Feeds

back to article Bitcoin briefly soars to record $147 high, driven by Cyprus bank flap

Virtual currency Bitcoin soared to a record high of nearly $147 yesterday as Euro-spurred interest continued to boost its exchange rate. The e-cash fell back later in the day to $117, but the value of all Bitcoins in circulation is still well on its way to $1.4bn. The online dosh has rocketed from just $10 last November as the …

COMMENTS

This topic is closed for new posts.

Page:

Silver badge
Holmes

For those with interest in the "dismal science", there is an article of some interest about bitcoin:

The Money-ness of Bitcoins

written by:

Nikolay Gertchev is an economist with the European Commission, Brussels, Belgium. The views expressed in this article are strictly personal and do not engage the responsibility of the European Commission.

In particular, we read:

In conclusion, virtual monies, of which bitcoins seem to be the most perfected specimen up to date, do not allow acting individuals to manage the uncertainty of the future as well as material monies do. They could serve to intermediate exchanges among those who invest in the technology that creates them, stores them, and transfers them. Nevertheless, they could never achieve that degree of universality and flexibility that material monies carry with them by nature. Thus, on the free market, commodity monies, and presumably gold and silver, still have a great comparative advantage.

2
0
Bronze badge
Boffin

Good article, and right on the nose. I think something like bitcoins would be excellent as a short-term medium for anonymous cash transactions over the internet (like dropping a small donation to your favorite webcartoonist if they made you laugh today), but without the backing of a large body to back it up with something real, it's NOT a place to sock away your savings.

I want to slap past-me for not buying a some coins when they were 50 cents each, but mostly that valuation doesn't do you any good. If there was any significant move to cash in the coins, it would plummet to nothing almost immediately, considering how thin the trading market really is.

So, it's great if you're out there buying ... whatever you can buy directly with bitcoins (time on a botnet, "gas station weed", and spamware?), but being a "bitcoin millionaire" don't mean jack.

0
0
Silver badge

>Cannot manage the uncertainty of the future as well as material monies

So I have a suitcase full of Reichmarks - can I buy a BMW with them?

>on the free market, commodity monies, and presumably gold and silver

Assuming there is a free market and not a government that suddenly takes 10% of your commodity monies or requires you to report your gold holdings

0
0
Boffin

Without the backing of a large body to back it up with something real?

All major banking systems that exist today are backed with sometign "real", however the value of that "real" is a serious problem, cash:loan ratios are rarely (if ever) 1:1, as we see in "it's a wonderful life" even a morally sound credit union or housing initiative will have non liquid assets.

Bitcoin vs "Real Money" is not an either/or, the "value" of Bitcoin is quoted in "Real Money", because "Real Money" gets watered down as new cash is produced the relative value goes up, and *key difference* Bitcoin will approach saturation with little or no new Bitcoin being produced, which means that it only has value when being exchanged, with no interest, no inflation, no new Bitcoin the traditional monitary model breaks.

Put another way, banks are often thought to reserve cash as gold, but how does that work when more gold is discovered? the value *must* go down, it has value because it's slow to discover, but suddenly if everybody had a ton of it in their back garden it would be as valuable as mud (i.e. it's manufacturing scrap value, witha lot of scrap around, not it's rarity value) as an aside this is why mining asteroids will not make everybody billionaires (if we were all billionaires, we'd all be just as poor).

So, when you say "it's NOT a place to sock away your savings" there is *some* truth, but it's a rather out of date truth, and I suspect as we have already put faith in banks with their pretense of "being backed" we have already moved into a virtually backed currency (this is of course the reason for the global banking crisis), but at least with Bitcoin we have a cap on it's ability to be devalued (in theory!).

2
1
Anonymous Coward

Re: Without the backing of a large body to back it up with something real?

"banks are often thought to reserve cash as gold"

What are you on about? Are you AMFM in disguise? There's some sense in there, but...

There's this concept called "fractional reserve banking". Readers should look it up if they're not familiar with it.

Readers should then also look around at how many banks have been "stress tested" since 2008, how many of them were said to be perfectly fine, and how many of them are now being forced to be "re-capitalised" (quantitative easing etc) because their reserves aren't strong enough. All at the expense of Joe Public.

1
1

Don't buy any then.

0
0
Anonymous Coward

Written before or after Cyprus?

Did he write that stuff before or after events in Cyprus proved that "material money" isn't necessarily worth as much as we'd all been led to believe it was worth, especially for those lucky enough to have lots of it in any given bank account?

Yesterday, Cyprus.

Who next? Portugal? Italy? Spain? Or even Germany (they'd be coming at it from a different angle though).

Big sock under the bed. Or in my case, a little one.

You know it makes sense.

0
0
Bronze badge

Ok I gather you can, or could buy into this Bitcoin thing. But, how many hoops does One need to jump though in order to re-convert those Bitcoins into something more universal like €uros, Dollars, or Pounds?

Seems to me that only One getting fat off this is the cat the came up with this scheme.

0
1
Pint

Don't worry, lots of folks got in when its cheap, and are now cheerleading like crazy.

BUBBLE.

2
0

One simply sells them to a fool. Finding that fool ought to be depressingly easy.

4
0
Bronze badge

From what I've been hearing People are using this format to bypass paying Taxes, and protecting themselves from having there savings seized. We could argue over the morality of the First, the the Latter seems to be (On the face of it), a good idea. But for Bitcoin to "work" it has to be transferable into a "Hard Currency", and I fail to see how this doesn't transfer into a got'cha for the above. As your likely to need to transfer it to an Account somewhere.

Until I can walk into a Tescos, Asda, Lidl or Aldis and pick-up some Milk and a Head of Lettuce with my Bitcoins, its completely worthless to me as a Currency.

2
1
Silver badge

Bitcoin is a crowd sourced ponzi. The price is only going up because people are buying into the scheme allowing early adopters to exit with profits. As soon as sellers outstrip buyers it will collapse again just like it did the first time around.

6
0
Big Brother

Trading BitCoins

An idiots guide to buying and selling BitCoin:

It's actually really easy.

It's just not as easy as it would be if PayPal / credit cards were generally accepted.

The reason most such things aren't accepted is down to whether they trust you to buy a currency with a currency, issues around chargebacks vs. guarantees they have the funds, and so on.

The simplest way to buy and sell is via an exchange such as Mt.Gox (mtgox.com). This one, for instance, handles 80% of all BitCoin trades.

You can fund your account via a number of other virtual wallet accounts that make you want to self harm by the time you've got money into them. Or, much simpler, you can make a wire transfer from your bank account. I've transferred money in from my normal online banking to their account details in Japan before going to bed one night, and had it credited to my account and fully ready to spend by the time I've woken up.

You then just treat it as equities trading: there are buy and sell prices, and you put a bid and a quantity in.

So, if you wanted to just buy a few on the off-chance they end up being worth trillions, you can.

Caveat: if the exchange you're holding them in gets hacked, they could "disappear". So, the idea is that you keep them somewhere trust-worthy. How you can keep a set of numbers safe is an interesting one! (Printed out, in a safety deposit box??) You can "download" them to your computer (sorry - explanation of how to do this without the footprint still being at the exchange is too tedious to go into) - IF you trust yourself to manage them better.

Now, it gets more interesting: Different exchanges have different buy/sell rates, so there's some real arbitrage fun to be had buying on one and selling on another. And once your currency is in BitCoin, moving it between the exchanges is VERY easy - not like the initial wire transfer

As for selling them - Wire transfer back out.

One other option is "physical" purchases of them. You can trade duo-tone pictures of the Queen's head (or dead-pres's) for them with quite a few people. And there are sites for that, too. E.g: https://localbitcoins.com/location/GB/London/

Other ways of getting them: mine some. Although, that's getting to be a much more commercialised operation than ever before, so unless you have a server farm going spare, or a half dozen top end GPU-laden graphics cards to throw at it, not such a great idea. (For any large-scal sysadmins out there, having a screen-saver that coin-mines could reap large rewards).

And there are sites that'll give away tiny fractions of BTC for clicking links and the like if you just want to have some kind of [tiny] holding of them on the off-chance they become rarer than common sense in a currency bubble.

If you get into mining them, buying and selling for cash on the street, or link-clicking, you'll need a wallet to hold them in: http://bitcoin.org/en/choose-your-wallet

If you're just trading them on Mt.Gox, that's not necessary.

2
0
Anonymous Coward

What you're describing is not a ponzi scheme, it's simply supply and demand in action.

So the majority of bitcoins are held by a minority of the population? Sounds just like every other currency to me.

0
0
Anonymous Coward

Can you walk into a Tescos, Asda, Lidl or Aldis and pick-up some Milk and a Head of Lettuce with a Gold bar or a Picasso?

0
0
Gold badge
Happy

Can you walk into a Tescos, Asda, Lidl or Aldis and pick-up some Milk and a Head of Lettuce with a Gold bar or a Picasso?

Easily. Walk up to me in a supermarket armed with a gold bar, and I'll buy the lettuce for you, and take the gold bar. On the very high chance that it's just shiny-painted lead, it'll make a good doorstop and a great story. And lettuce is cheap. I'd do the same for any convincing copy of a Picasso too.

0
0
Silver badge

I just did it (sold some) for the first time a couple of days ago. It really wasn't too bad, I gave the exchange (I used BitFloor) my bank account number and a scan of an ID and within a couple days they set it up so I could send money directly to my bank. I sold ~2 BTC for ~200 USD, the same price I bought around 30 for originally. So I'm quite happy. I still wouldn't recommend it to anyone who couldn't afford to lose their money though. I just look at it as a fun experiment.

0
0

"Can you walk into a Tescos, Asda, Lidl or Aldis and pick-up some Milk and a Head of Lettuce with a Gold bar or a Picasso?"

No but you can be confident the gold bar and Picasso will be worth something in 5 years time.

2
0

Clearly you have a non biased opinion. When that happens, buy. Folks, this is a game changer. So I own a few, and as of late, I've got to ask myself - would I rather own BTC or GBP......? And strangely, the answer I come up with is BTC. Unregulated and decentralized, backed by only maths and technology, I trust bitcoin more than my bank or the UK government. Stick that in your manifesto.

0
1

non brain melting version

uh, still didn't understand it I'm afraid, but no matter

2
0
Thumb Up

mostly harmless

I don't tend to view Bitcoin as a future reserve currency, but rather one that could facilitate a lot of online payments and removes all the problems with fluctuating foreign currencies, sort of like the Euro, but without the bureaucracy. I would certainly rather pay for stuff with Bitcoin than Paypal, but unfortunately all this ridiculous speculation could kill it before it reaches the critical mass adoption it needs. For the record I have never bought anything illegal with Bitcoin, unless vpns are declared illegal.

1
0
Anonymous Coward

Re: mostly harmless

problems with fluctuating foreign currencies

as opposed BitCoin whose value appears to have "fluctuated" by 20% in one day!

1
0

Re: mostly harmless

Like I said 'ridiculous speculation' driven by fear of missing the boat. It is a bubble, but that does not make it worthless.

0
0
Silver badge

Bitcoin offers criminals an untraceable way to launder their ill-gotten gains

Unlike the HSBC. Who were able to completely trace everyone that had laundered money through their bank.

3
0
Anonymous Coward

Re: Bitcoin offers criminals an untraceable way to launder their ill-gotten gains

Even though they did, was anything actually done about it? After all, it was 'only' £15 Trillion.

1
0
Silver badge

Re: Bitcoin offers criminals an untraceable way to launder their ill-gotten gains

Or various cypriot banks, with money belonging to nice russian gentlemen.

2
0
Bronze badge
Mushroom

Gee...WHAT a surprise!

Imagine that...someone(s) hacked Bitcoin...an online, imaginary, virtual currency. Now why would anyone want to do that? Comes as a total shock....OK...so maybe not.

Just like all the rest of this "social media" crap...if you are stupid enough to use it...then shut the F up, and deal with the consequences, when it all turns to sh*t before your eyes.

1
2
Anonymous Coward

Re: Gee...WHAT a surprise!

Who has hacked bitcoin? What are you going on about - do you even know what bitcoin is?

And this has anything to do with social media how, exactly?

0
0
Bronze badge
FAIL

Re: @AC...13:51...Gee...WHAT a surprise!

Right here Ace.

http://news.cnet.com/8301-1023_3-57577853-93/surging-bitcoin-plunges-$30-after-exchange-outage-hack/?Media

0
2
Silver badge

Re: @AC...13:51...Gee...WHAT a surprise!

No - somebody hacked an exchange.

If somebody hacked a bank that doesn't mean they have hacked the Dollar/Euro/Pound

2
0
Silver badge

Bitcoin

The trouble is, as someone who wanted to just "put £20" into Bitcoin to see what happens in the next year or so, it's so dubious and tricky as to be almost impossible.

You *won't* mine your own bitcoin in a number of years with all the kit in the world unless your invest thousands just to do so and have electricity bills far in excess of the monetary value you want to put into BitCoin now.

You can arrange shady deals with anonymous people who'll take PayPal or cash and hand you some BitCoin in return. Sounds about as reliable as giving John down the pub a tenner for a car stereo.

You can go through numerous websites, all of whom want wire transfers, bank details (i.e. sort codes, ID-confirmation, etc.) or methods of payment that you've never heard of (and most of which require just the same details) to get any Bitcoin. There's no simple way to pay by credit or debit card whatsoever (and some convoluted methods include passing the cash through things like Second Life and all sorts). And they are all run by people who make their living holding other's BitCoin-wallets (which is just prime target for hacking, and several have been compromised in the past and everyone's money stolen).

I get the idea of an anonymised payment system. I love the mathematics and computer science behind it. But the fact is that there's just no sensible way to actually GET some of those magical Bitcoins, even in amounts that are pitiful and sacrificial, without chancing your arm with shady people asking for more bank details than necessary in advance. And the anonymity of the currency itself just means that you'll have basically zero comeback if you never get paid your BitCoin.

6
0

Re: Bitcoin

@Lee D I'm with you on most of the in/out transactions around it being mighty shady. But wire transfers in and out of Mt.Gox really are as simple as filling in half a dozen fields in your online banking Make a Payment page, and they really do turn up there, let you buy coins, let you sell, and cash-out simply, without horrific charges.

I was pretty nervous doing it the first time; are thousands of pounds going to vanish never to be seen again?? ...but they've always been absolutely fine*. They take 0.6% on transactions. I think that's pretty reasonable compared to PayPal/Western Union/etc.

*Until the first time it goes wrong, of course. As yesterday's hacking attempt showed, that can massively affect the currency's valuation, especially when 4 out of every 5 trades are done through that exchange. It's just down to your "risk appetite of that exchange" x "risk appetite of the currency"

2
0
Gold badge

Re: Bitcoin

Wasn't MtGox hacked last year though? Or was it the year before? Hopefully it's more secure now, but I doubt they've got the resources to be all that well locked down.

0
0
Silver badge
Boffin

Re: Bitcoin

I'm actually wondering if the effort of minting BitCoins is still far over the economical benefit of having those 25 BTCs given. At current trading rates, 25 BTC cashes in around $3450 USD. That's got to be enough to pay for a high-end CUDA-toting PC *and* the leccy bill. Maybe even two of 'em. Of course, this only holds if the price point holds...

0
0
Silver badge
Mushroom

NO

Bitcoins aren't government-backed and don't have a central bank, leading some investors to treat it as a kind of online version of gold or silver - a safe haven for their cash.

...

Creating a limit on the total quantity of Bitcoins puts it into the same monetary league as gold, with finite supply creating greater demand.

PLEASE stop comparing Bitcoins to gold -- there's a fundamental difference which makes the comparison void. The first cited sentence is the worst, as the conclusion is antithetical to the fundamental difference.

Gold, silver, gems, precious metals, all have non-monetary use. THAT is what makes them a "safe haven" against the vagaries of monetary markets: no matter what happens to the currency markets, you still have your useful commodity, which you can use for yourself or sell for functional value at least.

Bitcoins, on the other hand, have no use other than as a form of money. That makes them more susceptible to the vagaries of monetary markets rather than less. If they become worthless as a currency, you have exactly nothing.

5
0
Silver badge

Re: NO

Gold has some industrial uses - but gemstones are only valuable because De Beers run ads to persuade your girlfriend that she has to have a diamond ring. If you want to know how intrinsically valuable jewels are - ask the jewel what the trade in value of that $5000 engagement ring is.

0
0
Silver badge

Re: NO

Gold has some industrial uses - but gemstones are only valuable because De Beers run ads...

Diamonds et al do have some industrial uses as well, as cutting tips or abrasives, for example.

Furthermore, "fashion accessory" is still a use, as incomprehensible as that is to us code monkeys.

0
0
Silver badge

Re: NO

Industrial diamonds are synthetic and fashion accessory is subject to fashion.

Until the mid C19 diamonds weren't the most prized gemstone - rubies were - it would only take somebody with a bigger ad budget than de Beers to make diamonds worthless

0
0
Pirate

Commodity/currency? Nah, it's a penny stock.

FT Alphaville are doing some serious financial analysis of the whole BitCoin phenomenon here:

http://ftalphaville.ft.com/tag/bitcoinmania/

(Registration but no payment)

Some interesting discussions on the practicality and viability of the whole concept. The comments in themselves are quite enlightening, and it might be interesting to get some more techincally minded people throwing their opinions into the mix.

The argument put forward by proponents of BitCoin is that it's a government-less currency of the people, for the people, by the people. But given that there's no intrinsic value to the currency (it's bits in the ether) and there's no backing to it (legal, militaristic or material), once there's a large enough crisis of faith (as that is all the currency is trading on), it will eventually return to its intrinsic value: 0.

Which means it's essentially a con and a Ponzi scheme.

The more vehement defenders of the concept come across as penny stock pushers, with classic quotes such as "Price drops are opportunities to buy", "If you think it's stupid, stay out of the market and let me make my easy money" and the classic "Volatility is by design and one of the benefits!"

It's a bubble, it's going to pop. The "anonimity" it provides is for paranoid conspiricists and illegal transactions. The fact is that the market can (and will) be easily manipulated. As there is no underlying assets, obscure supply and virtual demand, at the end of the day it's a deer market. Price goes up, more people hype and buy, self-perpetuating. Price gets to a certain level and there's a security "scare", confidence collapses and so goes the value. Manipulators buy at the start of the hype, sell into the bubble and "create" the scare to allow themselves back into the market at the bottom.

There'll be tears enough for all.

4
2
Anonymous Coward

Re: Commodity/currency? Nah, it's a penny stock.

"there's no intrinsic value to the currency (it's bits in the ether) and there's no backing to it (legal, militaristic or material), once there's a large enough crisis of faith (as that is all the currency is trading on), it will eventually return to its intrinsic value: 0.

Which means it's essentially a con and a Ponzi scheme."

Not disagreeing with your facts, but pretty much that description and discussion (except replace "currency" with "shares") applies to most shares being traded, not just penny share scams, doesn't it?

And shares are valuable investments, for us working folk to store our hard-earned wages in till we retire, By Order, are they not?

1
1
Pint

Re: Commodity/currency? Nah, it's a penny stock.

@AC 14:42 - you misunderstand what shares are if you think they have no intrinsic value. They are quite literally a 'share' in the assets of a company. Ultimately backed by the money in that company's bank account, the company's

stock, buildings etc.

That's not to say that share prices can misrepresent the underlying assets - that happens all the time - however there is something solid behind (most) shares.

2
0
Anonymous Coward

Re: Commodity/currency? Nah, it's a penny stock.

"you misunderstand what shares are if you think they have no intrinsic value. They are quite literally a 'share' in the assets of a company."

No, you're out of date. You describe what they used to be, until a few decades ago.

Facebook?

C'mon.

1
1
Mushroom

Re: Commodity/currency? Nah, it's a penny stock.

Not really, as shares in a company generating income has value in two different ways: The value of the property of the underlying company (holdings, cash, IP etc) and the present value of future earnings (normally presented to shareholders in dividend payments). So for most shares there is a "bottom" price at which buying up the company and breaking it up into its most basic components still yields a value.

The problem with penny stock scams (and to a certain extent BTC) is that there's normally nothing underneath other than the *hope* of a successful find (new drug/oil deposit/tech breakthrough), hence the marketing language that tends to follow those scams: "Easy money", "Just a matter of time", "where the clever money is", "mainstream investors about to step in", "revolutionary", "game changing", etc. BTC goes even further in that there's not even THAT hope, it's just belief that the currency will continue to be viable. It's purely trading on faith: that people will accept it in trade for goods/services, that it will be convertible into "hard currency" (which it claims to threaten and destabilise...), that the security of the system and algorithms won't be cracked.

Which, given the history of electronic security (not that it doesn't exist, but that given enough financial motivation, SOMEONE will find a flaw), means it's only a matter of time before things go ka-blooie.

2
0
Thumb Up

Re: Commodity/currency? Nah, it's a penny stock.

Ah, yes, the Case of Facebook. Shares aren't necessarily *priced* at their intrinsic value, and again there's the price of expectation in there too.

But Facebook does own servers, property, IP etc. which means it's not *completely* worthless...

3
0
Silver badge

Re: Commodity/currency? Nah, it's a penny stock.

And how exactly does the UK's military might set the value of the pound?

Accept pounds or we send in Prince Harry?

1
0

Re: Commodity/currency? Nah, it's a penny stock.

Bitcoins are neither fiat money (like Sterling) or commodity (asset backed) money (like Gold). They are really just a medium of exchange for these other types of money. Some beans if you like.

0
0
Anonymous Coward

need to register with the government...

open up their databases (those awful terrorists surely left their contact details there), and PAY UP your share of ill-gotten gains, cause like, if you don't, we're going to clamp down hard. And why? Because we CAN. And remember, NOBODY can steal from our people!*

* certain exclusions apply, see your government or "international bodies" in the latest high-packed drama, "The Cyprus job", on a telly near you.

0
0
Bronze badge
Pint

"limit of 21M Bitcoins" vs. unlimited Copy-Cat Crypto Currencies™

"...there is a limit of 21 million Bitcoins that can be mined. ...there's no physical reason why there can't be more Bitcoins; that's just the current rule."

Copy concept. Paste concept. Rename "Bitcoin" to "JeffyCoin". Print.

There can be an unlimited supply of Copy-Cat Crypto Currencies™. There is *no* limit whatsoever.

Once upon a time, there was the first coin... the first currency. It was a good idea, so everyone started doing it.

Same. Exact. Thing. No limit. No shortage.

0
0

Re: "limit of 21M Bitcoins" vs. unlimited Copy-Cat Crypto Currencies™

You're forgetting that only virtual currencies that are backed by maths and limited in supply will succeed. People (except a few) are not stupid.

0
0
Anonymous Coward

Re: "limit of 21M Bitcoins" vs. unlimited Copy-Cat Crypto Currencies™

"People (except a few) are not stupid."

Explain the 'success' of The National Lottery then, please. It's no more than a tax on the arithmetically challenged, isn't it? And it seems that contrary to your assertion, there are quite a lot of them about.

0
0

Page:

This topic is closed for new posts.