back to article Bitcoin gets a $100 haircut on rollercoaster trading run

Virtual currency Bitcoin lost $100 in value relative to the US dollar on Wednesday due to panic selling by its devotees. The currency began tumbling from a high of $260 on Wednesday after major Bitcoin exchange MtGox started getting hammered by many micro trading requests per second. This bout of high-frequency Bitcoin trading …

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  1. Don Jefe
    Happy

    What can I say

    But hahahahahahahahahaha.

    1. Anonymous Coward
      Anonymous Coward

      Re: What can I say

      Average age of bit coiners, 19......

    2. Mark .

      Re: What can I say

      Yes I'm sure those people who bought at $10 are feeling awful that it's now only worth $170 instead of $260...

      Or to put it another way, this "crash" has simply put it back to the value of a few days ago, but it's still way up on historical values. The Register is at least more accurate in its reporting - it's not so much a crash, more that we've seen some rapid up and down. It's funny just how out of date even the web news is with some of the articles I've seen, gloating about a crash (which they claim they saw coming, when it's not really a useful prediction if they've been saying for months, especially when the post-crash value is still far higher than when they'd started claiming it was a bubble), yet by the time the article goes live, the price has already gone up again.

      The losers would be people buying high and selling low. Some winners would have sold at the peak, and bought back again when low. But for a lot of other people, the fact that bitcoin was worth less at 6pm 10 April that it was 12pm 10 April is somewhat irrelevant, if the value is still higher than what it was say on 12pm 3 April (or something like that - I forget the exact times/dates).

      I think it's a good thing for the currency to stabilise for a bit anyway, as rapid rises can put people off its potential use as a currency as much as rapid falls.

      (If bitcoin really did crash to say $1, great, I'm buying 10, as it seems worth a gamble...)

      1. I ain't Spartacus Gold badge

        Re: What can I say

        It's not a currency.

        It could become one in future. When hell freezes over. But due to the opacity, scams, general fail of all the main players, massive volatility, and built in deflation - it'll probably never make a viable currency.

        It's a very high risk investment, with zero intrinsic value. So although it may not be designed as a scam, it's almost certain to end in tears. Any currency that loses 50% of its value overnight, or can gain 100% of it's value the previous morning, is worth about as much as a Weimar Mark or a Zimbabwe Dollar. Or possibly soon, Euros...

        Finally, there's no problem if you risk $10 you can afford on cheap coins, in the hope of ludicrous gains. Even if it should be obvious that any investment that can make you 100% profit in a morning is going to be somewhat horrendously high risk... But if there are really Eurozone savers desperate to protect their life savings from the incompetence of the Eurogroup - I would hate to see them fucked over by the scammers and idiots involved in Bitcoin, to follow on from the fucking their currently getting in order to help Angela Merkel get re-elected and keep the Euro-nutters dreams of EU statehood on life support.

        1. Mark .

          Re: What can I say

          Being a currency, as you describe, isn't either/or. Of course right now, it isn't something you can trust large amounts of money in. But it has some uses for transactions, similar to (and potentially better than) things like Paypal. (With Paypal's track record, I don't trust them at all, so if I have to use Paypal, I take the money out asap, so the trust argument doesn't work.)

          And you haven't explained why such a thing couldn't grow to become more useful and stable. Indeed, the mention of the Mark is the classic point - by your own argument, does that mean that paper money is inherently worthless, because there have been examples of hyperinflation?

          "Finally, there's no problem if you risk $10 you can afford on cheap coins, in the hope of ludicrous gains. ... But if there are really Eurozone savers desperate to protect their life savings from the incompetence of the Eurogroup - I would hate to see them fucked over by the scammers and idiots involved in Bitcoin"

          I entirely agree - but are there really people putting their life savings into bitcoin? Perhaps some, but I would have thought that most of the people talking about it and dabbling in it have put in relatively small amounts ($10 is barely a couple of pints; even $100 is only slightly over 1% of a yearly cash ISA allowance, and a portfolio with 1% high risk seems rather conservative to me - some people here spend $100s on a gadget just so they can go "shiny" that they then throw away next year). As such there seems to be a bit of a straw man here, portraying people who have used bitcoins as people about to lose their life savings, or people who can't afford to lose any money. I suspect if anything, it's probably a lot of people with plenty of money to spare.

          1. David Hicks
            Meh

            Re: What can I say

            It's a terrible replacement for paypal - once a vendor has your coins there's no way to get them back, if they don't deliver or just drop off the face of the earth, you have no recourse. Paypal and credit cards are very, very good for the consumer.

            1. Jonathan 29

              Re: What can I say

              Paypal is fine for consumers, but horrible for small sellers. Their chargeback system and fees are the work of the devil. Bitcoin is lacking some infrastructure currently, but this will change providing we see some medium term stability.

              1. David Hicks

                Re: What can I say

                Thing is, without chargeback, why would I trust a small seller? I'll stick to the big one.

                And stability ain't looking so possible now. Gox has just closed its doors (for 12 hours apparently) and some of the other exchanges are trading in the $70 range! That's a $200 haircut...

  2. cyke1

    scammable currency

    1. Craigness
      Facepalm

      It's the only non-scammable currency. Do try to keep up.

      The problem last night came from the overwhelming popularity of one of the banks and its inability to meet skyrocketing customer demand, not the inappropriateness of the pretty paper the government prints (to put it in terms the ignorant might understand).

      1. David Hicks
        Stop

        Non-scammable?

        That depends entirely on what you do with it. As it has no chargeback capability it's a scammer's dream in a lot of ways. I know, I know, it's like cash and you can't chargeback with cash either. However this does mean it's not a very good online payment system, which is one of the things that it gets pushed forward for.

        What's that, chargeback is open to abuse? Sure is, but compared to the abuse you'd get without it, and the lack of trade as people like me *never* shop online again, it's a blessing.

        Now, as for currency use, it's pretty worthless as it fluctuates in value so damn much. And it always will because there's no central bank around to try and keep it stable. Were those the 'scammers' you were thinking of when you said "It's the only non-scammable currency."? I rather like them, they keep my currency roughly stable, keep a low, positive level of inflation (a positive for myriad reasons), and expand the money supply to suit the economy. They do make mistakes, sometimes huge ones, but it's better than a rudderless, bubble prone, speculative 'asset' that encourages mass hoarding.

        IMHO, of course, you are within your rights to disagree with any and all of that.

        1. Yet Another Anonymous coward Silver badge

          Re: Non-scammable?

          Is there any currency that supports chargebacks?

          Remember this is a currency not a payment processor.

          1. David Hicks
            Stop

            Re: Non-scammable?

            Remember this is a currency not a payment processor.

            Which is exactly why I said "this does mean it's not a very good online payment system". And you'd be surprised how many people say, when they've had it pointed out to them just how bad a currency it is "but remember this is a payment processing network too!"

            1. Daniel B.

              Re: Non-scammable?

              Yes, part of the problem with BitCoin is that some people buying into the whole BTC thing aren't able to differentiate between BTC as a currency and payment processing systems. BTC is NOT a payment processing network. It does have transactions, but they exist because it is the only way to trace the currency at all!!

              For true online payments, anyone using BTC for payment should be using actual payment processors. Those would be able to initiate chargebacks if needed.

        2. Craigness

          Re: Non-scammable?

          No part of the bitcoin system prevents chargebacks being implemented, just as no part of Sterling specifically enables it. If someone uses either currency in something illegal then tell the police. The volatility makes it a poor currency at the moment but it's still quite useful as a money transfer system in spite of this, as it's fast, liquid (usually) and cheap.

          Deflation is not necessarily a bad thing. If you want a 3% return on your lending in an inflationary environment then you charge inflation+3%. If you want the same return in a deflationary environment then you charge deflation+3%. If you have a business idea which you think will generate in excess of either inflation+3% or deflation+3% and also enable you to repay the capital then you should proceed, nomatter what the inflation or deflation rate is.

          Not every company selling IT hardware has been a huge success, but falling prices certainly haven't killed the industry.

          1. David Hicks
            Thumb Down

            Re: Non-scammable?

            No part of the bitcoin system prevents chargebacks being implemented, just as no part of Sterling specifically enables it.

            Well, except we're talking about bitcoin-itself-as-payment-method, one of the many things its boosters say it's awesome for, a drop in replacement for paypal and credit cards, which it fails hard at. And before you say "nobody says it's the perfect payment method", please look around the internet and in fact in this very thread.

            If you want a 3% return on your lending in an inflationary environment then you charge inflation+3%. If you want the same return in a deflationary environment then you charge deflation+3%.

            But why would you bother? If deflation was (for instance) 4%, you're better off sitting on the cash and not taking the risk. This is the fundamental difference.

            1. Craigness

              Re: Non-scammable?

              You didn't mention the part of bitcoin which prevents paypal implementing a chargeback mechanism for bitcoin payments. Cash has no chargeback mechanism, but you can pay to use a mechanism created by someone else...or choose not to. Bitcoin...the same.

              Apart from the fact people do and have invested during periods of deflation, there is really no reason for there to be no inflation in a bitcoin economy. The pretty paper is not really printed by the government - they just mint the coins. The paper is printed by the banking system, which is why it's a promise to pay a number of pounds and not an actual quantity of pounds. The balance of your bank account also does not represent a stock of pounds, it's the result of many credits and debits denominated in pounds. And the total sum of bank account balances can increase without the government needing to increase the number of coins. So a banking system using credit-based money denominated in bitcoin is not inconceivable, and would grant you the inflation you desire.

              The corollary of your 4% argument: If inflation is 4% then everyone would look for investment opportunities which lose 3% per year; they will come out on top by destroying value. Do you see that you don't make sense?

              1. David Hicks
                FAIL

                Re: Non-scammable?

                "You didn't mention the part of bitcoin which prevents paypal implementing a chargeback mechanism for bitcoin payments. Cash has no chargeback mechanism, but you can pay to use a mechanism created by someone else...or choose not to. Bitcoin...the same."

                Right, so you agree it's a crap payment method, and in order to make it into a good one we effectively need paypal and VISA. excellent.

                The pretty paper is not really printed by the government - they just mint the coins. The paper is printed by the banking system...

                This is factually false. It's outsourced by the government to printing firms like De La Rue. Are you actually labouring under the illusion that coins are 'real' money but notes are just the bank promising real money? What an interesting world you live in.

                So a banking system using credit-based money denominated in bitcoin is not inconceivable, and would grant you the inflation you desire.

                So why bother? We already have that, so bitcoin adds nothing. Also, as with payment systems, it's good to see a BTC enthusiast admit we'll still need banks issuing fiat, only now we've decoupled them from any government regulation where it comes to currency. Awesome.

                If inflation is 4% then everyone would look for investment opportunities which lose 3% per year; they will come out on top by destroying value. Do you see that you don't make sense?

                No, in fact you don't make sense, that sentence doesn't even make sense. What the hell are you even trying to say there? I'll restate in case you missed the point -

                If inflation is 4% then you come out behind the game by 4% if you stuff your mattress with cash, so instead you look for saving and investment opportunities to earn greater than 4% so you can at the least break even. This has knock-on positive effects on the economy.

                If deflation is 4% then you come out ahead of the game by 4% just by stuffing your mattress. This has no positive knock-on effects for the economy.

                To paraphrase your initial comment on this and really hammer it home - if you want 3% return in an inflationary environment you charge inflation + 3%, at the end of the day you come out 3% better off than if you had done nothing. If you want 3% return in a deflationary environment you *could* charge deflation +3%, but if deflation is greater than 3% you'd actually be better off doing nothing.

                Do you understand the difference yet?

  3. Yet Another Anonymous coward Silver badge

    technically skilled?

    "people investing into the currency that are not technically skilled enough to understand the complex principles on which the system works,"

    It's a thing - people want to buy it the price goes up, people think that the price isn't going to go up anymore they will sell to people who do.

    You don't need to understand distribute hash schemes or elliptic curve cryptography to figure that out

    1. beep54
      Holmes

      Re: technically skilled?

      Is anyone actually surprised here? If so I have one word, 'Tulips' (which may or may not have been a thing, but the underlying story is useful). Economics is just daft. And why not? It's driven by humans who are, more or less, by definition nuts.

  4. mrfill
    Happy

    Who do these people think they are?...

    Investment bankers???

  5. Anonymous Coward
    Anonymous Coward

    Looking at the price now, it's just under £110. Or essentially, the same price it was on Monday?

  6. Destroy All Monsters Silver badge
    WTF?

    D'Oh!

    Well, it's definitely not a Ponzi scheme. Bernie Madoff's investment pyramid is a Ponzi scheme. "Quantitative Easing" is Ponzi scheme. Social security is a Ponzi scheme. This here? Just the standard "bubble". Bubble up, bubble down.

    This dramatic rise has led to people investing into the currency that are not technically skilled enough to understand the complex principles on which the system works

    Unskilled? It happens to the "best". Quite a few ministers of finance and economics as well as that nobel-prizewinning economist-clown writing columns in the NYT are not skilled enough to understand even basic economic principles. What you gonna do about it? Always look on the bright side of life...

    Bitcoin's virtues as a digital currency may not yet be clear, but right now its devotees are treating it like a commodity, and this can only end in tears.

    Money *must* be a commodity, what else? And it must not be easily generated either. Next you will be telling me cheap paper with pretty pictures and flowery signatures of semi-dead males on it and monopolized/imposed by a government outfit hidden in a repurposed 18th-century building with lots of marble and large wooden doors is "money". I laugh!

    (Although, is bitcoin a "money"? Opinions diverge)

    1. Destroy All Monsters Silver badge
    2. Scorchio!!
      Thumb Up

      Re: D'Oh!

      Oh noes! The money tree is broken, and this one was going to work!

    3. beep54
      Meh

      Re: D'Oh!

      Eh, Social Security is NOT a ponzi scheme. Repeat. NOT. Stop being silly.

      1. I ain't Spartacus Gold badge

        Re: D'Oh!

        There ought to be an addendum to Godwin's Law. In any financial discussion online, someone will misuse the phrase Ponzi scheme in order to look clever and more knowlegable than they actually are.

  7. Winkypop Silver badge
    Alert

    Hard landing?

    Those credulous men in their ponzi schemes,

    They go up diddley up-up, they go down diddley down-down!

  8. Killraven
    Alien

    'tarded

    cointard

    freetard

    commentard

    Yet another reminder that when it comes down to it, this is just another blog.

    An alien: as is the concept of professional journalism.

    1. AndrueC Silver badge
      Joke

      Re: 'tarded

      Killraventard?

      :)

    2. Scorchio!!

      Re: 'tarded

      Too many people have placed too much emphasis on 'the net' as an alternative to meat space, this is one example, and Assange's rambling 'theory' (perhaps I should not grace it as such) of politics and democracy is another. Quite a few other online bubbles have burst and, as someone else has pointed out this has much in common with the Tulip bubble, the South Sea Bubble, and so on. A few years back the 'dot com boom' crashed and the zombie business were culled. This is going to be worth watching, not least because the banks have been offering their own alternatives.

      When I heard someone say a few days ago that this one is rock solid, immune to the travails of the outside world, I sat upright. Why? Because I'd heard the very sort of thing that I would expect to hear when something goes wrong.

    3. I ain't Spartacus Gold badge
      Alert

      Re: 'tarded

      Killraven,

      The Register is a tabloid. Deal with it, or don't read it. They do serious news coverage, they do irreverent news coverage, they build paper aeroplanes and launch crash them from balloons, they do consumer research into some of the most horrific 'food' known to drunkard...

      They also insult their own userbase in a friendly way. This is classic group bonding. Just ask any anthropologist.

      I leave you with the thought that an overheating turkey vulture will urinate down it's own legs, in order to cool itself down. Whether you feel this says anything about El Reg is up to you...

      1. GrandpaChris
        Go

        Re: 'tarded

        "The Register is a tabloid" humour wins me over every time. And this new money is so easy to phone in phone out. Especially when the local loan shark is having coffee.

      2. AndrueC Silver badge
        Joke

        Re: 'tarded

        an overheating turkey vulture will urinate down it's own legs, in order to cool itself down.

        Well - who wouldn't?

        :D

  9. Charles Manning

    Where's the value?

    Unless a currency is based on some underlying share in something of value, then it is going to be open to wild fluctuations in exchange rate.

    A GBP, USD, or even a Zim$ is at least tied to something tangible. A bitcoin is tied to nothing. It has no intrinsic value at all. Only a complete moron would "invest" in this.

    1. Andraž 'ruskie' Levstik

      Re: Where's the value?

      You are aware that the GBP, USD or any other currency aren't tied to anything tangible as well? They are fiat currencies. They have no intrinsic value at all. Atleast a bitcoin has the value of the leccy needed to generate it.

      1. TeeCee Gold badge
        Facepalm

        Re: Where's the value?

        While it is true that they are fiat currencies and have no intrinsic value, they are tied to something tangible.

        That "promise to pay" is backed by the assets and reputation of the country (or countries) that owns the currency, vested in the reserves of the appropriate Central Bank.

        How much precious metal, hard currency, etc does the Bitcoin Exchange hold to underpin its promises? What's its GDP?

      2. Natalie Gritpants

        Re: Where's the value?

        Well the USD, GBP and most currencies are backed by their countries armies, some of them have nukes.

        As far as bitcoin being worth the electricity used to generate it - can you turn it back into electricity?

        1. Loyal Commenter Silver badge
          Facepalm

          Re: Where's the value?

          "Well the USD, GBP and most currencies are backed by their countries armies, some of them have nukes."

          Cool, I'll just take the money in my wallet down to Threadneedle street and exchange it for a couple of tanks and a harrier jump-jet then.

      3. Brewster's Angle Grinder Silver badge

        Let me troll for downvotes

        The bitcoin bubble isn't a bubble in bitcoins: it's a bubble in fiat currency paranoia. The bitcoin bubble will only burst when the fiat-currency-paranoia bubble bursts. So I predict bitcoins will continue on an upwards trend for some time.

    2. Anonymous Coward
      Anonymous Coward

      Re: Where's the value?

      Keep believing that, because if enough people stop then the currency will collapse.There's no tangible asset underlying the USD, nor the GBP; governments can (and do - we call it "quantitative easing") create more money at will. Even if you hanker after the days of currency being backed by gold, that's really no different to Bitcoin - someone digs sparkly rocks out of the ground and it instantly becomes money?

    3. Cliff

      Re: Where's the value?

      Currencies tied to nothing are known as 'fiat', and that is most currencies since the dropping of the gold standard. However, even though they are all based on faith alone, some also have the interests of a nation underpinning them which dampens volatility. Remove any motive to dampen volatility, and this is going to happen.

      Interestingly, gold investing itself has something of a fiat nature, as the material properties are not as valuable as the trading price. If you want an exchange format you can really believe in, I suggest sheep.

    4. Anonymous Coward
      Anonymous Coward

      Re: Where's the value?

      The currencies thrust onto people are no different - just check it out - we've been duped into thinking that they are backed by Gold. As I understand it only the Swiss Franc and now more recently the Renminbi are backed by Gold.

      1. Don Jefe
        Meh

        Re: Where's the value?

        The U.S. dollar hasn't been backed by anything other than trade interests in nearly a century. Unless you are incredibly old or have terribly bad teachers you couldn't have been fooled.

      2. Anonymous Coward
        Anonymous Coward

        Re: Where's the value?

        Fiat or gold-backed could be a very dull distinction. Bitcoins are set apart in that they are ultimately finite, by defintion. You may regard that hard fact as tangible or not.

      3. I ain't Spartacus Gold badge

        Re: Where's the value?

        The currencies thrust onto people are no different - just check it out - we've been duped into thinking that they are backed by Gold. As I understand it only the Swiss Franc and now more recently the Renminbi are backed by Gold.

        Solaris_fan,

        You don't understand it then. No currencies are fully backed by gold. The Gold Standard was a horrible farce that failed miserably and led to the 1930s depression. The next attempt at it, with Bretton Woods didn't work properly either. The Euro is causing a depression, just like the Gold Standard, but without the shiny bars.

        To many of the other posters, major international currencies aren't backed by commodities. But they are backed by the countries that use them. The reason the Euro is in serious trouble is that people are beginning to suspect that when the going gets tough, countries will leave. They are aiding this feeling, but always nearly doing enough to bail themselves out, but never quite doing the job properly, and always doing it too late. Eventually the brinkmanship will fail, and the Euro will most likely fall over.

        If however you've only got the one currency, and you've got national assets (not least a population and modern economy), plus a government and a tradition of a rule of law, then your currency is backed by something. Sure our government could inflate the Pound to Zimbabwe like levels, but there's 63 million of us who are stuck with it, so they're unlikely to.

        Also, history helps here. Britain has hundreds of years of not defaulting on its government debt and not destroying its own economy. Even when debt hit 200% of GDP a couple of times from fighting world wars. Britain invented national debt 250 years ago, and has always paid up. The US also have a long history of abiding by contract law, and not defaulting.

        The Euro has a much shorter history. If today's news about the horrifically fucked up Cyprus bail-out causes it to leave then the Euro will be in a bad state as a fiat currency. Where no-one seriously believes the voters and governments will honour their commitments.

        Bitcoin has even less backing. There is no government to stand behind it. Its short history is of hacking, scams, collapses in confidence, bizarre screw-ups where people have to roll back software updates or exchange trading to correct for errors, and randomness. Any faith in that system would be absurd. And there's no government or workforce to stand behind it.

        1. moonface

          Re: Where's the value?

          "Well the USD, GBP and most currencies are backed by their countries armies, some of them have nukes."

          I understand how a countries armies can at the last resort, force the taxpayer and future generations of taxpayers to exchange their labour resources to back\cover the debt of a currency. However nuking them would be a bit counter productive.

          1. I ain't Spartacus Gold badge
            Coat

            Re: Where's the value?

            I understand how a countries armies can at the last resort, force the taxpayer and future generations of taxpayers to exchange their labour resources to back\cover the debt of a currency. However nuking them would be a bit counter productive.

            moonface,

            That's because living in your Faraway Tree, you're not as far-sighted as the modern politician. I think you'll find that once you've nuked the electorate, they won't be able to hide in the dark, not paying their taxes.

            Plus they'll work much harder, due to their new get up and glow...

            Perhaps I'd best get my coat.

        2. Anonymous Coward
          Anonymous Coward

          Re: Where's the value?

          "Britain invented national debt 250 years ago, and has always paid up"

          Well, supposedly. If you were holding some AAA rated fixed rate ten year gilts in 1970, then you'd not have been too happy by 1980, when the actual value of your total return would have amounted to about one third of the value of the sum you'd invested.

          And this time round the pattern will be the same, of some prolonged and generously proportioned inflation. Except that it won't just be Britain, but the Yanks and the Europeans will do the same thing, because they've got vast debt mountains they've no idea how to repay, along with impaired assets they'd rather not write down. Admittedly the Germans are determined not to see debt mutualisation, and not to see inflation, but their choice is simple: Accept those things, or accept some form of collapse in the Euro as the system currently exists. As Germany is an export dependant economy, and as the German Chancellor will always be a committed Europhile, my guess is that the German population will continue to be reassured that inflation and mutualisation won't happen, even as their leaders secretly plot to ensure they do.

        3. Don Jefe

          Re: Where's the value?

          The biggest problem with Bitcoins are precisely what was wrong with the gold or silver standard. There isn't enough to go around after a point and our economy (capitalism in general) is built on the idea of unlimited growth which you can't have with a currency which has a fixed volume.

          I wrote a longish post about this the other day but at the end of the day it's a fools gamble and the only way to profit from the system is to force massive instabilities & buy or cash out, depending on your position. It's like trading in commodities but not being able to eat the product if the market falls out.

    5. Piro

      Re: Where's the value?

      Tied to something tangible? Do you even have an idea what a fiat currency is? I suggest you stop posting and go back to learning about how wishy-washy all of the financial system is.

    6. Anonymous Coward
      Anonymous Coward

      Re: Where's the value?

      What, exactly, gives the british "pound sterling" value then? Because it sure is not backed up by anything tangible like you seem to believe.

  10. pewpie
    Black Helicopters

    Unsurprise!

    Gold and silver have inherent value.

    Anything else is just a pocket full of promises.

    1. Mark .

      Re: Unsurprise!

      So do bitcoins. The question is how much that value is - and how much it could be in future. Indeed in this sense, it's in a better position than gold (and tulips) - the inherent value of gold is unlikely to change in value, so changes in price are always down to speculation (as someone pointed out above, gold does have a fiat nature), whilst bitcoin's inherent value is likely to change (whether up or down), and long term is completely unknown.

      The hard part now seems to be buying bitcoins - amusingly because you have to deal with all of the bad aspects of currency (dealing with banks, paying fees, converting and transferring) - once in bitcoins, it's effortless to zap it around the globe under your control.

      I'm surprised at the negativity here - paypal has shown there is a large need for the ability to transfer money without the reliance on visa etc, but paypal is not an ideal solution, as surely any geek knows.

      Maybe it's some envy at the people who bought at $10 and have made lots of money, people want it to fail - but even after the "crash", the value is still way up on historical values. And it seems somewhat childish to want something to fail just because it went up in value.

      Of course it was clear in the short term that it was overvalued, but long term is a different matter. The current total market value of a billion or so dollars is peanuts in the world economy. Even if the future sees multiple competing virtual currency, or even if bitcoin only becomes a paypal-like thing rather than a replacement world currency, that's still a use far greater than today (hence also needing a higher value for the higher money supply). Is that value higher than the peak it got yesterday? Who knows. But the possibility that it might doesn't seem ludicrous to me. It's just like any other high risk investment - you might lose it all, but if you can afford to lose, it's perfectly ordinary to put a small proportion invested into higher risk areas.

      1. I ain't Spartacus Gold badge

        Re: Unsurprise!

        Mark .,

        Bitcoins have no inherent value. Nothing whatsoever. Nada. Zip. Zilch. Deal with it.

        Gold and silver have actual uses. Even if people stopped wearing jewellery (unlikely after a known 5,000 year history of its use) you can still use them for industrial processes and both have medical applications.

        Fiat currencies are backed by countries. They have to use them, so they have no choice but to support them. No-one backs Bitcoins. It is as likely that everyone who uses them will have stopped by next year as not. The only fiat currency you might possibly say that of is the Euro.

        People like me knock Bitcoins because I hate to see people lose their money through ignorance, or getting scammed.

        The fact that you keep talking about the rise in value of bitcoins proves that even you don't see it as a currency really. You see it as an investment. And they're two different things. I'm negative about it, so if anyone sees a post like yours, there's a dose of reality next to it to warn them. Then it's up to them. I'm not jealous that you may, or may not have, made a profit. Apart from anything else, the faith in Bitcoins could evaporate tomorrow. Then yours would be worth nothing. You can only crystalise that gain if you sell, and as yesterday proved, there is no easy way to sell, as all the exchanges are either scams or flakey - and keep getting hacked DDoSed, or plain fall over.

        Finally, in more proof that it's not a currency, all the Bitcoin boosters I've ever seen keep talking about its dollar value. Even though exchange rates of real currencies fluctuate, because they have a genuine internal market that's not as important a factor. Sure you can buy stuff with BTC, but in reality it's still an investment (and a horrible one), because most people don't see it in terms of the economy it supports, but how many dolalrs they can get for it.

    2. fandom Silver badge

      Re: Unsurprise!

      "Gold and silver have inherent value."

      Nope, they don't, like everything in life they are only worth what someone wants to pay for it.

      Lately I am watching Tv series like storage wars and pawn stars and one of the reasons is the amazement I get seeing how much people are willing to pay for rubbish.

      Yes, I know, it's nothing but a guilty pleasure.

      1. GrandpaChris

        Re: Unsurprise!

        Lately I am watching Tv series like storage wars and pawn stars and one of the reasons is the amazement I get seeing how much people are willing to pay for rubbish.

        Really? You think entertainment on American shows is truth real. Get a life!

        1. fandom Silver badge

          Re: Unsurprise!

          You must have missed the last line I wrote:

          "Yes, I know, it's nothing but a guilty pleasure."

          As for getting a life, I am indeed working on it, I post here,don't I?

  11. Dan 55 Silver badge

    Every so often a market develops around something improbable

    "tulips, uranium, beanie babies"

    And houses. Don't forget houses.

    1. Fido L Dido
      FAIL

      Re: Every so often a market develops around something improbable

      True, but list in order of intrinsic value (highest first):

      1/ Houses

      2/ Uranium

      3/ Beanie Babies

      4/ Tulips

      ---

      5/ Bitcoin

      You can argue over the order of the first 4, but they all have an underlying intrinsic value, even if that is very low in the case of 3 & 4. Bitcoin has such a negligible intrinsic value it is effectively zero. This has all the hallmarks of the Tulip bubble. There will come a point when everyone realises:

      "Hold on a minute, these are worthless, how was I so stupid?"

      Then those same masses will then try and find a way to blame the government, cue class action lawsuits for compensation for anyone who looks like a worthy target.

      1. Mark .

        Re: Every so often a market develops around something improbable

        Do you actually know what Bitcoin are? They do have uses - in fact a poster gives a use he needed them for just two comments above them. We can debate how useful they are or how useful they could become, but they are nonetheless on the same level as the other examples on your list, as well as any other kind of investment like gold or stocks and shares.

        The only one I'd say is intrinsically different is houses, in that if you're buying purely for an investment, you can also rent it out as an income. Whether bitcoin is seen as a high risk investment, or something that's used for something, there's nothing fundamentally different to other high risk investments in things that also have some intrinsic use to some people.

        1. Fido L Dido
          Thumb Down

          Re: Every so often a market develops around something improbable

          I talked about 'intrinsic value'. I never claimed it didn't have a use.

          If I want something that resembles a house, I can buy one. Alternatively I could build one. Either way, it costs time/effort/money. There is the intrinsic value.

          Uranium - it needs digging out the ground and refining. TIme/effort/money. For many applications there are no alternatives.

          Beanie Babies - I could make my own copy. Time/effort/money. There's the intrinsic value.

          Tulips - I could grow my own. Time/effort/money.

          Where is the intrinsic value in Bitcoin? There is none.

          In terms of shares in companies, they have intrinsic value, which is the book value of the company. They often cost more than this because those companies can generate wealth.

          Gold, you almost have a point here, but gold has alternate applications where there are no alternatives. Additionally, people like shiny, shiny which ultimately pushes the price of it up given it's rarity.

          1. Mark .

            Re: Every so often a market develops around something improbable

            You can make your own bitcoins - that's part of the design ("mining"). It's increasingly harder - though still far easier for most people than building a house or getting uranium(!) More generally (since you're including making alternate copies), you could create your own alternative bitcoin network trivially (it's open source after all), it's just that those would be worth little, since no one would want to trade with your single independent network (and fewer people would want to buy an unofficial trademark-infringing beanie baby, too). So if that's your definition of intrinsic worth, they have them.

            Though it seems odd to dismiss their use. I mean, if you're trying to say "Bitcoins are useful, and have worth, they just have no _intrinsic_ worth", then I'm not sure what point you're really making? What is the practical difference?

            "but gold has alternate applications"

            As does bitcoins, but you just said you weren't talking about uses...

            "Additionally, people like shiny, shiny which ultimately pushes the price of it up given it's rarity."

            And some people like bitcoins. Plus for most people, investing in gold means it's stored in a vault where you can't see or touch it, and you just see the numbers that you own, which lessens the "like shiny" appeal of it, which doesn't apply for someone who likes the appeal of bitcoins.

            1. Fido L Dido
              FAIL

              Re: Every so often a market develops around something improbable

              I guess my point is that I believe Bitcoins will eventually move towards their intrinsic value, which I believe is zero. That doesn't mean you can't make money out of them, in the same way that pump-n-dumpers make money out of penny shares.

              1. magrathea

                Re: Every so often a market develops around something improbable

                "I believe Bitcoins will eventually move towards their intrinsic value, which I believe is zero"

                Despite what many goldbug websites will tell you, value is not intrinsic to the thing being valued.

              2. Mark .

                Re: Every so often a market develops around something improbable

                You still haven't defined this "intrinsic value" definition that is somehow different to value. You offered one definition, I then showed it applied to bitcoin, now you back-pedal to some other definition that you don't explain.

                Perhaps the value could tend towards zero - that could happen either suddenly or gradually, if a flaw was discovered, or a better alternative for payments came along. But your guess is as good as anyone else's.

                Like I say, it's a high risk investment. Do you put 100% of savings into low interest safe bank accounts, and lecture anyone who invests that they might lose their money (as if they don't already know that)?

                1. Fido L Dido

                  Re: Every so often a market develops around something improbable

                  It's a standard definition Mark, look it up. I've shown the intrinsic value in the items I compared it to, fundamentals that Bitcoins don't have. Others have also shown this earlier in the comments.

                  I have a mixture of investments, some more risky than others. I feel Bitcoins bear far too much resemblance to a Ponzi scheme for me to go near them (and I do acknowledge there are some differences to traditional Ponzi schemes).

                  I can't demonstrate here that my 'guess' is any better than yours, and I don't wish to post here my experience with finance, so we'll have to agree to differ. I hope you're right and you don't lose out, because the future value of Bitcoins will have no effect on me.

          2. AndrueC Silver badge
            Thumb Up

            Re: Every so often a market develops around something improbable

            Gold, you almost have a point here, but gold has alternate applications where there are no alternatives. Additionally, people like shiny, shiny which ultimately pushes the price of it up given it's rarity.

            Yah, shining nicely is an application the same as facilitating the free flow of electrons at connection points. Ultimately nothing has value outside of what humans credit it with. Everything is worth what the people trying to acquire it think it's worth - it's just that if you're basing off a physical thing then you're more subject to the foibles of the real world. Typically that tends to introduce price stability but it doesn't always.

            It's all part of a game we choose to play called 'civilisation'.

            And no, I don't mean Sid Meier's.

            :)

          3. Spoddyhalfwit

            Re: Every so often a market develops around something improbable

            "Where is the intrinsic value in Bitcoin? There is none."

            There isn't much intrinsic value in a small square of paper.

            Wipe your ar5e with it, or spend it (if its a 100 dollar bill).

            Its worth what other people will pay for it. So long as enough people consider Bitcoin a useful form of currency to trade, then it has value. It offers a number of advantages that nothing else does at present

            - relative finite, like gold (and unlike pounds or dollars, which as we've seen central banks can print at will eroding your savings with inflation)

            - anonymous, like cash

            - easy to transfer through the internet (like paypal etc, but with out the requirement to have an account, or the risk of chargebacks, account closure, US sanctions etc)

            I suspect therefore it will survive and prosper. Its boomed and crashed before but the concept and system is sound. The dotcom crash didn't spell the end of the internet or dotcom companies in general. Bitcoin's price rise has been as absurd as the dotcom share valuations, but to write it off based on that would be like writing off the internet in 2000.

            1. Ian 55

              Re: Every so often a market develops around something improbable

              But when you ask to be paid with one, you have little idea what its going to be worth in a month's / week's / day's / hour's time.

              I can be almost certain that the dollar / pound / yen isn't going to double or halve its value in that time - and I'd even trust the Euro not to do so - but there's no way I can trust Bitcoin not to do it, given its problems.

              1. Marcelo Rodrigues
                Pint

                Re: Every so often a market develops around something improbable

                True, we can't be sure of this.

                OTOH, a site could charge in bitcoins to avoid dealing with (an example) credit cards and its costs. It would receive the bitcoins and ship the product.

                As soon as the (bitcoin) transaction is confirmed, it could sell the bitcoins in a local exchange - turning it in "hard" money, and avoiding this problem.

              2. Yet Another Anonymous coward Silver badge

                Re: Every so often a market develops around something improbable

                "I can be almost certain that the dollar / pound / yen isn't going to double or halve its value in that time"

                Your euros might if they were in a Cypriot bank.

                Your icelandic Krona pretty much did when they decided they weren't going to pay up

                Your Iranian whatevers might become worthless if the USA decides you to impose some freedom.

                1. Ian 55

                  Re: Every so often a market develops around something improbable

                  Only if I am foolish enough to use a Cypriot (rather than a German) bank AND have more in any one place than is covered by the EU guarantee.

                  For the rest, yep if you want to have some minor currency... but that's what Bitcoin is, except Bitcoin is more unstable and less accountable. When the Krona goes down, Icelandic politicians lose their jobs.

          4. jonathanb Silver badge

            Re: Every so often a market develops around something improbable

            Intrinsic value relates to the benefits you receive from owning it, not the effort involved in producing it.

            If you own a house, you can live in it, or you can rent it out.

            If you have Uranium, you can put it into a nuclear power station and get electricity, you can make a bomb out of it and scare people into doing what you want them to do or you can use it in medial equipment.

            If you have Beanie Babies, you might enjoy looking at them or playing with them, or have a child who likes them.

            Again with tulips, you might enjoy looking at them

            You can use gold to make pretty looking things to wear, or for electrical contacts and so on.

            That is the intrinsic value. Regardless of how much effort is involved in making a bitcoin, you can't do anything useful with an actual bitcoin, just trade it for something else. Therefore it has no intrinsic value.

      2. Mark .

        Re: Every so often a market develops around something improbable

        Incidentally, the floral industry global revenue is about $100 billion, whilst the total bitcoin worth was under $3 billion even at yesterday's peak, so if one thought bitcoins were only as useful as flowers, it would suggest they were undervalued...

        (No, this isn't really comparing like with like - but I'm not the one comparing them to flowers in the first place.)

        1. Loyal Commenter Silver badge

          Re: Every so often a market develops around something improbable

          Incidentally, the floral industry global revenue is about $100 billion, whilst the total bitcoin worth was under $3 billion even at yesterday's peak, so if one thought bitcoins were only as useful as flowers, it would suggest they were undervalued...

          I think maybe people are making a reference to 17th century 'tulip mania', rather than the current value of the global floral industry:

          Tulip Mania

      3. Anonymous Coward
        Anonymous Coward

        Re: Every so often a market develops around something improbable

        Sorry to disappoint you, but uranium is not that valuable either. Areva is shutting uranium mines because of the depressed uranium price.

  12. Stretch

    tulips, uranium, beanie babies

    Housing

  13. Annihilator
    Happy

    To paraphrase a tweet I saw yesterday (Rob Delaney I think?) "I'm not sure what Bitcoin is, but I'm jumping off a 45-storey building just to be safe"

  14. Crisp Silver badge

    So, essentially what you're saying is

    Now is a good time to buy?

    1. Tim Parker

      Re: So, essentially what you're saying is

      "Now is a good time to buy?"

      That's what a lot of this is about - it's been happening enough, and with enough poking at from suspicious origins, that it's almost certainly deliberate manipulation, e.g. disrupt a key point or two, watch Chicken Little reaction drive down price, buy. A few cycles of this and you can start getting some profit without making massive buys on the lows, or otherwise drawing attention to yourself. It might have been interesting if this blog had dug a bit deeper into this.

      1. Anonymous Coward
        Anonymous Coward

        Re: So, essentially what you're saying is

        Disclaimer:

        "Please remember that the value of your Bitcoin investments and any income from them is not guaranteed and may go up as well as down."

  15. LinkOfHyrule
    Paris Hilton

    Love that pic on the WeExchange site

    If you buy some bit coin, you too could be happy and in love and have stupid hats!

    1. AndrueC Silver badge
      Thumb Up

      Re: Love that pic on the WeExchange site

      Marketing 101.

      Buy this car, you'll enjoy traffic free roads and beautiful countryside.

      Eat this cereal and you'll enjoy a happy family life with two kids (one of each sex) and a golden retriever.

  16. Anonymous Coward
    Anonymous Coward

    Let's see ...

    I was forced to use bitcoins to subscribe to an NZB site I know of (their banks started to refuse to handle payments). So for £15 (IIRC) I thought it was worth a punt. I signed up, subscribed, and promptly forgot about it (this is December last year).

    Imagine my amazement to discover the 0.xxxx bitcoins I had left were worth £21 week before last. Out of curiousity, I spent another £20, and decided to just wait and watch ....

    If I cashed in Tuesday, I would have got £104 ....

    INVESTMENT ADVICE: Never spend more than you can afford to lose.

  17. Ants V

    Similarities with Ponzi, similarities with property, new stat-ups, tech...

    There is one clear similarity with a Ponzi scheme. Mining for bitcoins gets harder as time goes on, to enforce scarcity. When it first kicked off, you wouldn't have to spend so much money on electricity and hardware to get a higher amount of bitcoin out.

    Providing you didn't spend the bitcoins your assets earned you, you would now have a pretty penny as the value of the bitcoins has appreciated as demand has increased for the scarce currency.

    So in that way, yes, early investors clearly benefit over new entrants and this can be similar to a Ponzi scheme which benefits those at the top of the tree. But everything is like this - if you invest early on in something that becomes successful/appreciates in value, you win - be it a house in a desirable area, Apple shares in the 90s, whatever.

    So I don't think it's fair to call something like this a scam without applying it to all speculation.

    FWIW a year or two ago when I looked into mining, it was patently obvious that it was not worth mining. Although the "difficulty" of mining had greatly increased, the value of the bitcoin hadn't sufficiently risen to match the resources required to break even. Maybe now that has changed. But what I was left thinking was that if scarcity doesn't match the rate of technological progress, there will always be distinct peaks and troughs with this currency, making it highly volatile. But I must admit, I didn't read that much further into it, but perhaps it's time for a re-appraisal.

    1. Marcelo Rodrigues

      Re: Similarities with Ponzi, similarities with property, new stat-ups, tech...

      "There is one clear similarity with a Ponzi scheme. Mining for bitcoins gets harder as time goes on, to enforce scarcity. When it first kicked off, you wouldn't have to spend so much money on electricity and hardware to get a higher amount of bitcoin out."

      Wrong. For starters:

      1) No one said You would receive an "X" value/product. You have the bitcoins You bought/received/mined - and that's it. If there is no delivery promess, there is no Ponzi

      2) Mining for bitcoins does not get harder as times goes by. It gets harder/easier based on the number of bitcoins mined on a given period. Really. Check it out. The difficulty is adjusted in order to keep the mining of about "Y" bitcoins/day. If, for some reason, the number of mining machines goes down, the difficulty level follows.

      3) There is a finite number of bitcoins to be mined. By design, and since day one. There is, also, a timeframe for this to happen - hence the changes of difficulty. It is weird, but we can have a rough idea of how many bitcoins will be mined each day.

      I can't comment on the affirmative of the difficulty of early days. But I can say that it IS feasible to a new player (a new miner) begin today, and make some money. You don't have to be an old player, because You CAN mine for yourself - and the mining isn't affected by the number of bitcoins You already have.

  18. Tom 38 Silver badge
    Joke

    WeeXchange

    Where you can swap urine products with other like minded urine enthusiasts.

    1. Winkypop Silver badge
      Pint

      Re: WeeXchange

      <-- Here's mine.

  19. R J Tysoe
    Mushroom

    My lord! Success! After literally an hour's ceaseless searching I have succeeded in creating gold! Pure gold!

    1. JimmyPage Silver badge
      Coat

      ITYM

      "Green" ?

      And it's not so much a nugget, more of a splat.

    2. Scorchio!!
      Happy

      ...and after that my lord, we are going to extract the sunlight from excrement in order to give chavs suntans... ...oh, but wait....

  20. envmod

    bitcoin poverty

    i've only got 0.2791 bitcoins :(

  21. Anonymous Coward
    Coat

    Invest in bitcoins? Sooner or later this bubble will burst and you'll be left with nothing.

    Me? I've got my Euros locked away safely in a Greek bank.

  22. sisk Silver badge

    $20 per bitcoin was the low???

    How and when did that happen? When I was last looking at them it was more like $0.25 per bitcoin. Maybe I shouldn't have written them off quite so quickly.

    1. Daniel B.

      Re: $20 per bitcoin was the low???

      Hell, I'm thinking that. Last time I checked, it was somewhere around $3/bitcoin.

  23. Graham Marsden

    What word is missing from the following sentence...?

    "A ____ and his money are soon parted"

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