The devastating bit coin bubble

[weekender 0]

base698

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the entire thing seems so risky. everything about them is sketchy and speculative. I suppose if someone is a gambler and willing to risk it all, go for it. I would not put any money into them i was not willing to lose completely.

I don't understand this line of thought. Why is it all or nothing? Can't you just invest 1% in it and hold? If you'd of bought at previous highs and held for a few years your return would be astronomical. Three years ago some friends from work and I bought $300 worth when it was at $12. Over time it sunk down to $3 and I bought a few more. He sold when it went down and lost then his shit when it skyrocketed. I had kept it and offloaded it at $200.

If you think through the issues of today's money and understand the problems bitcoin solves, then it isn't that sketchy. One of the problems is how to loan $100 to a goat herder without the bank taking 50%, or how to keep bankers from over leveraging your money. It has insane practical value, but it is speculative and risky, but risk is something that can be managed.

Mining requires a huge investment now, and you'd never mine a block of bitcoins without being part of a mining pool.

Of course you can invest just 1% of your portfolio in Bitcoins, i didnt imply otherwise. My point is that, IMO, you better be prepared to lose your entire 1%. They are purely speculative, unregulated and do not trade in any recognized market. That adds a tremendous amount of risk. I called it sketchy because of its affiliation with money laundering, drugs and illegal arms deals. Those are not normally considered standard business models. I am not comfortable with that much risk but if you are, go for it. I was clear when i stated there is money to be made in them, just not for me.

As far as understanding the problems Bitcoins solves, we are going to just have to part ways on that. I am a banker. I'm perfectly fine with today's current monetary system. I prefer to make a 50% markup on all my goat herder loans. Bitcoins are an obvious threat to that. (sarcasm alert)

"The point is, I'm weird, but I never felt weird."
John Frusciante

[kelpdiver 2]

base698

I don't understand this line of thought. Why is it all or nothing? Can't you just invest 1% in it and hold? If you'd of bought at previous highs and held for a few years your return would be astronomical. Three years ago some friends from work and I bought $300 worth when it was at $12. Over time it sunk down to $3 and I bought a few more. He sold when it went down and lost then his shit when it skyrocketed. I had kept it and offloaded it at $200.

People who bought Apple @ < $10 made out like kings as well. But that was the time when it was very possible they would go out of business. MS floated them some money just to maintain an opposition so they could avoid more monopoly tags. It was a highly speculative investment.

Now it has ranged from the 700s to the upper 300s (sound familiar?), but the days of astronomical gains are over. Now you might hope to double over a number of years.

And bear in mind that Apple actually sells product and makes money. There is still no underpining to the value of bitcoins, other than scarcity, and to a decreasing degree, illiquidity.

[base698 1]

I'm fine with today's monetary system too. I see bitcoin as a compliment not a replacement to our monetary system. I look at it as a growing opportunity for the third world who don't have enough capital for the 1st world to care to solve their problems.

[base698 1]

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And bear in mind that Apple actually sells product and makes money. There is still no underpining to the value of bitcoins, other than scarcity, and to a decreasing degree, illiquidity.

I don't know what this has to do with the discussion. It's a currency, so it has no underpinning of value like the US dollar. The volume I've messed with it over the past 4 years has never resulted in a problem of transferring it into another currency.

[kelpdiver 2]

base698

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And bear in mind that Apple actually sells product and makes money. There is still no underpining to the value of bitcoins, other than scarcity, and to a decreasing degree, illiquidity.

I don't know what this has to do with the discussion. It's a currency, so it has no underpinning of value like the US dollar. The volume I've messed with it over the past 4 years has never resulted in a problem of transferring it into another currency.

the dollar, like most currencies, had a historic past based on gold reserves, and past that, historical patterns. There is inflation, but it's typically measured in the 2-4% range. You can get a nice car for 20-25k. You can get a DVD/Bluray for $20. Dinner entrees at a cheap diner are 8-12$, at a fine dining place might be in the upper 20s. There is of course variation, but these are acceptable ballpark figures. Prices are effectively set by how much money people have - iow, their salaries. Charge too much, they don't buy. This controls the movement.

Bitcoins have no such controls. When you see it go up 400% in a few weeks, you know it has nothing to do with valuation. Or earlier in the year when it rocketed up, and then lost more than 50%. Illiquidity doesn't mean you can't trade it. It means that the price gyrates. You see this with the less popular ETF brands, as well as with penny stocks. If you buy an ETF from iShares or Vanguard, its price tracks very closely to NAV, and the bid spreads are usually only a penny. If you deal with a thinly traded vehicle, it can stray very far from NAV and the spread can be substantial, greatly outweighing the direct trading costs.

[weekender 0]

base698

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And bear in mind that Apple actually sells product and makes money. There is still no underpining to the value of bitcoins, other than scarcity, and to a decreasing degree, illiquidity.

I don't know what this has to do with the discussion. It's a currency, so it has no underpinning of value like the US dollar. The volume I've messed with it over the past 4 years has never resulted in a problem of transferring it into another currency.

it is very illiquid by financial standards. You are trading in odd lots( small quantities) when you make a personal trade. im one little trader at one little bank and transact billions in a day. compound that by all the traders in the world and you get a sense of how little Bitcoins are trading in comparison. it has a long way to go before it is not considered illiquid.

"The point is, I'm weird, but I never felt weird."
John Frusciante

[base698 1]

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the dollar, like most currencies, had a historic past based on gold reserves, and past that, historical patterns. There is inflation, but it's typically measured in the 2-4% range. You can get a nice car for 20-25k. You can get a DVD/Bluray for $20. Dinner entrees at a cheap diner are 8-12$, at a fine dining place might be in the upper 20s. There is of course variation, but these are acceptable ballpark figures. Prices are effectively set by how much money people have - iow, their salaries. Charge too much, they don't buy. This controls the movement.

But they aren't anymore, which is kind of why it isn't as big of a stretch as it would of been if people still used shiny rocks for money. Given shiny rocks are limited it's harder to start trillion dollar wars or use them to finance billion dollar business deals and real estate deals.

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Bitcoins have no such controls. When you see it go up 400% in a few weeks, you know it has nothing to do with valuation. Or earlier in the year when it rocketed up, and then lost more than 50%.

I know, it's like a libertarian wet dream. Completely unregulated free market. You can easily see the importance of some of the controls we have in the current monetary system as well as supply and demand in real time. Quite fascinating to me, and that's not even going into the technical side which is even more fascinating.

[quade 3]

Meanwhile...this just in.

http://www.businessinsider.com/bitcoin-540-2013-11

This is why I don't do bitcoins. I'm sure somebody somewhere is making a fortune, but I can stand the idea of going to sleep one night and waking up the next day with my savings/investments being worth half.

quade -
The World's Most Boring Skydiver

[kelpdiver 2]

quade

Meanwhile...this just in.

http://www.businessinsider.com/bitcoin-540-2013-11

This is why I don't do bitcoins. I'm sure somebody somewhere is making a fortune, but I can stand the idea of going to sleep one night and waking up the next day with my savings/investments being worth half.

http://bitcoincharts.com/markets/

Or here, look at the difference in price between MtGox and BitStamp and BTCE, the 3 largest dollar based markets. In a mature market, someone would swoop in and buy from the cheaper and sell to the more expensive until the difference disappeared.

[labrys 0]

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This is why I don't do bitcoins. I'm sure somebody somewhere is making a fortune, but I can stand the idea of going to sleep one night and waking up the next day with my savings/investments being worth half.

I had a couple thousand of them when they were cheaper than a dime. I ditched them a few months later because it seemed like a bad idea. I don't kick myself, but it hurts a little regardless.

Owned by Remi #?

[Chelseaflies 0]

Bitcoins is definitely a gamble. As others have said, it's nerve wrecking to know you may wake up one day and your money is worth half it used to be. But I put $900 into buying a bunch about a month ago and that $900 is now worth more than $3000 if I pulled them out.

That's a lot of jump tickets for me.

[weekender 0]

Chelseaflies

Bitcoins is definitely a gamble. As others have said, it's nerve wrecking to know you may wake up one day and your money is worth half it used to be. But I put $900 into buying a bunch about a month ago and that $900 is now worth more than $3000 if I pulled them out.

That's a lot of jump tickets for me.

Ok the trader in me has to say something. you know they are volatile and speculative. you are up good money on them. how about you take some off the table?? if they were not so volatile, id suggest 25% but since they are how about the original investment? or just a bit more with a profit, say 1000. then the rest is play money and you dont have to worry about a loss and still have upside.

if you worked for me, i would force you to sell some or consider firing you for not knowing to sell some. either way, you would end of selling some.

did i mention you really should sell some?

"The point is, I'm weird, but I never felt weird."
John Frusciante

[base698 1]

I reduced my holdings to 10% of what they were before this run up. I've done this 3 times now, seems like a good strategy.

[weekender 0]

"13:24JPM Filed a patent on a crypto-currency system that resembles Bitcoin - tech blogs- Back on Thanksgiving day, the United States Patent and Trademark Office published JPMorgan Chases"

this shows that JPM, the biggest of the bulge bracket banks, sees revenue in the cryto currency model. that legitimizes the theory behind Bitcoin. there is no way GSCO is not doing the same, they are way to smart to be outdone by JPM. so this could actually be bad for the hippies who like Bitcoin. if JPM and GSCO decide they want to play they are going to smoke the free love guys.

for the record, i know nothing about Bitcoins other than what i read on google news. so my opinion is really not worth much on this topic. even though i am quite an amazing securities trader. possibly the best i know. this is not my thing.

"The point is, I'm weird, but I never felt weird."
John Frusciante

[kelpdiver 2]

weekender

this shows that JPM, the biggest of the bulge bracket banks, sees revenue in the cryto currency model. that legitimizes the theory behind Bitcoin. there is no way GSCO is not doing the same, they are way to smart to be outdone by JPM. so this could actually be bad for the hippies who like Bitcoin. if JPM and GSCO decide they want to play they are going to smoke the free love guys.

if their intent is to create another bitcoin, I don't see them succeeding. Why would hippies (crude catch all phrase for those who distrust government and financial institutions) use this one instead? Who exactly would be the customer? Those who trust them are content to use dollars.

But when I look at the exchanges and see wide variations in price (5-10% just for the USD exchanges), I'm shocked that someone already hasn't been trying to profit. The liquidity seems sufficient. And here is a place where GSCO should be able to clean up. A more stable bitcoin would also increase its acceptance, I believe.

[cryptocoin 0]

There are heaps of different crypto currencies. One does not need to invest a great deal to get into this.

You just watch the values and the market cap of each coin and trade between them on the likes of cryptsy or BTC-e and make your money that way.

You can also lose you money that way, just like the share market.

Wall St. is about to get into crypto currency in a big way in the coming months and my advice is to get some of a reputable coin and sit on it.

BTC, LTC, QRK and MEC are my picks...

I trade between the other shitcoins to make money, you can double an investment in a matter of hours if you now how to watch it...

coinmarketcap.com is a good place to start watching...

Once you get familiar with the math... then cryptsy.com is a good trading site that is easy to use. They have had some server issues lately with a massive influx of new accounts and trades being made but that should be relatively short term. India and China are warming up very quickly to crypto as well...

I like some of the comments earlier in this thread. The typical know it all's should have chucked a hundred bucks in, instead of hating...

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Click here for an example of the idiocy. In the last minute, bitcoins have sold for prices between 69 and 102$. Which pretty much says you bitcoin traders are fucking idiots, along with a couple guys stealing your fortunes doing arbitrage.

Yep, now between $850 and $900 after it crashed from $1250 the other day.

Prices are very volatile for sure, but one bitcon was worth more than an ounce of gold a couple of weeks back... and lots of people making money off them, some losing for sure, but you tell me a marketplace where this does not happen and where such money can be made in such a short period of time.

One coin in my portfolio has increased over 100x in the past 2 months. I have taken my investment out... the rest is free money, really idiotic .

I am willing to bet that one bitcoin will surpass an ounce of gold and leave it for dust in the coming year...

This is a nice website to watch Mt.Gox with...

http://bitcoinwisdom.com/markets/mtgox/btcusd

Lets see what a click of this tells us at Christmas 2014, shall we.

Currently - Bitcoin
$ 10,521,251,108
$ 867.58 12,127,125 BTC -0.77 %

[weekender 0]

kelpdiver

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this shows that JPM, the biggest of the bulge bracket banks, sees revenue in the cryto currency model. that legitimizes the theory behind Bitcoin. there is no way GSCO is not doing the same, they are way to smart to be outdone by JPM. so this could actually be bad for the hippies who like Bitcoin. if JPM and GSCO decide they want to play they are going to smoke the free love guys.

if their intent is to create another bitcoin, I don't see them succeeding. Why would hippies (crude catch all phrase for those who distrust government and financial institutions) use this one instead? Who exactly would be the customer? Those who trust them are content to use dollars.

But when I look at the exchanges and see wide variations in price (5-10% just for the USD exchanges), I'm shocked that someone already hasn't been trying to profit. The liquidity seems sufficient. And here is a place where GSCO should be able to clean up. A more stable bitcoin would also increase its acceptance, I believe.

i know no one who is involved with these things outside of their personal account. i know nothing of them other than what ive read here and on the internet. so i dont have an intelligent response as to why anyone would use them or why they are developing them. anything i said would be speculative and based on nothing. i prefer to not sound too ignorant. i am confident there are people smarter than me who do know and eventually i will meet one and then have something to add here.

i can speak as to the banks and why they are not widely involved in trading. its just too small. when banks already have well established trading desks that bring in billions and billions of revenue. who cares about tens of millions. it really doesnt move the needle. also, they are very illiquid by an institutional trading desks standard. i need to be able to move several 100 thousand of them in one block for them not to be considered illiquid. they do not have anywhere near that kind of volume. we consider thousands of shares to be oddlots.

"The point is, I'm weird, but I never felt weird."
John Frusciante

[kelpdiver 2]

weekender

i can speak as to the banks and why they are not widely involved in trading. its just too small. when banks already have well established trading desks that bring in billions and billions of revenue. who cares about tens of millions. it really doesnt move the needle. also, they are very illiquid by an institutional trading desks standard. i need to be able to move several 100 thousand of them in one block for them not to be considered illiquid. they do not have anywhere near that kind of volume. we consider thousands of shares to be oddlots.

If there's enough action for JPM to consider creating a new vehicle, then that suggests there's enough action in bitcoin now. If it stays in the 1000$ range rather than the hundred dollar range, with these same wide spreads, then that's decent money. Are they really above making $10M? Something(s) have to fill in for the lost mortgage game.

[base698 1]

One thing that's gotten lost in the speculative talk is its utility. Buying online is much less of a risk with bitcoin. As a merchant you don't have to worry about charge backs. As a consumer you don't have to enter a long form proving you are the card owner, since it operates more like cash. Consumers also don't have to worry about the merchants leaking their card information.

There is also multiparty payment useful for contracts. You can make it so two of three parties have to agree for the transaction to go through. Useful for arbitration in absence of a notary.

[cryptocoin 0]

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One thing that's gotten lost in the speculative talk is its utility. Buying online is much less of a risk with bitcoin. As a merchant you don't have to worry about charge backs. As a consumer you don't have to enter a long form proving you are the card owner, since it operates more like cash. Consumers also don't have to worry about the merchants leaking their card information.

Bingo. No matter how much bad talk there is on bitcoin and other cryptos by the mainstream, there will never be scam artists in the classifieds asking to by your rig with 3x as many bitcoins as you are asking for. Then asking you to send the remainder back afterwards...

Cashiers cheques, credit cards and pay-pal on the other hand...

The scam artists that are far too common these days are utilising the weaknesses in the current financial markets along with human gullibility.

Bitcoin transactions eliminate many of these weak loopholes.

[normiss 622]

When the world gooberments figure out how to get their cut, bitcoin will be mainstream.

My friend that purchased the Tesla with bitcoins STILL has attorneys and tax accountants trying to figure out how to process a purchase that has already been completed.

He paid no taxes nor fees, just a bitcoin transfer.

[ryoder 1,384]

Now you too, can mine bitcoins in your browser!

http://qz.com/154877/by-reading-this-page-you-are-mining-bitcoins/

I can't say it is really doing what it claims, but it does bump up the CPU activity.

"There are only three things of value: younger women, faster airplanes, and bigger crocodiles" - Arthur Jones.

[weekender 0]

kelpdiver

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i can speak as to the banks and why they are not widely involved in trading. its just too small. when banks already have well established trading desks that bring in billions and billions of revenue. who cares about tens of millions. it really doesnt move the needle. also, they are very illiquid by an institutional trading desks standard. i need to be able to move several 100 thousand of them in one block for them not to be considered illiquid. they do not have anywhere near that kind of volume. we consider thousands of shares to be oddlots.

If there's enough action for JPM to consider creating a new vehicle, then that suggests there's enough action in bitcoin now. If it stays in the 1000$ range rather than the hundred dollar range, with these same wide spreads, then that's decent money. Are they really above making $10M? Something(s) have to fill in for the lost mortgage game.

yes, they are really above worry about 10mill. with that said, i dont know why they are creating the currency. perhaps they want to create their own market, similar to what they did with the carbon credits until the market vanished. if you create a market you make money on every trade risk free. i have no idea and can only guess what their motives are though. I'll ask around and see what i can find. should be interesting.

as far as making money trading, i can speak intelligently. or so i hope, hah. they cannot prop trade anymore. so chopping for the spread, as you suggest, is off the table. its been against company policy since right after 2008 and is not not permitted under the Volcker rule. since they are so volatile and illiquid, i doubt there would be an interest in market making. not enough of them trading to make it worth their while and would end up a huge distraction from more profitable trades.

again, its still tiny by institutional standards. they cannot put together a large block of 100k or so. your dealing in odd lots by block trader standards. there are traders at JPM that gross 150mill a year and trade 20mill shares a day. they do not have time or interest to be involved with trading a few hundred bitcoins. 10mill is small change on their desk and i doubt it could be done anyway. too illiquid and too few of them trading.

Market making needs more than volatility. you need the ability to build a book to hedge against the swings. the bitcoin market is too small and fractured for that. and again, we cannot prop trade anymore. so banks trading them are pretty much out for now.

"The point is, I'm weird, but I never felt weird."
John Frusciante

[base698 1]

I think at current difficulty it would take hundreds of years to mine a block. You'd be better off buying lottery tickets :)

[cryptocoin 0]

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how many bitcoins for a six pack of good beer??

https://twitter.com/Heineken/status/412582896038580224/photo/1

There are a bunch of bars that already accept bitcoin but heineken look like they will sell you a sixpack for BTC soon enough by the looks...