That's major news.

http://globaleconomicanalysis.blogspot.com/2013/03/canada-discusses-forced-depositor-bail.html

There's loads of info on this on google if you need more info. This is on top of the EU statement that Cyprus is a template for future bailouts. Dieselboom or whatever his name is.

stackerman · 02-04-2013 12:31am

Roonbox wrote: »

Can you tell me where you heard this? That's major news.

Titled ECONOMIC ACTION PLAN 2013 and tabled in the House of Commons by Minster of Finance James Flaherty on March 21st, the official 2013 Canadian budget contains an explicit provision that Canada will pursue the bail-in model for systemically important banks for future bank failures!

Depositor haircuts have just jumped to this side of the pond, effective the next bank crisis/ failure:
From Page 144:

“The Government also recognizes the need to manage the risks associated with systemically important banks—those banks whose distress or failure
could cause a disruption to the financial system and, in turn, negative impacts on the economy. This requires strong prudential oversight and a robust set of
options for resolving these institutions without the use of taxpayer funds, in the unlikely event that one becomes non-viable.”

Translated, Without the use of taxpayer funds means via depositor funds.

And the meat of the provision, from Page 145:

The Government proposes to implement a bail-in regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital.
This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada.
Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants…

stackerman · 02-04-2013 12:36am

You will also find Spain, the UK, the US and I'm sure others that I don't know of right now have done the same.
Sneak the changes in while the people are looking elsewhere, then "bam"a la Cyprus.
It's so well flagged at this stage, that it would be hard to miss it, as long as you are willing to see it :rolleyes:

Times are a changing

stackerman · 02-04-2013 12:44am

New Zealand openly discussing same

The National Government are pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.
Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.
“Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand – a solution that will see small depositors lose some of their savings to fund big bank bailouts,” said Green Party Co-leader Dr Russel Norman.

The others can be found via google, but you got a be looking for them.
Night

martyoo · 02-04-2013 9:30pm

Looks like Instawallet got hacked.

MyPeopleDrankTheSoup · 02-04-2013 9:42pm

while Cavehill_Red has a sketchy technical understanding of bitcoin at best, I agree with him that it's a massive bubble at the moment. it's gone from $100 yesterday to $115 now! i bought some a few days so i could use it to actually buy something, you know, like you normally use a currency. everyone i talked to just bought it to hoard it and wait for the price to go up. a classic bubble. but when the crash comes, i'm interested to see what happens after.

i've been obsessed since i bought my service from a legit website and it worked! (and it wasn't anything illegal before you ask!)
it's just the coolest thing ever, the technical details are really interesting.

new yorker just came out with a great article about it:
http://www.newyorker.com/online/blogs/elements/2013/04/the-future-of-bitcoin.html

Amberman · 02-04-2013 10:51pm

martyoo wrote: »

Looks like Instawallet got hacked.

nothing in Google news about a hack. Seems it's down for maintenance and has cleared out its wallets as a precaution as far as I can tell.

Squeaky the Squirrel · 02-04-2013 11:01pm

That pizza is worth 1.1million now.

http://www.ounce.me/

Amberman · 02-04-2013 11:08pm

georgiecasey wrote: »

while Cavehill_Red has a sketchy technical understanding of bitcoin at best, I agree with him that it's a massive bubble at the moment. it's gone from $100 yesterday to $115 now! i bought some a few days so i could use it to actually buy something, you know, like you normally use a currency. everyone i talked to just bought it to hoard it and wait for the price to go up. a classic bubble. but when the crash comes, i'm interested to see what happens after.

i've been obsessed since i bought my service from a legit website and it worked! (and it wasn't anything illegal before you ask!)
it's just the coolest thing ever, the technical details are really interesting.

new yorker just came out with a great article about it:
http://www.newyorker.com/online/blogs/elements/2013/04/the-future-of-bitcoin.html

Georgie, I'm not sure that BTC can ever fit the definition of a bubble. It's a bubble compared to what? It has no traditional valuation metrics or anchors of affordability, like housing, stock or bonds have...and gold and oil have extraction costs and variable supply.

Bitcoin is really a put on accelerating financial collapse, a counterparty run, currency debasement or expanding government confiscation of funds.

It has no real intrinsic value above this value and its "extraction" costs is held relatively steady by a combo of Moores law and the steadily increasing power needed to mine the coins.

If you measure it compared to the value of deposits in Cyprus over 100k, (which seems the likely reason for the rise in value) then it still has a very long way to go to catch up the the diluted value of those deposits.

Bitcoin isn't like gold, oil, tulips or tech stocks. There is no income stream from it by which it can be judged to be good or bad in value compared to alternatives.

It isn't like currencies, which have embedded counter party risk. It isn't like gold, which has an extraction cost which varies with oil and ease of access to deposits, it has no cost of carry, like housing, no opportunity cost as there are no close substitutes and no valuation metrics, as it doesn't create an income stream.

I cannot see how you can mathematically demonstrate that it has soared above its fundamentals and is now a bubble...because it has none.

To me, it seems rather simple. The price seems to be reacting to rising recognition of Bitcoins utility leading to strongly increasing demand.

That is not a bubble, by definition.

If it was, the market for Picasso paintings entered bubble territory after he died and should have seen a sustained price crash...which has never materialised.

Heisenberg. · 02-04-2013 11:12pm

This post has been deleted.

MyPeopleDrankTheSoup · 02-04-2013 11:45pm

Amberman wrote: »

If you measure it compared to the value of deposits in Cyprus over 100k, (which seems the likely reason for the rise in value) then it still has a very long way to go to catch up the the diluted value of those deposits.

I don't agree that Cyprus itself is the reason for the rise, it's the numerous articles in the world media because of Cyprus/Bitcoin that's spreading the word and shooting up demand.

Amberman wrote: »

I cannot see how you can mathematically demonstrate that it has soared above its fundamentals and is now a bubble...because it has none.

Of course I can't prove it mathematically! It's just my opinion that the price will crash 'soon'. I have no idea when. I have no idea to what price it will crash to. But it's just my opinion and we'll have to agree to differ!

I fully agree with the recent Economist blog post that currencies are in a bubble when most people are hoarding the currency rather than actually using it to buy goods and services.

I hear of conspiracy nuts switching all their life savings to Bitcoin because of the 'impending collapse' of the EUR/USD and I think that's absolute madness.

It's after this crash and when volatility settles down and more retailers start accepting it that it is going to be very interesting.

Also, do you have any BTC? Would you be willing to sell me 0.25 or the USD equivalent of $25 for payment via Paypal?

Amberman · 03-04-2013 12:04am

Im not saying it isn't going to correct somewhat from here. I think it will...no asset goes up in a straight line.

The global savings rate (especially the Western savings rate) is low compared to historical norms, and savings alone don't cause currency appreciation...so you can safely ignore the Economist.

Agreed that anyone putting all their savings into one vehicle is lunacy.

What happens if there is no crash? Space your purchases out over time to mitigate this risk and smooth returns. I am not selling my Bitcoins, sorry. They're making me a fantastic return. If anything, I'm buying more shortly.

Buying bitcoins

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