Topic: A beautiful crash story (Read 1101 times)

Good discussion, glad to see there are people who take BTC seriously and are not just a bunch of cowboys looking to get rich on an easy deal. I'm not an expert by any stretch of the imagination, however I believe the following is true:

- the more governments around the world increase the supply of FIAT currency, the more feasible alternative stores of value such as BTC become.

- just as with any currency, the stability of BTC will depend on the extent to which people have "faith" in it as a store of value.

- BTC provides an alternative and arguably safer method of storing value than depositing money in the bank. This is still an emerging trend, but now that its been done in Cyprus, it would be easy to repeat it in other small countries like Slovenia and Greece because the taboo has been broken.

If this continues to happen, people will seek out alternative stores of value (such as BTC) for all the right reasons, instead of looking at it as a quick in-out investment.

- I believe BTC is still in its infancy. 5 years is little time for a commodity, which is not that easy to understand, to stabilize.It still needs a proper infrastructure and support industries (ie- e-security companies, user- friendly interfaces for non- technical users etc) to help it maintain its stability and therefore boost its reputation as a reliable commodity.

- BTC becoming a currency in its own right is pretty unrealistic for the moment. We have a long way to go and a lot of convincing has to be done until large companies start accepting it as a means of exchange and until you can pay your utility bills in BTC.

- crashes like the one we just saw will flush out those who are not that serious about using BTC. The more people realize that the true value of BTC is the fact that its an alternative to your bank account, the more powerful it will become.

This has been my first foray into investments over which I have active control.  I don't know about you guys, but it is both terrifying and exciting to think that with the right trades, your pile of bitcoins can either explode or vanish.  Or you can just stash them away in a cold storage wallet which can never be taken from you.  That's pretty cool when you think about it.  It is also disturbing to see the volatility resulting from widespread panic and criminal attacks on the bitcoin infrastructure.  I'm also disturbed by the lack of pricing information available when Gox is down.  Seriously .. the market is absolutely paralyzed without it.  Thankfully, there isn't nearly the kind of panic we saw before.  It seems like people are adjusting to life with DDOS.  Anyway, the current volatility makes its use as a bona-fide currency impractical since manufacturers generally don't buy capital, labor, materials, etc. in bitcoins.  What's clear is that this is definitely a work-in-progress and the bitcoin you see 5 years from now will look very different than the bitcoin you see today.  Probably much like the internet itself as it morphed from pure html to what we have now.

After all the speculation, hand waving, and so on you see over in the big boy forums, I think what is evident is nobody really has a solid pulse on what will happen in the next hour, day, month or year.  You read what the speculators have to say, and it reminds me of a broken clock being right twice a day.  Every bull has his day and every bear has his day.

Predicting where BTC/$ will be tomorrow is like predicting the weather.  In fact, I'd say its considerably harder to predict than the weather.  Tomorrow NK could launch nukes @ Japan.  What happens to BTC?  There could be a DDOS against all the exchanges that never lets up and basically cannot be mitigated.  What happens to BTC?  A security flaw, another hacked exchange, gov't regulation, another panic caused by some unforeseen factor, and so on are all distinct possibilities.  Hell, the people running each exchange could be threatened by hired guns.  If this really takes off, a lot of very powerful dynasties will be extremely agitated.  I think this will either be an unbelievable success story or a dismal failure .. lots of money will change hands in the next few months & years on these exchanges.  Grab your popcorn

Why ?

Ripples are the future!

why all the focus on Value & hoarding?

why not just buy more coins with fiat to spend online, keep some - everyone needs to save, but the only way to get this mainstream is to get the coins changing hands - get more vendors to accept it. pure speculation is bad for adoption!


That's my 2c anyway!

T

Exactly.

BTC is not fractional. BTC is usury free. That is why I believe in it. That is why I bought it.

Hundredth or centiBTC (cBTC) and thousandth or milliBTC (mBTC) and millionth or microBTC (uBTC) need to be introduced as needed so BTC can continue to be used as currency which is where its value lies at a level which is confortable to people everywhere.

$266 BTC are unwieldly for most people to use as currency.

When BTC reaches $200+ again it should be reset to $2+ (cBTC) so it can continue to easily be used as currency. BTC value is as a currency. There are a fixed amount of units. To accomodate new users and fluid trade a currency reset or splitting at successive points is required. No wealth or value is ever lost and BTC stays at a currency comfort level for trade.

Without actual products and services backing bitcoin up, it's going to be incredibly volatile due to the value being backed only by the confidence of speculators. Thus your assertion would render itself rather invalid. Bitcoin's only going to become stable if people start to attach the value of bitcoin to the value of things. That of course happens when people buy and sell stuff with BTC...
 

Very well written. I concur with your feelings. Thank you.

I would be interested in learning why you feel that is the most logical conclusion. Personally, lack of liquidity, nicely demonstrated now, would lead me to conclude that it is quiet bad at storing value. I would not want to store my savings in a commodity where trying to get them out is likely to cause a reduction in its value regardless of how small they are Currently, I seem to be watching a whole lot of panic sellers stuck in a bottleneck, not a good look for savings or investments. Whereas when it comes to spending, I can send payments immediately and without a middle man to take some of it. Works equally clean when i receive it. That to me is a brilliant medium of exchange (or at least a good iteration towards one) and with all the recent publicity, one that has the potential to be widely accepted 


You don't need a better comparison, "market cycle" is exactly what happened because people are trying to trade bitcoins the same way they would trade any other commodity in the markets. That is probably also why the new investors were attracted to Mt. Gox, the place looks and works like any other market they have been trading in. One of the reasons why I think this crash has been a blessing; it has the potential to make people understand bitcoin and its possibilities rather than taking the simplistic approach of simply treating it like any other commodity. But, there is also the possibility that the cooperators will move on if the currency stays unsuitable for exchange due to excessive volatility created by the competitors. If that were to occur, It would be interesting to see how the competitors would prop up the value of a currency you can't buy anything with 

The crash was caused primarily by a huge flood of newbies into the market, who end up using mtgox. When the server lags due to the flood of new traffic, the newbies panic-sell because they aren't yet well-informed on how the system works, economics, etc. With the huge pile of volatility already present (from overspeculation; that is the currency value was artificially boosted by speculation and not backed by actual spending/movement of goods and services) all the traders manage to panic and we fall into a liquidity trap. Gox serves to exacerbate the people's fears by shutting down for a bit (so it can sell off its bitcoins and make a hefty profit) essentially destroying confidence in the name of greed. Thus I agree; we really need actual spending power to back up artificially high bitcoin prices.

 I've been reading and studying about bitcoins for the last eight or nine months. But the crash was what I actually got me the most excited about opening an account and learning to transact with bitcoins. I believe the crash in the recent start of a comeback will do more to validate bitcoins than any thing so far.
The crash is proving that bitcoins can come back on their own, nobody stepped in to bail them out no government or corporation had to back stop them, they have just proven they are a real store of value. On their own merit they have survived a "market cycle" for lack of a better comparison. And though not maintaining the 250 value which was not real "yet". They have still stabilized at a higher value than they were at before.

right

I would hold on as well.

I think there are differing degrees to which an asset can be used for exchange. Something like gold can be exchanged between individuals and institutions, but it's not that convenient for small, day-to-day transactions. Clearly bitcoin needs to be exchangeable to have value, but it doesn't need to be the end-all solution for every split-second nanopayment to have value.

That scenario will mean the death of bitcoin because its only intrinsic value is its utility as a medium of exchange. In order for the currency to have any value at all, the Bitcoin system must be viable. Speculative bubbles like this one are the direct result of bitcoin being overvalued as a store of value.

This is an interesting discussion. However, realistically speaking, bitcoins seem to be more useful as a store of value rather than as a medium of exchange. Perhaps bitcoin's utility in the future will be like that of gold--good for storing value or backing other currencies, but not so good for buying things.

yes, mindfulness is as hard as it is easy but does wonders for correcting those mindsets and keeping us happy I'm just using the term 'crash' as shorthand for the 'big price drops recently', I have no doubt that BTC will bounce back as it is very useful and people like buying useful things


some mornings would be pleasant surprises, others quiet unpleasant. the harmful thing there is that hoarding BTC basically drags competitiveness (if you're making a profit from the boom/bust/boom/bust, it is at the expense of others) into a refreshing cooperative system. Competition, even if you're winning, is stressful. I'd rather not be a winner or a loser but just help out people who help me out 

it is true that hoarding speculators that enjoy the competition are needed by the system as well so it can grow, but would be inclined to think that obtaining an unhealthy ratio of competitors (buying and selling bitcoins) to cooperators (buying and selling commodities and services with bitcoins as well as mining and software development) is what causes the crashes. hopefully it is resolved by more people switching to the cooperators team rather than just leaving BTC but we'll have to wait and see how it plays out.



cheers, that is exactly the kind of healthier thinking i've returned to - thanks to the crash i am very thankful to Bitcoin for re-awakening the part of me that had given up on finding something that can make a difference! i don't necessarily agree with all of the political positions behind it, but the power of alternative markets and currencies to make a difference has already proven itself to a degree.. and that is something to be excited about

i am currently trying to learn as much as i can, as quickly as i can regarding those concepts, and welcome any mature discussion as i type away my interpretations based on knowledge obtained so far. as for starting a business, i find myself plagued by the same problems as in the mainstream economy; have the skills to make things happen (software, hardware, design, architecture, development, admin etc) but they're spread out - jack of all trades (involving tech) but master of none (fairly decent at each but not as good as someone focusing in a single field) and definitely lacking business (money side) and marketing skills - i don't really mind but it does get in the way whenever i take the entrepreneurial path... except in cases where i can collaborate with people that have the opposite skill sets; business minded people who need someone with an overall, mature view of technology to coordinate it. maybe there are some here? 

I think you are almost there.

The real value in Bitcoin is not the value of the bitcoins. It is the value of the industry and business built up around it. Sure you can buy some bitcoins and sit on them and hope for the price to rise and make you a millionaire, but the real profit is in building a business that grows into something that makes you a million dollars every year.

Bitcoin is wide open. The bitcoin businesses that have sprung up weren't started by rich people with lots of money to burn. They were started by people like you and me. These people had an idea and they built something, and they are being rewarded even as the price of BTC plummets.

Take casascius, for example. He doesn't do anything special. He makes physical bitcoins and he has done very well. He's a smart guy and I have no doubt that his next project will be just as successful.

Take johnniewalker, for example. I have a lot of respect for him. He isn't the smartest guy here and he hasn't been that successful yet, but he keeps trying. Eventually, he is going to come up with something great and he will be amply rewarded for all his efforts.

It's hard to stop thinking in $ at this time. You have something other people want and it immediately switches your mindset.

But the Bitcoin did not crash. Every Change in value ends up in a correction in the opposite direction. It's still worth a lot more than 2012.

Hang onto them. This is still a new frontier and over time BTC is here to stay. You'll be glad you held your ground. Keep acquiring BTCs and don't worry about the price. You'll wake up some day and be plesantly surprised.

Mark