Bitcoins in 2014?

[Edwin]

Worth considering that there is a small, finite supply of Bitcoin and Bitcoin can be (and have been) irrevokably lost, most famously the guy with his laptop lost to landfill. Arguably some stolen Bitcoin will never surface again either, because the monitoring is too tight so the thief doesn't dare expose themself too much and so only fences a small fraction of their booty. Those Bitcoin are gone forever, and so the supply of Bitcoin will diminish through attrition. Add to that the fact that over half of all Bitcoin have already been mined and that fewer and fewer coins are being released in any given time period, and it's clear that some highly artificial, not-directly-demand-driven aspects of the currency are also contributing to prop it up.

In other words, if the demand for Bitcoin is X (a positive, but stable amount/time) then the Bitcoin losses plus constraints on the supply of new Bitcoins will drive the price of the other coins up. But this isn't (necessarily) because people want them more this week than they did last week, it's because they want them the same amount but there are less of them.

Once the psychology of the above really sinks in, it has the potential to further depress the market price.

 

[jasman]

If your argument is that bitcoins have credibility because the BOE and the Fed do not hold reserves to support the Pound and the Dollar, you need to do a bit of research.

Actually I haven't afforded any credibility to bitcoins and I don't own any. I would rather wait until the system is more secure and bitcoin holdings are guaranteed if that ever happens. But it's early days and I welcome all attempts at creating alternative currencies so that we have more choice and are not forced to use currencies that are constantly devalued by the actions of greedy banks and crooked governments.

I'm pointing out that like bitcoins, currencies including the USD and UKP are not backed by anything. The pound is so called because in the past you could exchange a pound note for a pound of silver - back then the currency had backing. Now UKP and USD being fiat currencies have no backing.

The BOE and the Fed do have huge asset holdings on their balance sheets but these are not reserves that back the currency. The BoE's and Fed's assets are held on their own account so they can enter and manipulate the various markets in the economy and influence them according to their plans, or to bail out banks, forcing the population to become victims of banker fraud. Those assets on their balance sheets are not there for our benefit. If you take some notes down to the BoE they won't exchange them for any of their assets. So the UKP like the bitcoin is not backed by anything other than the users' belief that it will be exchangeable for goods or services in the future.

And on your point about prices, of course the pound would have lost 99% of it's purchasing power but only if your Father in law was still earning £800 per year today as he would have been doing in the sixties.

No, the pound has lost nearly all of its purchasing power regardless of what we earn. We have more pounds with which to purchase nowadays but the currency has lost its purchasing power. My point is that real assets - especially property and land as they are by far the largest store of wealth for people - have gone up in price much more than the statistics like the CPI that the government and media use to measure inflation, and much quicker than salaries have increased, which has resulted in people on average holding less real assets.

This is why nowadays most families need to have both parents out working to make ends meet (and many still run up credit card and loan debt on top) whereas it was common for just the husband to work a generation or two ago. And despite having double the earners today's families can only afford to live in houses half the size with current average house prices at 9 times average salary.

So effectively, despite being fooled that we have a better standard of living due to the plethora of cheap electronic gadgets around the home, when all is said and done people have become noteably poorer in terms of the assets of real value they hold and the relatively much lower salaries they are paid.

And this is due to the expansion of the money supply resulting from banks creating loans. Thus an alternative currency that has systemic limits imposed on its money supply expansion, which has the benefits of its money supply expansion shared by its users rather than banks and governments would be a boon to the population.

 

[Skinner]

Jasman only touched on this in a round about way, but it was noted in a tv program (yeah not exactly best source) that british houses now are getting smaller and costing more. Infact we now have one of the top 5 smallest house size in europe and they are getting smaller.

Comparing my mums current house with my mums childhood house, aside from her childhood house being 4 bedroom vs 3 now. There was her, 4 brothers, mother and father there. She says the 2 smallest rooms wasn't much smaller than the master bedroom where she is now and the other 2 rooms was a touch bigger. She says the bathroom was huge too, along with a cellar.

Just based on anecdotal info, her child home was at least 70% larger her current one without the cellar, if you included the cellar it over twice the size and she lived in a fairly poor council area as well, so again its anecdotal but houses do appear to getting smaller, while prices increase.

 

[disruptive]

True

Only in the UK do we buy property by rooms. It's crazy because the square meterage is what you really buy. Continent buys per sq m, US by sq meter and asia by square meter. Watch an estate agent fail to tell you the total square meterage of most UK properties. You have to add up the individual dimensions of each property.

Jasman only touched on this in a round about way, but it was noted in a tv program (yeah not exactly best source) that british houses now are getting smaller and costing more. Infact we now have one of the top 5 smallest house size in europe and they are getting smaller.

Comparing my mums current house with my mums childhood house, aside from her childhood house being 4 bedroom vs 3 now. There was her, 4 brothers, mother and father there. She says the 2 smallest rooms wasn't much smaller than the master bedroom where she is now and the other 2 rooms was a touch bigger. She says the bathroom was huge too, along with a cellar.

Just based on anecdotal info, her child home was at least 70% larger her current one without the cellar, if you included the cellar it over twice the size and she lived in a fairly poor council area as well, so again its anecdotal but houses do appear to getting smaller, while prices increase.

 

[martin-s]

Most properties have floor plans showing square footage these days. It's just that it's only the savvy buyers who notice!

All commercial property is sold/let on square footage also of course.

 

[disruptive]

Sadly there is not usually a total, which means having to add everything up.

Makes it annoying and time consuming - i,e, you need to go in and talk and cant see immediately.

Most properties have floor plans showing square footage these days. It's just that it's only the savvy buyers who notice!

All commercial property is sold/let on square footage also of course.

 

[Edwin]

Put a fork in it, it's done...
http://www.forbes.com/sites/andygre...s-mt-gox-goes-dark-with-massive-hack-rumored/

Below a certain price, mining becomes totally unviable, and once that threshold is reached all interest vanishes since those with mining hardware will flood eBay and elsewhere trying to find the "greater fool" in order to get some of their sunk costs back.

 

[disruptive]

Yep, what amazing is that the price is still holding on BTC-e. Saw the half billion (British billion) loss this morning! Crazy! It really is over now. The beginning of the end.

But interestingly as Edwin says it will be interesting from a psychology perspective to see what happens to the most vested in the virtual currency.

 

[Edwin]

Yep, what amazing is that the price is still holding on BTC-e. Saw the half billion (British billion) loss this morning! Crazy! It really is over now. The beginning of the end.

But interestingly as Edwin says it will be interesting from a psychology perspective to see what happens to the most vested in the virtual currency.

A lot of people will be doubling down in the hope of recouping their losses. Classic panic behaviour, which could easily be sustaining the price as it's a thin market. Plus there are some deep pockets "invested" (note the quotes) in Bitcoin, so they may also be trying to prop up the sinking ship.

But once that influx of cash dries up (which could be soon as there's literally no upside to anything that's going on) I'd expect the price to drop like a stone towards or very close to zero. Which, let's face it, is what Bitcoin are actually worth.

Reminds me a bit of accounts I read of Nick Leeson trying to save his position by betting more and more and more, and we all know how that ended (or if you're "young" perhaps you don't - here's a refresher http://en.wikipedia.org/wiki/Nick_Leeson )

 

[Retired_Member38]

mtgox has been going down the toilet for months - there is nothing new there.

Its a bit foolish to say bitcoin is finished because one exchange went down. The price has hardly crashed badly either... look how much up it still is compared to a year or two ago.

As much as you hate it... bitcoin is here to stay.

 

[PanzerWagon]

If you view the source on MtGox you will see the following:

<!-- put announce for mtgox acq here -->

 

[Edwin]

mtgox has been going down the toilet for months - there is nothing new there.

Its a bit foolish to say bitcoin is finished because one exchange went down. The price has hardly crashed badly either... look how much up it still is compared to a year or two ago.

As much as you hate it... bitcoin is here to stay.

MtGox was by far the easiest way for sheeple to take a punt on Bitcoin. So its importance was larger than its trading position alone.

 

[websaway]

Why would you steal something whereby the very fact you have stolen it may render it worthless ?

 

[disruptive]

There is a part of me in the early days that wanted BC to succeed - perhaps because of its novelty and some of the technological wonders and also because we were mining the coins.

But then it became a speculative bubble rather than an experiment. I think many businesses you publicly committed to BC will reverse their decisions. Its good news for the PayPal's of this world.

 

[Edwin]

Why would you steal something whereby the very fact you have stolen it may render it worthless ?

If the theft "costs" the thief nothing, then even quickly fencing a tiny fraction of the stolen assets nets you millions, which is more than 99% of other thefts ever do. Why would the thief or thieves care after that?

 

[disruptive]

Why would you steal something whereby the very fact you have stolen it may render it worthless ?

Exactly - crazy, but still its easy to steal compared to stealing "real" assets.

 

[Edwin]

There is a part of me in the early days that wanted BC to succeed - perhaps because of its novelty and some of the technological wonders and also because we were mining the coins.

But then it became a speculative bubble rather than an experiment. I think many businesses you publicly committed to BC will reverse their decisions. Its good news for the PayPal's of this world.

It may also mean more governments take a strong stance in overseeing, regulating or banning Bitcoin transactions.

 

[Retired_Member38]

http://bitcoincharts.com/charts/bitstampUSD#rg360ztgSzm1g10zm2g25zv

Doesn't look like much of a crash to me. The only people even looking a paper loss are the ones who've piled in in the last couple of months.

 

[disruptive]

Volume is low so I would not expect prices to fall immediately. Plus news takes a while to go around all time-zones.

http://bitcoincharts.com/charts/bitstampUSD#rg360ztgSzm1g10zm2g25zv

Doesn't look like much of a crash to me. The only people even looking a paper loss are the ones who've piled in in the last couple of months.

 

[Retired_Member38]

I'm gonna guess it won't drop below $250 at any point and it'll be back above $500 within a few months.