Slashdot Mirror
Value of Bitcoin "Crashes"
souravzzz writes with an update on the state of Bitcoin. Quoting the Ars Technica article: "Bitcoin, the world's first peer-to-peer digital currency, fell below $3 on Monday. That represents a 90 percent fall since the currency hit its peak in early June."
That's still three times its value in April 2011.
When we started Dragon's Tale, Bitcoins were worth 5 cents, and people played for 100's at a time. When Bitcoins were $30, people played for fractions of a coin. Now that Bitcoins are $2.00 or whatever, they may spend a Bitcoin or two on a play session.
The point is that the exchange rate to dollars is irrelevant - players play at the level they're comfortable with, and our revenue (viewed in dollars) has been increasing steadily.
Speculators are a capacitor. Storing charge when the voltage is above the mean level, dumping charge when below.
Market manipulators are an external power supply, forcing the mean level up then down.
If speculators have more resources than the manipulators, the manipulation will fail, otherwise it succeeds.
-nB
whois gawk date unzip strip find touch finger mount join nice man top fsck grep eject more yes exit umount sleep dump
As to your assertion that widespread adoption necessarily creates unbounded riches for the founders, or even the early adopter, I don't see that as a supportable premise. It's a matter of scale. I can think of several titans of information industry who have benefited disproportionately by virtue of their early positioning.
"Satoshi" (I read he may actually be a guy called Mike, but anyway) owns not just half of the bitcoins there currently are, but half of all the bitcoins that can ever be created (less the ones he's already sold, I guess). No-one else has that disproportionate an advantage; Google might have more than half today's search market, but they don't have anything that guarantees they'll always have it. (Myspace had over half the social networking-fu at one point, but facebook was able to outgrow them).
I am trolling
Too bad you never took any economics courses. You'd almost be spot-on if not for a few tiny oversights.
Too bad you never took any economics courses.
Speaking as part of the 1%, just FYI.
Sigh.
I am part of the 1%. I also did complete economics (Money, Banking and Financial Markets). I also know that because money is used a measure of value in barter, the market sets the value for any form of money. The bitcoinites seem to miss a very important point - there is no value in electricity already spent unless value has been added. The only value of a currency is to represent the value added by the next link in the chain of production.
Farmer grows sunflower crop (adds value by expending work to make something that the next person wants)
Vegetable oil refinery uses sunflower seeds to make vegetable oil (added value is something that people can cook with)
Supermarket makes oil available to shoppers (added value is to the shopper that purchases all groceries at the same place)
All that is value being added!
How about normal currency?
State takes worthless paper and, using electricity and effort and time, makes legal tender (the value added to the paper is the promise that all vendors within that jurisdiction will accept that paper as payment, and they can always redeem it for actual value with the state)
The secondary value added by dealing with the paper (or any other similar state-backed currency) is the secure knowledge that it can be used to measure value in any amount of arbitrary products - it's the base of reference for value.
Now, bitcoins?
Miner takes electricity and produces unique combination of numbers (No added value, as those numbers have no legal status as a measure of value in any nation)
Those numbers can be exchanged for items of value, but said items value is not measured in those numbers, it is measured in the currency described above
Those numbers are accepted by an insignificant minority of vendors, rendering them even more worthless.
At this point, bitcoins aren't a currency because a currency has to be universally recognised as a measure of wealth in that jurisdiction. Bitcoins are simply an item of value to barter with, much like swapping a pocket of potatoes for a crate of tomatoes. Unfortunately, the value bitcoins possess differs from person to person in the same jurisdiction (some value it close to nothing, others hoard it in anticipation of future payoff) so the bartering is unpredictable and thus it even fails as an item of barter. Even worse, the only way to measure it's value (from zero to infinite) is by using the existing ruler - namely the actual currency of that jurisdiction.
Bitcoins are a lovely idea, but the idea has no grounding in reality. Posts below mine explain all this very well for non-economics people; I'll just add that a real currency has a measure of worth that is independent of other currencies. For example, a single ZAR is backed by the South African Government. The country as a whole has value that is expressed by the GDP (irrespective of actual units of measure, the GDP is still a statement of value!). That single ZAR is a slice of that value. A bitcoin, OTOH, has no value that can be expressed as the product of a jurisdiction. This is because it does not represent any sort of value.
I'm a minority race. Save your vitriol for white people.