Slashdot Mirror
Friday's Big Swings, Mostly Down, Illustrate Bitcoin Value Volatility
An anonymous reader writes "As cool as Bitcoin is, it looks like it lost 1/3 of its value in the last 24 hours. Lots of big sells, complaints of liquidity, and pissed off nerds." The linked article goes on to explain that the value rose again, so the aggregate loss was considerably less. The author also helps defuse claims that Bitcoin is untraceable or otherwise especially well suited to nefarious activities.
I keep waiting for someone to jump out and shout "April Fool!"
Yes, yes, all currency is imaginary. But there's imaginary and frigging deluded.
I have some tulips for sale.
The opposite of progress is congress
The gst of the article is "Bitcoin is important. It's just like real money. See, it even has a market like real money, but the problems of the market aren't too bad." Despite the Slashdot headlne mentioning the volatility, the article goes out of its way to say to say that the problems aren't all that bad and goes on to emphasize how much it is like real money. It then goes for four sections (out of five total) explaining exactly what Bitcoin is, why people might want to have it, how it's being attacked for no fault of its own, and how some people don't like it but it's just paranoia.
It's a disguised ad It's like having an article whose headline says that a popular diet doesn't always work, then reading the text and finding that the reason it doesn't work is because it's too natural and some people refuse to obey the diet because they don't like natural things. Then followed by paragraphs of details about the diet, where to buy a book about it, and complaining about how the media doesn't like the diet.
These swings are fairly meaningless since Bitcoin hasn't achieved its goal of becoming a currency yet.
The markets have turned it into a volatile foreign exchange game, and people are just trying to make a quick buck playing the market. There currently isn't any 'currency' aspect to it, since there's damn near nothing you can buy with bitcoins.
Since they failed to achieve any intrinsic value of their own, they are currently just bad, unreliable representations of legal tender. As long as that is true, nobody will ever accept them as payment for real goods or services.
Scratched Emulsion
So if I buy some of your tulips for $10 there will be somebody else who will buy them from me for $100? Clever!
Think it'll work with houses too?
Please consider this account deleted, I just can't be bothered with the spam anymore.
Any way you look at it, high price or low, I would have come out way ahead if I had.
This is the fallacy that gets people into so much trouble participating in speculative bubbles. "If only I had bought low, I surely could have sold high!"
The nature of speculative bubbles means that most of those who buy low don't sell high. The collapse may happen too suddenly. Or your attempt to sell may even trigger a crash before you can find a buyer. They always have to pop, for the exact same reason that pyramid schemes can't make the whole world rich. It's a kind of gambling game, like playing chicken vs. an invisible wall.
If you had put your $7 in, you might well be thinking now, "It's only $7. I can afford to lose that. But what if it goes to $1000? It's worth hanging on just in case." or when the value dips under what you paid, "Surely it will recover. It was a good bet when I bought in before (I could easily have cashed in for several times my investment, if I had wanted), so I might as well put $100 in -- I might become a millionaire!"
You might call these stupid moves, but there's no move more stupid than buying into the game in the first place. Inflation and collapse of the bubble are entirely unpredictable, and the odds are stacked heavily in the favor of the initiators of this scam.
Right now, we are in a bitcoin speculative bubble. The bubble will burst eventually, and then bitcoins will be worthless, since there is no ultimate source of bitcoin value. Nobody can pay their taxes with bitcoins, and hence nobody needs bitcoin -- compare with the US Dollar, which America citizens need in order to pay their taxes, and which American bitcoin holders will likely try to trade their bitcoins for when tax season rolls around.
To put it another way, it is about demand, and the demand for bitcoins will not be very high in the long run (unless a government somewhere starts accepting bitcoins for tax purposes).
Palm trees and 8
Someone just cashed out a large deposit of bitcoins, and these nerds and bitcoin miners just got played. 3 months ago, this thing was less than $1. Now it was $30? lolz Someone made some good money, and waited for there to be enough liquidity for them to be able to cash out and raped the order book. This is a classic accumulation/distribution (a.k.a pump and dump) pattern where a few buyers suck in a multitude of retail fools by slowing raising the price through accumulation, and then once retail fervor hits, they dump it and get out. It's so stereotypical, it's a cliche, and I guess bitcoin just fell for it as well. I only wish I could short this thing, it's going back to below $1.