Slashdot Mirror
Why Bitcoin Boomed During the Government Shutdown
Daniel_Stuckey writes "Just two weeks after the Feds shuttered the Silk Road, the notorious online drug bazaar, Bitcoin prices have touched a five-month high — with a single Bitcoin fetching nearly $156 on Tokyo-based exchange Mt. Gox. Bitcoin's resiliency can no longer be denied, especially as the digital currency continued its ascendancy even against the backdrop of a U.S. government in utter disarray. At the 11th hour of the crisis, President Obama signed a bill that ended the partial government shutdown and, more importantly, raised the debt ceiling, an arbitrary limit on the amount of money the country can borrow that would have been surpassed today. If Congress had failed to reach a deal and the U.S. was unable to pay its bills, the results might have been catastrophic, eclipsing the bankruptcy of Lehman Brothers five years ago, the domino that could trigger the worst financial crisis since the Great Depression."
How many people honestly understand the relationship between currency prices and the government shutdown? Very very few I would guess.
Gold dropped when the goverment was down and bounced back after the deal was signed. Why? Gold is supposed to be a safe harbour.
Does the author of TFA see BTC as the opposite of gold, or does he see BTC as filling the same kind of role as gold?
Or is this simply a case of making using hindsight to construct an argument that fits a general argument that BTC is worth investing in?
The recent price of Bitcoin has far more to do with explosive adoption in China than anything happening in the United States.
Are you freaking kidding? Why is it that every half wit thinks that bitcoin is all about drug transactions and prostitution?
I use BitCoin to make donations to various Linux projects. That way when I download all those Linux ISOs on BitTorrent, I really feel like I'm sticking it to The Man.
Trolling is a art,
Correction. Threatening not to raise the debt ceiling lead to a credit rating downgrade. Explicitly saying in public that you're thinking about not honoring your financial obligations does that.
An interesting anagram of "BANACH TARSKI" is "BANACH TARSKI BANACH TARSKI"
Go on thinking that, Pollyanna, if it helps you sleep at night.
The shutdown wasn't really a big deal, sure, but if the US had defaulted on its debt, that would have been catastrophic.
We owe around $16 trillion right now. But it's really not a big deal, because we pay negative interest on it (relative to inflation). Countries are eager to keep investing in the US, and the high demand lets us pay very low interest. If US debt were seen as unsafe, we would need to pay MUCH higher interest in order to attract investors. We obviously wouldn't be able to pay the higher interest, since this scenario is based on the assumption that Congress refuses to even repay the principle. So we would have to start paying out $16 trillion without replacement investments coming in.
Goodbye, Medicare. Goodbye, Social Security. Goodbye, foodstamps and welfare and section 8. Hello, social upheaval. Hello, desperation-induced crime wave. Hello, Great Depression.
That's your idea of "annoying"? I'd say "catastrophic" is a far more apt description.
They aren't even anonymous transactions... if you convert bitcoins to cash, that's a major weakness.
And they have a great use: eliminating payment processing costs. Those costs are distributed among the people who run the mining software.
You liar. The credit rating downgrade wasn't because we raised the ceiling, it was because the Republicans threatened not to.
The ratings agency EXPLICITLY SAID SO:
The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.
Banks made transferring out of MTGOX impossible, MTGOX refunded my $. They are about 8 weeks behind processing withdraws.
Bad news, banks and government attacking at same time interfered with each other.
Also, they had this guy, he sold drugs... lots of drugs... but did they bust him? Nope, they did an elaborate sting to bag him for something REALLY REALLY evil... (I hate drugs btw) Why? So he wouldn't be a martyr for free wealth exchange.
Also the whole BTC aren't totally anonymous thing is a good to know.
Much in the same way as bitcoin isn't backed by anything real or stable, just demand.
What is backed by "real and stable"? US currency? Nop, it gets devalued pretty fast. Gold? Real Estate? (How much Real Estate do you put in your wallet when going grocery shopping?)
Humans used to use all sort of currency, from sea shells to alcohol to pretty pieces of paper we have today. None of them backed by anything, just convenience. Maybe bitcoin is the next "it"
sounds like your problem is with all forms of cash
The difficulty parameter autoadjusts depending on the number of miners. Less miners = easier difficulty.
There should always be a new block every 10 mins (on average).
Also while the benefits of mining diminish, the 'fees' should increase with the use of bitcoin.
At some point the fees overtake the benefit of finding a new block.
Remember the fees get paid to the block finder.
Or maybe because what I buy is my business and my business alone? Without anonymity, it makes it trivial for people to track my purchases. If people can track my purchases, they can target me for their sales campaigns in order to try and manipulate me into giving them more money, Since I'm not terribly fond of being manipulated, nor am I terribly fond of junk mail or spam, I prefer my transactions to be as anonymous as possible.
But yeah, I guess you're right, it's all about the hookers and blow, Couldn't possibly be any other reason I don't want folks up in my business.
Right. China has tight exchange controls - it take special permission from the State Ministry for Foreign Exchange to exchange yuan for dollars, euros, or yen. But at present, China residents can buy Bitcoins with yuan. They can also sell Bitcoins for dollars, bypassing exchange controls. So if you've made money in China and want, say, to buy an apartment in London, Bitcoin provides a way to bypass the government exchange controls.
That seems to be what's pushing up the price of Bitcoin. The volume on exchanges in China is way up, while volume at Mt.Gox is way down.
However, there's no guarantee that this situation will last. The People's Bank of China can change this policy at any time. There's plenty of info available about PBOC policy; it's as least as important as US Fed policy. But that's enough for Slashdot readers.