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Bitcoin Exchange Value Halves After Chinese Ban
An anonymous reader writes with news of the latest major fluctuation in the price people are willing to pay for Bitcoins. From the article: "China's ban on its financial institutions handling bitcoin causes world's largest exchange to cease trading, halving the value of the currency from $1,000 to less than $500 in a matter of days. The country's central bank took a hard line on Bitcoin in early December when it banned financial institutions from handling the decentralized crypto-currency, and as a result BTC China, the world's largest bitcoin exchange, has stopped accepting deposits from its users."
Just watch that line trend downward.
Buttcoins. LOL. Everyone knows the real money is in ass pennies.
Both parties in a trade value what they are getting more than what they give. The person selling the item values the cash higher than the item. The person buying values the item higher than the cash. The price is where the exchange takes place where both parties value what they get more.
I love Jesus, except for his foreign policy.
Kind of a sideline approach here...
This is the clearest evidence yet that the pro-bitcoin libertarian segment misunderstand how government control works. The argument goes "government prints the money, and tracks the money therefor can tax me." The presumption of bitcoins is if the currency doesn't come from the government, they don't have any means to control it.
Good ol' actually tyrannical China comes along, and does the thing any government is capable of doing. Saying "if we catch you dodging our system, our system will throw your stupid self in jail." Poof.
If having a wallet.dat is a crime, the fact that the coins inside of it are encrypted won't protect you.
I expect the Chinease Yuan is going to collapse within, at most, five years with nothing but bitcoin to replace it. Fiat currency is doomed, and the governments know it.
Comment removed based on user account deletion
Somewhere in China a group of Bitcoin-speculating bureaucrats are very happy right now.
Must make the Bitcoiners really happy to know that their financial world can be so readily disrupted . . ..
When a couple of my friends started posting "now is a great time to buy into BitCoin" messages on my Facebook feed a couple of weeks ago, I had a feeling the BTC price was about to take a strong downward turn. It is never a good sign when the "true believers" begin actively recruiting new buyers into a price bubble.
The collapse of BitCoin as a speculative investment is inevitable, and its own success will be its downfall. The speculative frenzy over BTC is based strictly on artificial scarcity. The problem is that there are an infinite possible number of cryptographically signed digital currencies. If only X amount of gold exists in the world, there is no replacement for it, assuming you desire the exact physical qualities of gold. But if only Y digital coins exist, it is trivial to create another digital coinage with a slightly different protocol that behaves exactly the same way as far as a user is concerned.
The boom in BTC has led to several new competitors, with similar frenzies growing around some of them. And given the low barrier to entry, you can expect more and more competing digital currencies to appear. It is only a matter of time before people realize that they're fighting over a particular set of tulip bulbs while standing in an infinitely large field of tulips. Once that happens, the speculative bubble will pop for good for all digital currencies. In the long run, this is a good thing, because once the speculators are gone, some digital currencies may actually prove useful as a real medium of exchange, with values that don't fluctuate wildly from one day to the next.
It does not matter what people intended something for, it matters what it is USED for in actual practice. Until people start actually using BTC as a real currency, it is not a currency.
I can write a bunch of numbers on post-it notes and claim it is a currency as well - it does not make it one.
Every sale is also a buy. Derp.
"I have zillions of dollars worth of comic books! Wizard says I do!"
"I have zillions of dollars worth of Bitcoin! The exchange says I do!"
*Together* Let's cash out!
"WTF? Nobody wants to buy my comics at massively inflated prices!"
"WTF? Nobody wants to buy my Bitcoin at massively inflated prices!"
Cue the Python!
SCAM! SCAM! SCAM! SCAM! SCAM!
Chas - The one, the only.
THANK GOD!!!
There is a world of difference between gold and Bitcoins. Gold was always valuable in itself, before anybody used it as money, people wanted it just because the metal was fairly rare and easy to make jewellery from. It's not like gold was found and immediately people said: that's money. No, gold was a metal that was desired for thousands of years, then eventually it was used as money also for thousands of years. Gold was storing value for people before people started commonly using it as money, the metal proved itself to be capable of withstanding the test of time in business of storing value.
Bitcoins were intended to be money from the beginning, their entire existence is for one purpose: to be money. In that sense Bitcoins are a currency, and since they are not backed by anything (no gold behind Bitcoins), they are a FIAT currency. The difference is that they are not printed by government, but the scarcity argument is moot, every bit of Bitcoin is about as 'valuable' as any other bit. One Bitcoin is essentially 10Million coins, each one can take an arbitrary value. More importantly, competing electronic fiat currencies exist and there will be more and more of them as more people want to participate in this new electronic currency market.
To say that Bitcoins store value is premature AT BEST, I don't think Bitcoins will become less volatile with time, I think they will be more volatile with time, I don't think they store value, I think they are an interesting vehicle for speculation and many disciplined day traders can make a killing trading these, but there is no value outside of its direct purpose: be currency.
Some say that the protocol and the network are the value, but again, those are replicated across many other currencies and there will be more of them, there is nothing special about Bitcoin except for it being first, but being first also has disadvantages. With Bitcoin prices going up, every time the price goes up, the risk that one takes buying them is bigger than the day before. There was very little risk buying 1000 Bitcoins at a few dollars a few years back. Today to buy 1000 Bitcoins you need half a million or more dollars and given the speculative nature and volatility, very few people will buy 1000 Bitcoins, but they will buy a few or maybe fractions - coins of smaller denomination. Or maybe they'll buy other coins, that are perceived to be cheaper.
Basically declaring that Bitcoin is a store of value is extremely premature but also is most likely completely false.
You can't handle the truth.
Bitcoin value continues to be incredibly unstable! Also the sky is blue and water is wet! More updates as news develops!
"When information is power, privacy is freedom" - Jah-Wren Ryel
You have that backwards.
Inflation (and increase of) reduce the value of money and thus reduces the value of those who hold (net) cash and financial assets – a.k.a. the wealthy. Inflation also reduces the value of money that need to repay loans and thus help those who owe (net) cash and financial assets.