Topic: shit, shit, shit - page 2. (Read 8159 times)

Gold standard for the USD was implemented in 1900.  Before that there was a bimetallic backing for the dollar.  This might sound silly but I'd like to think of this as the various currencies you can cash out for with Bitcoin.  As gold and silver prices fluctuated the ratio was always different for how much silver or how much gold you could get.  Once they fixed the standard amount of gold a dollar was worth it remained stable (of course, until 1913, when they ran out of gold to back it and it again entered bitcoin-like instability)

If, for example, Mt. Gox promised you could get $6USD for every bitcoin and (no other currency, no arbitrage possible) it would certainly fix the problem of these huge up and downswings.  Of course they would have no reason to do this because they make money on volatility as does almost everyone in the market.  Bitcoin does not have stability in mind - unlike the US government did when creating the dollar.  This is one of the problems with having an international currency with no banks or government to protect it.  Sure, there are benefits, but there are also many flaws and there is a reason why most currencies are and will always be safer than bitcoin. They will never be as fun, or as profitable to trade, though.

Sold !!??

You say: "Either you lose a couple $100, or you get potentially humungous returns."

What a shame.  How can I sell the concept of Bitcoins to my friends when I honestly tell them
they could lose their USD value overnight?

It either needs to be traded on such a large scale the trading price is smoothed out, or a huge
adopter (facebook, amazon, google) implements it.


Edit:  I had been day-trading in Bitcoins like most everyone else. Now working on looking for
longer trends and actually investing in it. Need to appreciate the long traders a little more,
who are inBTC for the longer haul.

At what time (before 1913) was the USD not tied to gold?  I'm a little fuzzy on the pre-fed history of the dollar.

I agree.  However, this is sort of a Catch-22 because people will not keep their money in Bitcoins unless they know it's stable.

There was a time when USD wasn't stable at all until they tied it to gold.  Once it gained stability, everyone started using it (other countries tying their currency to the dollar) they were able to keep it stable without anything backing it.  Even with inflation as it is USD is still a reliable currency.

Exactly.

Revolutionary currency/technology meets immature trading exchange.

Not until people grow a pair and accept losses.  As it is now, everyone panics and runs in one direction when there is a strong move.

Probably never. It's simply not in the nature of BTC to have a "stable" price.
 
Will the volatility and swings decrease in the future?

Sure, but the price will never be "stable" like the USD is to the Euro and so on...

Those currencies are only "stable", because they are kept that way artificially..

That's nice analogy in theory, except Bitcoin is not traded like a publicly-owned company.

When you invest in shares of Western Union, you are doing so in a proven, viable business that is
financially regulated, and accountable to shareholders.

When you "invest" in Bitcoins you are entering a world of unregulated if not somewhat nefarious
manipulators, out-of-control margin "gamblers', and over-exuberant traders who are speculating
Bitcoin out of existence with parabolic rallies, pump-n-dump crashes, and Bitcoinica starfish nonsense.

Probably the most important factor in the adoption of Bitcoins: a stable trading price. And when
is that going to happen?

+1

The market cap is indeed one of the best fundamental indicators you can possible use when it comes to Bitcoin. It gives a solid idea of what Bitcoin could be worth now and what it could possibly be worth in the future. My thinking in regard to investing in Bitcoin takes this into account very strongly.

If you trade short or mid term then this indicator is not much use because it's hard to say at what level we are right now and how much of the expected future value is already priced in etc. But for a long term player like me this is very useful. There is indeed a realistic chance that Bitcoin could eventually challenge at least Western Union, I believe Bitcoin could go even bigger than that but that's just extra. This potential alone gives me reason to be bullish at these prices, from a long term perspective.

Bitcoin at three digits might still take a while but Bitcoin at single digits is something that we will say good bye for good sooner or later, most likely sooner. If Bitcoin doesn't totally fail for some reason, I have a very hard time believing that it could be at single digits in 2013, not for one day. In fact 2013 could be the first year we have a go at three digits.

I remember telling people that .mp3s were the next big thing in 1993. I also remember saying that Apple was a screaming buy at $4.  Sometimes it takes a while for the market to properly value something...

In my opinion, the best way to value Bitcoin is to think of it as a publicly owned company.  Right now, there are roughtly 8 million bitcoins in existance, with a $5 value.  That's about a 40 million dollar market cap.  You could even go a step further and say that investors have already priced in the roughly 20 million bitcoins that will be in existance.  That would be an estimated 100 million dollar market cap.  Is the Bitcoin idea/network/economy worth 100 million dollars?  In my opinion, it is will be worth far more.

The closest publicly traded company that offers the service that Bitcoin offers is Western Union.  Western Union charges higher fees, isn't anonymous, can't be be claimed from the privacy of your own home, isn't supported by an enormous public network and can't be used as a tax shelter.  Even with all of those shortcomings to Bitcoin, Western Union has a market cap of nearly 12 billion dollars.  If Bitcoin were to be widely accepted 10 years from now, it wouldn't be insane to assume that it would match Western Union's market cap.  For the sake of argument, lets say that Bitcoin did reach the adoption of Western Union.  If Bitcoin were worth 10 billion, that would be $500/BTC...

My fundamental analysis from last summer was way off.  I would not have believed it could have gotten down to $2.00 absent a system failure, and not even close.  For this reason, my confidence in my own ability to estimate the lows that can be plumbed remains weak.  So, I'm ready for anything...including that my fundamental analysis could be low on the upside as well.

Fortunatly I always considered Bitcoin to be a long-shot with a high probability of total loss and a outside possibility for enormous gain (years down the road, and not limited to monetary gain) thus any money I put in I considered disposable.  That remains the case, and it was thus not difficult for me to hold everything I have ever had (except for a tiny bit of hour-by-hour exploitation of Tradehill artifacts.)  I also had no inclination to cash out when I could have done so at a profit (which is not the case at this moment.)

I agree that fundamentals don't matter to short term prices. That's why I rarely do anything short term. As far as seeing the fundamentals last time, I did eventually. Later than many others but not as late as some of us.

Still it's important to understand that long term players who never sold during the big crash are still fine. They will always be fine as long as there is at least a glimmer of hope in Bitcoin's future. I see a lot more than a glimmer so I'm not worried at all.

Fundamentals don't matter to short term prices.  Also, you didn't see the fundamentals last time either for a big crash

I did quite well too and I'm still doing well. I made a lot of BTC going down because I eventually gave in and now I'm long from $2.3. Traditionally long of course, haven't used Bitcoinica and I never will. I did buy some more at $5.x going up but that was with less money, my average entry point is still very good at these prices.

The reason I'm doing nothing is not that I don't think that the price can't go down from where it currently is, I just don't see the fundamentals for a bigger crash. If we go below $4 I might start to think differently but we'll see about that then. I give that kind of a drop a low probability and I don't want to take the stress of selling now and then having to look at the charts all the time and think about the point of re-entry.

One of my favorite indicators which is the network transaction count, has been very healthy in the past weeks. Hasn't dropped very low for a single day and is showing an uptrend. That's in part due to the fact that panicking people are depositing coins to exchanges but still, I see no sign of a fundamental decline. I think of this as a correction in an overly aggressive uptrend. The uptrend will continue once the correction is over so I don't really have anything to worry about.

Right now I simply think that I have less stress from looking at a weaker long position at a possible $4.x than I would have if I sold and had to look for a re-entry point. If I had more money invested in Bitcoin my view could be different but I honestly haven't invested anything I can't afford to lose.

SHHH, you’re screwing up my contrarian indicators!

I did quite well in the last half a year  doing the opposite to what you were advising: selling when you were so enthusiastic and then buying when you started posting more balanced notes.

Not selling a single BTC. Buying more if it drops really low. Nothing has fundamentally changed to not be bullish about Bitcoin long term, there have been some confidence breakers recently but nothing compared to what we had after the big bubble. I will ride this one out and see you on the other side. That could be in 3 months, 6 months or 12 months. Doesn't matter.

Well... I just have about 30 bitcoins left... the rest I sold @ 5.75... hoping for this to go lower so I can rebuy cheap... I made a $500 profit with what I sold... so, not bad.