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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.'"
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.
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.
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!
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.
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.
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.
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.
we can get real good data from this experiment.
From that perspective, Bitcoin is fascinating. The Bitcoin world, tiny though it is financially, has seen just about every classic scam. Ponzi/HYIP schemes, pump and dump schemes, fake bank schemes, fake exchange schemes, fake stocks, and ordinary theft - it's all there. It makes the penny stock market look legit.
Someday, assuming they haven't lost them, the people who generated Bitcoins in the early days when it was easy will cash out. Most of the early Bitcoins are not being traded. Somewhere there are early adopters with substantial value. They can't exit yet without clobbering the price, though. Not enough suckers putting in real money.
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."
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
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.
"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.)
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..
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.)
For every $1000 in deposits, that means they can lend $10,000 at 5% above their costs and payouts, or more, yielding a $500 profit... wow!
1: It's $1,000 in assets. That includes a whole bunch of things beyond deposits, such as certain bonds.
2: That's $500 in revenue, not profit. From that revenue, they need to pay for all of their bills, and their payroll, and account for losses due to uncollectable accounts and outright thievery.
This $500 is spent by them eventually, and helps dilute the value of your original $1000 by inflation... so your "savings" loses value, as they leverage against it in multiple manners....
3: Inflation is a feature, not a bug. The work you did picking tomatoes last year is less valuable to the species than the work you did picking tomatoes today. The species would be better served if you used that same frugality to horde useful items instead of tokens, which is why the market rewards investment over savings.
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.)
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 thing about Bitcoin is that its exchange rate to the "real" currencies is irrelevant to its usefulness.
I think most users exchange e.g. dollars for Bitcoin, and then spend the latter as quickly as possible on (mostly) illegal goods. As long as Bitcoin can be obtained at all, the price is stable on the timescale of hours to days and secrecy is maintained, Bitcoin will be used.
In short, "currency" does not always need to represent debt (as do modern money and treasury bonds), or even to have the imprimatur of state authority, for it to be useful transactionally. Low-risk savings, of course, is another matter.
.: Semper Absurda