bitcoin bubble getting out of control...surging non stop. up over $600 now

[m22au]

Quote from Scataphagos:

How can the value of money fluctuate so much? After all, you're changing your $USD into bitcoins for whatever reason. How can they be worth 50X what you paid for them at a later date? If that's really how it works, the risk is HUGE!

It's not like buying value biotech stocks where you hope their business and earnings justifies a big price rise. Bitcoins is just exchanging one currency for another. ??

I'm not sure I quite understand. As with the purchase of any asset, the most you can lose is 100%. If you exchange $600 for one Bitcoin or $600 for 6 Yen, in both cases the most you'll lose is $600. The only difference is that Bitcoin fluctuates more than JPY.

The comparison to biotech stocks is valid - there is the potential (however small) for Bitcoin to be a game changer and replace fiat currencies as a medium of exchange. If that's the case, then $600 is cheap.

 

[gmst]

Quote from m22au:

I have no position in Bitcoin now - and I'm perfectly comfortable with that.

I don't understand your last question sorry - I'm not sure what "if you answer above question affirmatively" means.

not a big deal. ....my first question was hypothetical in that it started with "if"....how much would you invest in bitcoins.

What I meant from affirmative response was that lets assume you would have said you would put 3% of your networth in bitcoins, but you haven't taken a position yet - so my question was why have you not taken the position, if you want to.....is it because its hard to trade bitcoins, hard to cash out etc. etc.

Never mind.....

 

[Scataphagos]

Quote from m22au:

I'm not sure I quite understand. As with the purchase of any asset, the most you can lose is 100%. If you exchange $600 for one Bitcoin or $600 for 6 Yen, in both cases the most you'll lose is $600. The only difference is that Bitcoin fluctuates more than JPY.

The comparison to biotech stocks is valid - there is the potential (however small) for Bitcoin to be a game changer and replace fiat currencies as a medium of exchange. If that's the case, then $600 is cheap.

One of the reasons someone might transact in bitcoins is to go under the radar of money movement from one place to another.

Is it accurate to say that one might buy $1MM of bitcoin @ $10.. that is to get 100K bitcoins for $1MM.. then at some later date to exchange the 100K bitcoins for $60MM @ $600/bitcoin?

If so, that ain't a "currency exchange transaction"... that's something else entirely.

 

[m22au]

Quote from gmst:

not a big deal. ....my first question was hypothetical in that it started with "if"....how much would you invest in bitcoins.

What I meant from affirmative response was that lets assume you would have said you would put 3% of your networth in bitcoins, but you haven't taken a position yet - so my question was why have you not taken the position, if you want to.....is it because its hard to trade bitcoins, hard to cash out etc. etc.

Never mind.....

OK - I can probably give a better answer now:

I would give some consideration to trading BTC (both long and short) if it was possible to trade it using an online stockbroker. As you might know the Winklevoss twins are trying to get SEC approval for a Bitcoin ETF:

http://www.sec.gov/Archives/edgar/data/1579346/000119312513279830/d562329ds1.htm

You're right, the logistics of trading Bitcoin (not available at stockbrokers) is off-putting.

 

[m22au]

Quote from Scataphagos:

One of the reasons someone might transact in bitcoins is to go under the radar of money movement from one place to another.

Is it accurate to say that one might buy $1MM of bitcoin @ $10.. that is to get 100K bitcoins for $1MM.. then at some later date to exchange the 100K bitcoins for $60MM @ $600/bitcoin?

If so, that ain't a "currency exchange transaction"... that's something else entirely.

We're just disagreeing over the semantics of what is and isn't "currency exchange".

Suppose a Japanese person is concerned about Hyperinflation today, and they exchange their live savings of 10 million Yen into US Dollars.

Then Japan experiences hyperinflation and USD/JPY goes to 6,000.

She then sells her USD and gets 600 million Yen.

This is similar to your example to buying bitcoin at $10 and selling at $600.

 

[blah12345678]

Quote from Scataphagos:

How can the value of money fluctuate so much? After all, you're changing your $USD into bitcoins for whatever reason. How can they be worth 50X what you paid for them at a later date? If that's really how it works, the risk is HUGE!

It's not like buying value biotech stocks where you hope their business and earnings justifies a big price rise. Bitcoins is just exchanging one currency for another. ??

You're missing the *big* feature of bitcoins - built-in scarcity.

There's a finite number of bitcoins that can be created. Each ensuing bitcoin created (i.e. mined) is x% more difficult than the previously mined coin. I believe x% also increases with each mined coined - it's not static, either.

As long as the perception of demand exceeds the supply, the "value" is pretty much a one-way street - up.

If the US and other gov't kill the demand (by killing the ability to convert BTC into dollars, euros, etc or enacting methods to thwart/tax private barter transactions), the value will plummet.

Bitcoin is like any other fiat currency - backed by nothing except belief in it's value.

Bitcoin FAQ

 

[Scataphagos]

Quote from blah12345678:

"... As long as the perception of demand exceeds the supply, the "value" is pretty much a one-way street - up.


Bitcoin FAQ

Oh yeah.... just like tulip bulbs in the 1600s.

It's LUDICROUS to believe $1 USD can rationally be converted to $50 USD simply because it was washed through a bitcoin transaction.

However.. seems to me, that's how it works. And if so, it's a game for the stupid and naive.

 

[m22au]

Quote from Scataphagos:


It's LUDICROUS to believe $1 USD can rationally be converted to $50 USD simply because it was washed through a bitcoin transaction.

How is it any different to any other currency transaction?

 

[Scataphagos]

Quote from m22au:

How is it any different to any other currency transaction?

Currency transactions are "exchanging one money for another at a given time based upon the then conversion rate".... which doesn't fluctuate much over short terms of time... nothing like 50X.

Why should a bitcoin be worth 50X what it was 2 years ago??. The currency used to buy it didn't depreciate by 98% during that time.

 

[m22au]

Quote from Scataphagos:

Currency transactions are "exchanging one money for another at a given time based upon the then conversion rate".... which doesn't fluctuate much over short terms of time... nothing like 50X.

Why should a bitcoin be worth 50X what it was 2 years ago??. The currency used to buy it didn't depreciate by 98% during that time.

Like I said in earlier posts, investor perception changing regarding the possibility of it becoming a viable currency in the long-term.