Slashdot Mirror
BitCoin Value Collapses, Possibly Due To DDoS
hydrofix writes "The Bitcoin-to-USD exchange rate had been climbing steadily since January 2013, from around 30 USD to over 250 USD only 24 hours ago. Now, the value bubble seems to have burst, at least partially. The primary trading site MtGox reported a drop in value all the way down to 140 USD today, a loss of almost half in real value. With many sites unreachable or slow, there are also news of a possible DDoS attack on MtGox: 'Attackers wait until the price of Bitcoins reaches a certain value, sell, destabilize the exchange, wait for everybody to panic-sell their Bitcoins, wait for the price to drop to a certain amount, then stop the attack and start buying as much as they can. Repeat this two or three times like we saw over the past few days and they profit.'"
US money also technically has a real value of 1/20 of a cent per bill, that doesn't stop us.
If people will trade real goods and services for currency, that is what it is worth.
so they wanted an unregulated market. this is what they get...
Today's high was $266, the low was $105 and currently it is trading around $180
have found another target. Having bankrupted several major economies they are looking for virgin lands to grab.
We really need a corollary for Godwin's Law adapted specifically to Bitcoin discussions: as soon as you say, "The US dollar doesn't have any intrinsic value either!", you lose.
Dislike the Electoral College? Lobby your state to join the National Popular Vote Interstate Compact.
My money is a few bits in my bank's private datacenter.
What's the price of a few bits? If it's what Wells Fargo is telling me it is - holy shit. I've got a NAS with several TB of storage sitting here. Do you know how large of a number I can store on that sucker?
I'M RICH! Monocles and top hats for everyone on Slashdot! You get a monocle! And you get a monocle! And you get a monocle!
And I don't even care that Anonymous Cowards are getting back in line for multiple monocles!
How exactly is this a failed experiment?
The ultimate value of a dollar is zero ... anything.
The dollar used to be a receipt for a certain amount of gold that you owned in the federal reserve. But starting from 1971, the government defaulted on this commitment and the dollar became just a piece of paper.
Bitcoin is not different in this aspect. There is nothing behind it either. The difference is that there is a limit to the amount of bitcoins that can exist, but there is no limit to the amount of dollars the government can print. The government and the bank cartel known as the federal reserve can and do print insane amount of money every year to finance government spending, at the expense of the value of every other dollar in existence.
To illustrate this, take a dime from 1942, you could buy a gallon of gas with it back then. But you can still buy a gallon of gas with the same dime _because_ it is made out of silver. So it is not that things are more expensive, it is that the money changed, there are a lot more dollars circulating now that the government and the FED printed, which has caused it to lose a lot of value over time. This kind of devaluation by printing money is mathematically impossible with bitcoins.
...and you've just got mtgox DDoS'ed again. Well played, Sir.
OTOH, tulip bulbs do have intrinsic value, hence they are the ideal currency.
Escher was the first MC and Giger invented the HR department.
It's funny how people believe that their imaginary currency would have grown 10x in value in a few months weren't for those evil hackers.
au contrair, bitcoin is a raging success. it generates the <blink> LULZ </blink> every time some whiner bitches about what a useless waste of electricity it is.
full disclosure -- I too enjoy slagging on bitcoin with cheap shots.
the preceding comment is my own and in no way reflects the opinion of the Joint Chiefs of Staff
You can get gas for $1.99 a gallon? Do tell.
The whole issue here is that there is just ONE major exchange and they own 80% of the trades. Hitting one exchange impact the whole currency. The exchange rate has been manipulated for weeks now. Its time for other exchanges to pop up or this will continue. Its easy money so they will keep doing it untill & unless there is multiple exchanges!
Since a record is made of every transaction, and is kept forever, do you really believe that the anonymity will be preserved?
One step further; if you mention that 'bitcoin' isn't a real currency. The whole argument chain is fucking tired.
Google Glass will be the rich-nerd monocle of the 21st Century
If it works right etc
Wish I had bought some Bitcoins (or mined up a bunch) in January.... They're back up to about $200 now. From about $15/ea in January. Could have been more than a tenfold return if timed right.
Good luck going to Safeway and buying your Jeno's frozen pizza with Euros, Yuan, or Yen, but they're all "real" money.
"Think about how stupid the average person is. Now, realise that half of them are dumber than that." - George Carlin
The solution's the standard one: take the long-term view. If you think Bitcoins are actually going to be worth that much long-term, don't sell. Hold onto them, and buy during the drops. If you think Bitcoins aren't worth their current value long-term, sell before another drop happens and don't buy back in. The speculators (because that's what's driving any manipulation) depend on people dumb enough to do short-term trading while lagging behind the curve. They're professionals with all the tools, so as a non-professional the only way you can win is to not play their game.
Rule of poker: there's always a sucker at the table. If you look around and don't see one, it's you.
Either the Spanish Inquisition or Goldman Sachs. Either way, it sure was unexpected.
I said no... but I missed and it came out yes.
you can talk the shit out of bitcoin you want, but this unregulated market may provide us with data about currencies that we never observed before, we can get real good data from this experiment.
Really, once the general public is aware of 'get rich quick scheme' it is going to collapse.
I am not saying Bitcoins is such a scheme, just that some people interpret it as such. Currency speculation is not a good get rich quick scheme. It seems to best with people who have taxes in 30% range, or otherwise need to launder their money.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
Before the current silver bubble started you could buy a quarter's-worth of gas. You may not be old enough to remember when the last silver bubble was, back in the 1970s, but that dime would probably have bought two gallons of gas at the time. Once enough of the common public is invested in silver and gold the speculators will collapse the bubble, the public gets taken to the cleaners, and only the banks, speculators and lawyers win. A few years ago your logic was being used to inflate the real estate market.
"Think about how stupid the average person is. Now, realise that half of them are dumber than that." - George Carlin
Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor.
We might need to have a talk about what "steady" means.
I tried eating a tulip bulb once (thought it was a garlic bulb) and I can say that its intrinsic value isn't too high.
There are places where you can trade your bitcoins for dollars. It is an extra step but you can then go buy food or pay for your operation.
To illustrate this, take a dime from 1942, you could buy a gallon of gas with it back then. But you can still buy a gallon of gas with the same dime _because_ it is made out of silver.
Do it. Nine times out of 10 or more, I'll bet the attendant will say "Nice try buddy. That's a dime. It's worth 10 cents. Now pay up!"
Fiat currency works both ways. You want to get your $1.99 out of the dime, melt it down and take it to somebody who buys silver. Less fees and commissions. If it's a collectable dime, you might get more selling it to a numismatist, but the "value" of the dime will be in in its collectability, not in its silver content.
Even in 1971 the idea that everything in the world had a gold equivalent was absurd. These days we have computers and big-screen HDTVs that no amount of gold could give you back then. For a little while, these items may be worth hundreds or thousands of dollars, despite being made from inexpensive materials, then their value will plummet as something newer and better comes along. The amount of gold is limited and so, too is the value of the goods and services you can buy with it. If you owned all the gold in the world and spent it, you would still not own most of the world.
Value is what people give to things, not what things inherently have. To a parent of starving children, the only value gold has is if you can convince someone to accept it in exchange for food.
MtGox owns too much of the Bitcoin conversion market. They need a solid competitor.
Right now, if you can harm MtGox, you harm the entire Bitcoin network. Slow it down and you slow down Bitcoin trades. Manipulate it and you manipulate the entire market. Regulate it and you regulate most of the market. Destroy it, and Bitcoin may completely die, at least in the short term.
I'm not saying any of this is MtGox's fault - they're doing a good job at what they do. But they're the closest thing Bitcoin has to a single point of failure. We need redundancy.
You can easily buy a local variety of frozen pizza with Euros in the European Union, with Yuan in China, with Yen in Japan. With bitcoins, you can buy the pizza only in Bitcoinland, and at a very few fringe businesses.
When I posted the same 2008 about the stock market crash, I was laughed at. Care to tell me the difference?
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
You're understanding of the dollar is laughable, at best.
" but there is no limit to the amount of dollars the government can print."
Not true in in practical way, but common statements from the ignorant masses.
" the bank cartel known as the federal reserve "
the federal reserve is not a bank cartel,. You should probably look up what a 'cartel' is so you understand why the Fed. Reserve isn't one.
Let me know when they eliminate banks, until then Rothbard isn't even worth considering.
"print insane amount of money every "
hardly insane amount.
"year to finance government spending, "
nope.
" take a dime from 1942, "
ok:
type: mercury
weight 2.5 grams (current dime weight 2.268 grams
Content: 90% silver
Silver weight 2.25 grams.
Value(4/10) 1.99 ASSUME 100% purity of the silver.
So, no you couldn't by a gallon of gas.
But Weight!*
in 1942 Cost of a gallon of Gas 15 cents, Coca Cola 5 cents Average Price for a new car $920.00
So no, it wouldn't have bought a gallon of gas, but it wold get 2 bottles of coca cola, unlike today.
you would need 9200 of them to buy a house. If what you said was correct(it isn't) the average house would 18,400 dollars today.
It's nice that you can cherry pick a dime out of all of USE dime history and kinda force it into you incorrect understanding of money, but you are wrong.
*ha!
The Kruger Dunning explains most post on
Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor.
And with High Frequency Trading, you can get rid if your sandwiches before they go bad. Everybody wins!
The only thing necessary for evil to triumph is for it to be pitted against a slightly greater evil
Dude, you can buy "pizza" with bitcoins.
And by "pizza" I mean, "drugs and hookers."
The largest country by landmass is Russia, by population it's China, by GDP per capita it's Luxembourg, by GDP it's the US but by external debt it's also the US, in fact it's debt is larger than its GDP. As far as powerful nations go China is largest by population and and it may not have the GDP of the US but its GDP is many times what its debt is.
The dollar used to be a receipt for a certain amount of gold that you owned in the federal reserve
And gold is only valuable because someone says it is. In a societal collapse, abount the only currency would be ammo, food, shelter, and medicine. "Just a piece of paper" isn't appreciably different than "just a chunk of gold" in that regard.
XML is like violence. If it doesn't solve the problem, use more.
AFAIK there hasn't been any evidence of an actual DDoS against any of the market sites. People who were using the biggest market site Mt.Gox reported 25 minute delays in their trade orders, most likely because of people scrambling to cash in on their bitcoins before it's too late and people looking to buy bitcoins at 'bargain' prices. The most popular chart site bitcoincharts.com crumbled completely, most likely under the load of people who were legitimately interested in viewing the data, or in my case semi-legitimately interested in it (it's fun to watch).
Full discosure: I sold my small fraction of a bitcoin back when the price was at $235. I currently hold 0 BTC. I'm treating this like a game and I hope everyone else is too. I feel sorry for anyone who is investing real money now. Don't be stupid.
You mean the renminbi. _A_ yuan is the unit of _the_ renmimbi currency in the same way that _a_ dollar is the unit of _the_ dollar currency.
The government and the bank cartel known as the Federal Reserve can and do print insane amount of money every year to finance government spending, at the expense of the value of every other dollar in existence.
That is at least as questionable claim. The "insane amount of money" that the Federal Reserve "printed" (actually, just enters a number in a computer, but never mind that) was about $280 billion in 2012. Now, that's obviously not a small chunk of change, but it's not even remotely close to funding the $1,126 billion deficit in federal spending in that same year. Where most of that deficit spending money is actually coming from is private investors happily buying up US Treasury bonds (at very low interest rates to boot), which is probably caused by (a) investors fleeing Europe, and (b) record high profits for businesses and their owners that has to go somewhere.
Also important to think about: Ronald Reagan and George H.W. Bush spent more during their administrations (as a % GDP) than Barack Obama did in 2010-2 (2009 was a year he only had partial control over budget-wise), and is currently projected to go lower. The reason deficits are so high right now is that tax receipts are the lowest they've been (again, as a % GDP) since 1945.
I am officially gone from
Pumpity-dumpity from the Great Wall.
Pumpity-dumpity had a great fall.
All the geek women and all the geek men
Need to configure the routers again.
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
We really need a corollary for Godwin's Law adapted specifically to Bitcoin discussions: as soon as you say, "The US dollar doesn't have any intrinsic value either!", you lose.
Godwin's Law isn't actually about losing an argument; it simply predicts that the longer an Internet discussion goes on, the higher the probability that someone will bring up Hitler.
!#@%*)anks for hanging up the phone, dear.
Heh. The Slashdot Effect just ain't what it used to be.
!#@%*)anks for hanging up the phone, dear.
Actually, if you were a user of the sites, you'd notice there is strong evidence that points to a coordinated DDOS. The spurts of traffic aren't continuous, and they "break" at suspicious timings. For example, at the bottom of the curves, the sites work fine, most of the market/chart sites get their feeds, etc. It's only during the drops/raises start, when it would be fortuitous for people to put in trades, and then freak out when they can't, that the connection issues occur.
I'm not entirely ruling out it being sheer volume of people, but if it was it wouldn't "Come and go" as drastically as it's doing. We're talking sites entirely unusable one minute, and suddenly perfectly fine the next, then unusable 30 min later.
Massive surges in trade are expected during a speculative boom-bust cycle. This is how it works: every now and then, for whatever reason, the price either drops or increases significantly into a territory where you enter into a self-reinforcing surge of traders (many of which will be small traders) who are scrambling to sell and/or buy before it's 'too late'. This goes on until the price stabilizes at which point people calm down.
so, it sounds like he had the original price wrong. Lets say we start off with 20 cents per gallon, then at the current price of $27 per ounce of silver (and a dime is roughly a tenth of that) a dime is worth $2.70. So, 20 cents worth of silver then now buys you $5.40 worth of gas which is significantly more than a gallon since a gallon costs $3.50 or so. So, the point is that the thesis was correct and then some, even if the details weren't.
Only I can judge you.
1. Not legal tender.
2. Only exchangeable for other goods or currencies at a very small number of markets and merchants.
The Bitcoin system cryptographically and decentrally secures ownership and continued scarcity of the currency. But the real value, as with all currencies including gold, lies in the ability to exchange it. Lose that, and you're pretty much SOL.
(If a small number of actors can destabilize the currency like this, guess how resilient it is against the pressure that national governments can put on it.)
It is most defiantly a DDoS, you can tell they are being hit if you have the MtGox ticker chrome extension. The second it goes gray you know MtGox is under attack. You will however be able to "buy" bitcoins through your account page but you will be getting fuct over if you do, as you will be put into a buy queue at a high price (if you thought it was good idea to buy at say $190) you will be locked into this queue and no matter how many times you click cancel your pending order will not cancel, and even if it does their db is so fuct that even when the pending transaction is gone from your account page the transaction will stil go through the second the DDoS is stopped, This happened last week as well when the price was at $112 then shot up to $136, it had then hung around $126 for about a good 2 hours and then the DDoS commenced and dropped the price back down to $102 after that DDoS stopped price shot back up to $119 and took another 3 days to hit $124+ mark. within 3 days after that price has been over $200 So you can see how easy it is to destabilize the bitcoin market quite easily... Funny enough if you make a bot using the shitty MtGox api you can avoid the DDoS entirely to make your trades and this is how they are snatching up all the coins and setting the market during the DDoS. You can however sell your coins through your account page and it will queue them for sale without any issue, however just like the buy issue trying to cancel during the DDoS is impossible, so you see how a bot comes in handy ;)
Also MtGox is total trash for claiming to have DDoS protection they seem to go down in flames pretty damn fast, so until more trading sites come online you are pretty much stuck with the morons running MtGox. They let the DDoS happen because they still make $ of every transaction either way so why should they give a shit whats getting traded at any given time... It would be easy enough for them to just shut down for a few hours but you know they wont.
Is "No sovereign state accepts tax payment in BTC" any more valid?
"Isn't there an ongoing debate whether bitcoin is a "commodity" or a "currency" or both? ..."
That's like the wave–particle duality in quantum theory. Bitcoin is a curmodity.
Unless "you" = George Soros, that is.
"We really need a corollary for Godwin's Law adapted specifically to Bitcoin discussions: as soon as you say, "The US dollar doesn't have any intrinsic value either!", you lose."
Not really. They are correct about the dollar, but people who say Bitcoin has no "intrinsic value" are just wrong. They don't understand Bitcoin. (Demonstrably, neither do most people who have been trading in it. I'll get to that in a moment.)
Bitcoin does have an intrinsic value: the computing time it takes to mine a bitcoin. This is a real, tangible, and strictly-defined value that can be quantified. This value is FIXED. That is to say, it is fixed today. It can vary with time, as Bitcoins are designed to gradually become more valuable per hour of computing time, but that subject can wait for another day.
For the sake of argument, for the rest of this post, let's say a bitcoin is worth 10 hours of (the right kind of) computation time. We will call that value "X". 1 bitcoin is worth X. My numbers are arbitrary for the sake of example but this is easily quantifiable if you want to look up the actual numbers.
So here's the important thing: this value standard, that is to say X, is also quantifiable in dollars, not just Bitcoin. After all, a fixed amount of the right kind of computation time also has a very definite value in $$. So 1 Bitcoin is worth X which is worth Y dollars. This is a solidly pre-defined amount. It is not "floating".
Therefore -- and this is the heart of the matter -- Bitcoin should not fluctuate at all in DOLLAR value, except to the extent that computation time fluctuates in dollar value. And since computation time has not fluctuated much in value, then Bitcoin should also NOT have changed in $$ value.
The upshot of this is: the Bitcoin market has been an utterly irrational "bubble", with the market valuing Bitcoins far higher than their actual intrinsic worth!
And the result is: lots and lots of people taken for a ride, many of whom will eventually lose buckets of money.
It is almost as if, with the gold standard having been gone for decades now, people have somehow forgotten how standards are supposed to work. While I LIKE Bitcoin, I would not touch today's Bitcoin market with a 10-foot pole. If I'd had a warehouse full of money to invest in it 2-3 months ago, though, I would have. Even today, with the market having fallen 40%, Bitcoin is selling for somewhere around 5 times what it is actually worth in dollars. It was (but perhaps is no longer) a good candidate for pump-and-dump. Which just illustrates how stupid the market is today.
Having said all that: the dollar, in contrast, really does have no practical intrinsic value. Ever since 1971, when Nixon threw the last vestiges of any standard away. (And defaulted on U.S. debt in the process, by the way. People who said the "fiscal cliff" would be the first time the U.S. ever defaulted on debt simply don't know their history.)
Isn't there an ongoing debate whether bitcoin is a "commodity" or a "currency" or both?
Neither. It's just a bloody waste of CPU time.
If modpoints had intresic value, I'd give you a shit load of them.
But then it's no more a currency than chickens - it's a commodity.
You don't need to understand the maths...
You don't need to do anything that generates a positive return either, but you wouldn't call it an "investment" in that case. "Never invest in something you don't understand" is a great rule to follow.
People who say that modpoints have no intrinsic value are just wrong.
I shouldn't have to point out the obvious here, it will clearly fall on deaf ears considering the vast amounts of stupidity revealing themselves in postings on this topic. But hell, if it brings just one person to their senses I'll count it job well done.
First, nobody is forcing anyone to hold their savings in US Dollars. You can hold your savings in whatever form you want, it's called a BROKERAGE ACCOUNT. Buy a commodity-tracking ETF if you desire, and keep just enough dollars around to service your monthly needs. The dollar, after all, is very definitely stable in the short-term. One month isn't going to destroy its value. Realize, though, the price of everything in real terms fluctuates. Someone who bought gold at $1900 is sitting on a 15% loss of value in dollar terms right now, for example. Real commodities generally maintain their value over long periods of time. Are you worried about buy/sell fees? If you are, then you don't have enough savings to even be AFFECTED by inflation in the first place.
Second, Bitcoin isn't a currency. It's a commodity with a limited supply. Not only is it a commodity with a limited supply but it is a VIRTUAL commodity with a fixed supply. It isn't even real. It's not something you can touch. It doesn't even behave like a currency fod gods sakes! It may not be possible to counterfeit, but that doesn't stop anyone from creating their own virtual commodities and competing. In fact, there are MANY virtual currencies already in existance, primarily used in games, which are already far more stable than bitcoin.
Third, Bitcoin's 'value' is fleeting. It's like tulip-mania but worse. It's worse because the market is so shallow it is trivial (and obviously trivial) to manipulate. Heavy manipulation by people selling high slowly, causing a panic, and then buying low. Rinse and repeat.
I'm guessing that a large percentage of the exchange volume is from rinse and repeaters and very little is actual investment purchases or sales. It creates the illusion of decent volume when, in fact, there actually isn't any. Each time it cycles the manipulators are removing more real money from the system, leaving everyone else holding the bag.
Think about what this means, folks. It isn't rocket science. Whatever cash was injected into the system by real investors is being leeched away by the manipulators. There is LESS real original cash remaining, yet all the remaining real investors believe that a Bitcoin is worth at least as much as they originally paid for it, because they see that magic exchange value in $USD 'Oh look, 1BTC is worth $166 BTC!'. What these investors do not understand is that they cannot ALL get that price if they were to sell. They can't get it even if they all paid that price going in because the manipulators have already squeezed out a considerable amount of cash from the system.
The very definition of a Ponzi scheme. This will only end in tears.
-Matt
Some of your argument is interesting, but the idea that something's value is equal to the effort that it takes to obtain/create the thing is certainly not the case. There are lots of things that are very difficult to create and/or duplicate that have no value. If I have my computer hash random strings until I get a hash that includes my name in it, even though it might take 10 hours to do (and would take another 10 hours to duplicate), it doesn't make that random string valuable.
Value is the benefit I get from having a good or service (http://en.wikipedia.org/wiki/Value_(economics)). While often times it is correlated with the difficulty in obtaining something, they are not equivalent.
That being said, your argument could still (sort of) work like this: there SHOULD be a cap on the value of a bitcoin.... the $ cost in computing power to mine a new coin. Whenever the price rises much above that, there should be an economic incentive to spend the money mining a new coin instead of buying the coin on the market. Of course, this price isn't a HARD cap, since there is still a capital expense in buying the hardware to mine the coin (or the opportunity cost of not using that hardware to do something MORE valuable), but it shouldn't get too high above that cost.
Of course, the fact that the cost to mine a bitcoin increases with each previously mined coin makes this even more complicated..
One where there's lots of speculation. These kind of shifts are NOT what you want for a currency. When a currency changes value by 10% in a YEAR that is a problem governments try to deal with (2-3% is the normal target), never mind doubling or halving in a day. Even a normal stock or commodity would be having some extreme problem for that kind of movement to happen.
It shows all the signs of sever speculation and a bubble. People playing it to try and make a big short term gain, at the expense of others.
Bitcoin does have an intrinsic value: the computing time it takes to mine a bitcoin.
Stop. Bitcoins have an intrinsic COST. The computing time that goes into producing a bitcoin is comparable to the paper and ink used to print a physical US dollar, or the wages and electricity cost of the "creation" of purely electronic dollars. (Which are really debts, rather than currency, but that's an entirely different boneheaded idea that the one you're postulating.)
Once a bitcoin is produced, it cannot be redeemed for an equal amount of computer time. In fact, using a bitcoin requires SOMEONE ELSE to pay for the verification chain that makes this electronic currency at all feasible.
(you're right that it's a bubble, and I'm not here to argue the system's inherent merits or flaws.)
Having said all that: the dollar, in contrast, really does have no practical intrinsic value. Ever since 1971, when Nixon threw the last vestiges of any standard away. (And defaulted on U.S. debt in the process, by the way. People who said the "fiscal cliff" would be the first time the U.S. ever defaulted on debt simply don't know their history.)
The US dollar is backed up by an almost non-intuitive fact of modern society. It's legal tender for payment of debts. As in, if you don't pay your employees or pay for that meal in a restaurant, or if you just wrong someone more generally, the courts will denote whatever judgement is finally ordered against you in US dollars, and if your wealth is denominated in some other currency, you'll be subject to whatever market exchange rate you can manage to produce sufficient dollars to pay the debt.
Or, in short, "people who say the US dollar isn't backed up by anything don't know what they're talking about."
On a different note, though, I'd be interested if you could point to a US debt that was denoted in a weight of precious metal and not redeemed for sufficient value to satisfy the bond-holder. Just because in 1971 the President of the United States stopped offering gold for dollars doesn't mean the US "defaulted" any more than Wal-Mart selling out of ammo means they "defaulted' on that gift card you bought. (The phrase "Redeemable in gold on demand at the United States Treasury, or in gold or lawful money at any Federal Reserve Bank" was gone from bank notes decades before. And still did not specify the amount of gold.)
I'm not sure I'd agree with that. The computing time that goes into a bitcon is more akin to having a fixed production cost not an intrinsic value (although "fixed" migth also not be entirely accurate as the power of computing hardware, cost of electiricy and oppurtunity cost of what else that hardware could be doing probably varies drastically over time, but that's neither here nor there).
In this context intrinsic value means that you are able to use it for some practical purpose other than as a medium of exchange. In that sense I would argue that bitcoin has no intrinsic value. After all you can't take the bitcoin and extract from it the computing power that went into making it and use that computing power for some other purpose. If you want something with real intrinsic value think oil or wheat.
Now that's not to disparage bitcoin in any way. One of the things you actually look for in a medium of exchange is something that has limited intrinsic value. People tend to hoard currencies and you don't want actual useful stuff sitting around gathering dust in a bank vault.
I wish I were as sure of anything as some people are of everything
I am not a economist, but I am related to one...
While it's technically true to say that "Currency is only worth what people think it's worth" and that it's a socailly-constructed value, you are ignoring the underlying economic reasons why people assign greater value to one than the other.
The value of a US dollar is based on the power and stability of the US economy and Federal Government. No matter how bad things may seem right now for the US economy, it is much better than trusting a random internet craze, and no one doubts that it will be around in 100 years, hence people buy 100 year bonds. Even the currency of a small country like Sweden is a better bet than bitcoin.
I've looked into bitcoin, and while I think the idea is cryptographically sound, there is one problem with the concept: While there are built-in limits to inflation within bitcoin, there is nothing preventing someone else from building "Bitcoin 2" or "Crypto-coins" with the same concept but different keys. If merchants are willing to take bitcoin, what is to prevent them from also accepting any other crypto currency, thus devaluing the whole pool?
The value of currency as an investment is dependent on how much it will be worth in the long run, and while I am sure "bitcoins" will be around in 10 years, what will its value be? Will be around in 100 years?
And this is ignoring the issue this article bring up, that with a newly-consructed pool of currency with much fewer users, it is much more prone to currency manipulation than dollars or euros.
In the United States, people cannot ... trade real goods and services with BC -- because the U.S. gov' ...will enforce the dollar as the sole legal tender
That's not what "legal tender" means.
I could set up shop today in New York State and accept only bitcoins if I wanted to. The government wouldn't stop me, and in fact they'd back up my right to set my prices as whatever my little heart desires, in whatever strange currency I want.
But as soon as I ask the police to force a shoplifter to pay, I'll wind up having to deal with dollars, because that's all the government will force anyone to pay a debt in. And if I am on the other end of that transaction, I might wind up having to convert some bitcoins to dollars at a sub-optimal time when the bill comes due.
(That I'll also have to pay my taxes in dollars and likely pay my vendors and suppliers in the same means I'll have to deal with some local currency regardless. but that's a different issue.)
China uses its central control of its money supply to create money without attaching debt to it.
Isn't the point of this story that it'll take more than a minute?
Isn't there an ongoing debate whether bitcoin is a "commodity" or a "currency" or both?
Neither. It's just a bloody waste of CPU time.
I thought it was a scam to drive up Slashdot page hits.
Sheesh, evil *and* a jerk. -- Jade
We really need a corollary for Godwin's Law adapted specifically to Bitcoin discussions: as soon as you say, "The US dollar doesn't have any intrinsic value either!", you lose.
Godwin's Law isn't actually about losing an argument; it simply predicts that the longer an Internet discussion goes on, the higher the probability that someone will bring up Hitler.
And in this case, it took exactly three steps to get from "Bitcoin" to "Hitler".
Sheesh, evil *and* a jerk. -- Jade
We really need a corollary for Godwin's Law adapted specifically to Bitcoin discussions: as soon as you say, "Modpoints don't have any intrinsic value!", you lose.
CLI paste? paste.pr0.tips!
The Fed should use created money to help people directly instead of giving it to institutions. Give everyone the choice of a basic income, and hold challenges to stimulate the natural creativity most of us are born with. As long as we keep advancing knowledge and technology, we can create as much money as we want. The focus should be on increasing knowledge, not economics, because greater knowledge increases survival fitness the most, by better enabling us to predict and adapt to sudden catastrophic change.
US external debt is quite a bit smaller than it's GDP. Perhaps about 25% of GDP. Total gross government debt is 107% of GDP but a lot if that is debt from one part of the government to another.
Also nobody really knows what the Chinese government debt is because their statistics are completely unreliable. I've seen claims that local government debt is several times what the published government debt is.
http://www.dnaindia.com/money/1392108/comment-china-s-public-debt-a-damocles-sword
http://www.nytimes.com/2011/07/06/business/global/06iht-yuan06.html?_r=0
All currencies have a subjective value for each individual at each point in time. Unlike an objective value as say, 1 meter, or 1 gram.
When i'm willing to trade 1 BTC for 1 USD or 1 g Gold that's my choice, and if anyone else agrees during that time we can trade.
I'm having a zen-like moment where i'm thinking as a ferengi and a hippie at the same time... Money is a game that we're all forced to play, and naturally there are many that looses. Then comes the problem that the rich can rig the game so that they win no matter how stupid they are.
"Or, in short, "people who say the US dollar isn't backed up by anything don't know what they're talking about.""
But that is not something I ever stated. The US dollar *IS* backed up... by the faith of its investors. And that's all well and good.
But that is a very far cry from a value standard. They are not the same things, and they do not work the same way. That is my entire point here.
If you don't understand this, I warn you: do not go investing in the money market.
"That doesn't make sense; it only has a value if you can redeem the bitcoin for processing time. The cost to produce the currency is irrelevant."
And this is the last time I am going to repeat this here: I am not arbitrarily saying that a Bitcoin should be worth that much computation time. What I'm saying is that Bitcoin is DEFINED to have that value. It was both designed and defined to have that value. Look it up.
The current market is dumb because Bitcoin has a standard value, which just happens to also have a dollar value. It is built in to the DEFINITION of Bitcoin. People who are paying more than the DEFINED value of a Bitcoin are making a bad investment. Period. End of story.
Today's Bitcoin market is like people buying dollars for 100 nickels apiece. It just doesn't make any sense.
Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor.
And with High Frequency Trading, you can get rid if your sandwiches before they go bad. Everybody wins!
Yes, but HFT is pointless. They only take a little nibble per each sandwich trade which would have gotten traded anyway without HFTs, so we're essentially feeding them all for no reason, they're just leaches... For what? A little bit more Liquidity? Who Wants a Soggy Sandwich?!
To be honest, people can argue till their face is blue if Bitcoin has an intrinsic value or not it all boils down to this :
Anything is worth as much as somebody is willing to pay for it at the moment in time you want to sell. All the rest comes out of the rear end of a bull.
Yesterday people made some nice money speculating on bitcoins (including me).
They peaked at 200 Euro's so i thing this might not only had have something to do with the DDOS but also the psychological barrier, I had an order in to sell everything at 199 Euros/BTC and used half of that money to buy at 100Euros/BTC.
Clearly for someone bitcoins had a real value yesterday
I have been to auctions and seen things sell at triple and more of their valuation, and I have seen things sold at 10% of their valuation.
42
CheeseWiz!
Vote monkeys into Congress. They are cheaper and more trustworthy.
I have just defined the value of Slashdot posts to be one gram of gold. That is now their intrinsic value. Oh, wait, no it isn't. simply asserting the value of something doesn't make it have that value, and neither does repeating that you have defined its value to be that. If I burn a piece of paper, the intrinsic value of the ash and smoke is not equal to the piece of paper - it can not be used in the same way, and it can not be freely converted back into the piece of paper. If I could take a Bitcoin and turn it into a unit of computational effort, then that would be its intrinsic value. If a Bitcoin were a promise to do some computational work the the future, then that would mean it is backed by computational work. Neither of these holds.
I am TheRaven on Soylent News
The US went from being a bankrupt backwater to a wealthy superpower because it developed the infrastructure necessary to exploit its substantial resource wealth on a large scale (particularly railroads, but also oil), amidst IP laws that mostly looked the other way when American companies infringed upon foreign patents, and large-scale immigration that was an abundant source of cheap domestic labor.
Under those conditions, the US could have declared its currency to be backed by dogshit and gotten away with it. If anything, backing Dollars with dogshit would have been preferable. The gold standard *caused* at least two major depressions during the late 19th century, because the value of (and demand for) American goods & services exploded while the amount of gold in the possession of the US Treasury remained mostly constant. At least the volume of dogshit tends to increase at a linear rate over time... daily input correlates to daily output. ;-)