papatree84 Posted January 20, 2015 Posted January 20, 2015 Anyone have thoughts on this? I have been considering buy my first Bitcoins now that the price is low and affordable for me. Should I be worried about the low prices?
wayside113 Posted January 20, 2015 Posted January 20, 2015 If you understand why it's valuable i'd say go for it. If you're picking one up to hold onto for a while buying a couple is ok but if you're serious about investing i'd dollar cost average and but a few dollars worth each week. Really comes down to where you think bitcoin is going to be down the road. The price to me stopped being anything but a number that people keep reminding me when the topic comes up some time ago. I have no idea where the price is going but i definately believe the market is easily manipulated since its so illiquid so to me any price is a good buy price when the asset you're coming from is worthless imho.
Pepin Posted January 20, 2015 Posted January 20, 2015 My advice would be to buy if you believe in it. I was never really skeptical of it, but only recently have I begun to think that Bitcoin will really succeed. Looking at the competitive advantages it gives, I am pretty convinced that in 10 or 20 years that block chain will be used for everything. I'm getting in it for the long haul. I'm also putting money into alt coins, not because they will succeed, so much as that I want to be apart of this experimentation. 1
firefop Posted January 20, 2015 Posted January 20, 2015 I've been involved with bitcoin from close to the beginning. Done mining and I still use it often for purchasing. Part of the reason that the prices are where they are is because in 2014 there was a large push by the US government that effectively forced any domestic exchanges who wanted to continue operating to start identity verifying (and reporting on purchases and sale of bitcoins) for tax purposes. This is what has stalled out the growth. It's still slowly growing but it's become a hard sell in the states. Also if you take a longer view 16 months ago bitcoin was under 100 bucks. Then we had an end of 2013 spike to 1400... and then it crashed into our current range (slightly less than present). All in all - 200% growth over 2 years isn't bad at all. I'd simply look at it as an investment, by whatever you can afford on a fixed schedule... I think in some years you'll be quite happy with it. In the long run it's only going to go up... unless it fails completely. But it does have such amazing benefits compared to fiat that in my mind it's sure to survive and prosper.
ParaSait Posted January 20, 2015 Posted January 20, 2015 I think the price crashed because of a big panic caused by the bitstamp hack. In my opinion, now's the time to buy. I snatched myself some at $195.
Jeff_NH Posted January 20, 2015 Posted January 20, 2015 The price is not 'so low' nor is it 'so high'. It is currently where the market values it. It could be worth $100 tomorrow or $1000 six months from now. While bitcoin is designed to be money, it currently acts much more like a volatile commodity. I would not view money put into bitcoin as an investment. There are lots of reasons to buy bitcoin. Even more reasons to buy it, sell it, trade it, spend it, buy more. I would not recommend it as an investment. At the very least, get your feet wet and find a way of getting bitcoin easily (coinbase, circle, localbitcoins, etc). Then, when you are donating to charities, buy items at places like newegg, overstock.com or anyplace else that accepts it, opt to buy some coin and spend it. You'll understand the technology better. You'll contribute to free (as in speech) money. You'll be in a better position over time to understand how to safeguard your wallet(s). Nothing wrong with stashing a little away right now but I would not put more money into long term storage than you can afford to burn. 1
Daniel Unplugged Posted January 20, 2015 Posted January 20, 2015 I think the price crashed because of a big panic caused by the bitstamp hack.I just want to point out that neither the Bitstamp hack, nor the MTGOX fraud demonstrated any flaw whatsoever with Bitcoin. Websites are vulnerable to hacking, always will be. Financial institutions are vulnerable to fraud and mismanagement, always will be. Money, whether electronic or made of paper, is vulnerable to theft if not kept in a safe location. A park bench is not a safe place to keep US dollars and an online exchange is (although much less so) not a safe place to keep Bitcoins. Bitcoin is as secure as ever.
ParaSait Posted January 20, 2015 Posted January 20, 2015 Yep! I'd even say the very fact that these unfortunate things are happening serves as evidence that bitcoin works just as intended. Something bad happens in the network, no one has the power to magically repair it somehow. But try explaining that to your average joe...
TheAuger Posted January 20, 2015 Posted January 20, 2015 @papatree84, Also consider your reasons for buying BTC. What is your time horizon -- will you be a long term or short term holder of BTC? What's you purpose for buying -- as a hedge against inflation, as an investment, alternative commerce? What's your risk tolerance? https://www.tradingview.com/v/axBQoCTa/ About a year ago BTC was trading in the $730s, so it may be a great value purchase at $200. But notice, at least according to this source, it has missed even conservatively projected valuations. Questions about BTCs long term value and its reception by the greater marketplace are completely open, in my view, and so it's important to become crystal clear about your reasons for purchase at the outset.
yagami Posted January 20, 2015 Posted January 20, 2015 The reason bitcoin is down is simply supply and demand. The more people that accept bitcoin the more bitcoin will be sold. Bit coin is being accepted by businesses faster than it's being accepted by consumers. Businesses dont hold bit coins they sell their bitcoins immediately (for obvious reasons). They are essentially taking money out of the bitcoin system by doing this. The price of bitcoin will continue to fall as long as the rate of selling of bitcoin via businesses out paces the rate of buying by consumers. That's my theory anyway. Bitcoin is doing everything right this is just a natural consequence of businesses seeing more value in using bitcoin as a medium of exchange before consumers do. My recommendation would be to sell your bitcoins if you are holding onto them as an investment. There are groups out there dedicated to spreading bitcoin around the world and getting bitcoin accepted by as many businesses as possible. I dont see the tide turning anytime soon. But eventually bitcoin will gradually rise as people start buying more than is being sold. I doubt there will be another spike in price like there has been in the past.
Daniel Unplugged Posted January 21, 2015 Posted January 21, 2015 Businesses dont hold bit coins they sell their bitcoins immediately (for obvious reasons). They are essentially taking money out of the bitcoin system.I have heard this argument many times, and I don't buy it. ... a person buys some Bitcoins from an exchange, uses those Bitcoins to buy a pair of shoes from an online retailer, and then the retailer sells those Bitcoins back to the exchange. Once all is done and dusted, the transaction had zero effect on the demand or supply of Bitcoins (there was a short period where the demand for Bitcoins was increased while the shoe buyer was holding them). Some Bitcoins were purchased at the market price and the same quantity of Bitcoins were sold at the market price. The two transactions cancel each other out. But eventually bitcoin will gradually rise as people start buying more than is being sold.I hate to nitpick, but being OCD and all, I am compelled to do so. The quantity of Bitcoins sold (or anything else for that matter) is always exactly equal to the quantity of Bitcoins purchased, it cannot be otherwise. A more accurate statement would be: "The price of Bitcoin will increase when the demand at the current price exceeds the supply at the current price." Just trying to help. Dan.
yagami Posted January 21, 2015 Posted January 21, 2015 I have heard this argument many times, and I don't buy it. ... a person buys some Bitcoins from an exchange, uses those Bitcoins to buy a pair of shoes from an online retailer, and then the retailer sells those Bitcoins back to the exchange. Once all is done and dusted, the transaction had zero effect on the demand or supply of Bitcoins (there was a short period where the demand for Bitcoins was increased while the shoe buyer was holding them). Some Bitcoins were purchased at the market price and the same quantity of Bitcoins were sold at the market price. The two transactions cancel each other out. I hate to nitpick, but being OCD and all, I am compelled to do so. The quantity of Bitcoins sold (or anything else for that matter) is always exactly equal to the quantity of Bitcoins purchased, it cannot be otherwise. A more accurate statement would be: "The price of Bitcoin will increase when the demand at the current price exceeds the supply at the current price." Just trying to help. Dan. How can you then explain the price of bitcoin going down at any level. If the price of bitcoin goes from $600 a coin to $599 a coin what is a possible cause for that?
Daniel Unplugged Posted January 21, 2015 Posted January 21, 2015 One dollar movement in the price doesn't mean much at all for Bitcoin - the spread between the buy and sell orders on the exchanges is usually more than that. Note that the 'price' only refers to the last price at which an exchange took place. Price only exists in the moment of trade. All market prices fluctuate by small amounts in the short term. In a more general sense, price changes are determined by supply and demand. If Bitcoin goes down, it is because demand has dropped or supply has increased or both.
yagami Posted January 21, 2015 Posted January 21, 2015 Yes that's true but how would demand going down manifest itself. And my question was in regard to price fluctuations at any level. You didn't really answer how small fluctuations happen but lets say you did. How do large fluctuations occur? Are you saying that a large group of people could not act in one particular way which would result in a drop in price. If this is possible can you give an example of what this would look like? 1 1
Daniel Unplugged Posted January 21, 2015 Posted January 21, 2015 Have a look at the price ticker here to see what I mean. https://bitcoinwisdom.com/markets/btce/btcusd Yes that's true but how would demand going down manifest itself?Prior to the price going down, the number of buyers and sellers would be equal. If demand then drops, there would be a shortage of buyers. The sellers would have to lower their asking price in order to sell their Bitcoins.You didn't really answer how small fluctuations happen...At the Bitcoin market there are many buyers and many sellers. Whenever a buyer and seller agree on a price, a trade takes place. That price becomes the 'price' until another trade takes place. No central authority sets the price. There is always someone offering to sell and someone offering to buy, but these people have not agreed on price yet. Say the last sale was at $199, the highest bid offer is at $199 and the lowest sell offer is $200. If a new buyer comes in and agrees to buy some of the $200 Bitcoins, $200 becomes the price. If then, a new seller comes in and agrees to sell some bitcoins at $199. $199 becomes the price again. This can happen over and over again, with the price going from 199 to 200 to 199 to 200 many times. It's just noise in an imperfect market. 1
yagami Posted January 21, 2015 Posted January 21, 2015 When you say the number of buyers and sellers would be equal are you saying that when the price goes down there are then more sellers than buyers? 1
Daniel Unplugged Posted January 21, 2015 Posted January 21, 2015 When you say the number of buyers and sellers would be equal are you saying that when the price goes down there are then more sellers than buyers?Yes, some extra sellers came into the market. There was not enough buyers, so the sellers agreed to lower their prices in order to attract a buyer (at a lower price, more people will be willing to buy). All I was saying before, is that if a Bitcoin is bought, then a Bitcoin was sold, it has to be. 1
yagami Posted January 21, 2015 Posted January 21, 2015 In that case doesn't it make more sense to believe that the recent drop in bitcoin is due to the number of sellers increasing? I think we both can agree that businesses cant really hold bitcoins because of the risk. I mean not that they cant but I cant imagine holding onto them as any form of asset. And I think we can also agree that more and more major businesses are making it easy to buy their services with bitcoin. With that being the case it would seem to me that this would be the reason for the price decline. If we take your explanation of how the price of bitcoin is determined then what do you think would happen if more and more people entered into the marketplace asking to sell their bitcoins. It would seem to me that offers would be taken up over and over again asking for lower and lower prices. Eventually stopping when there are enough people willing to buy bitcoins at the offered price. This is what I mean by the success of bitcoin is why the price is falling now. The more people that enter with the intent of selling only the lower the price will go until there are more people buying then selling. You only seem to have further proven my point. Now this is of course all theory and I dont claim this to be fact but I haven't heard a better explanation yet. What do you think is the reason? 3
Daniel Unplugged Posted January 21, 2015 Posted January 21, 2015 How do large fluctuations occur? Are you saying that a large group of people could not act in one particular way which would result in a drop in price. If this is possible can you give an example of what this would look like?Sorry mate, I accidently downvoted your post when trying to click on 'quote', I'm using my S5 and i have fat fingers. I'll email Mike and get it fixed. A large group of people selling at the same time (or one person selling a lot at once) will cause the price to drop. Say there is someone offering to buy a bitcoin for $200, and someone else offering to buy a bitcoin at 199, someone at 198, someone at 197....all the way to 191. Then say a seller comes in with 10 Bitcoins, wants to sell all 10 straight away, and is willing to accept any price. He will sell his first bitcoin at 200, his second at 199, his third at 198 etc. The last Bitcoin he sells will be at $191. The Bitcoin price at this point will be $191. This is called a 'flash crash' If there is a flash crash, the price will usually recover quickly (within seconds or less). Almost everyone at the exchange will assume that some idiot just hit the wrong button on his keyboard. It is not rational to dump a huge quantity of Bitcoins and sell them at any price. A smart seller will sell a few at a time every few minutes so that he doesn't push the price down. 2
TheAuger Posted January 21, 2015 Posted January 21, 2015 I'm really liking this conversation, gents -- keep it up, if you please -- it's very informative! I wonder what your take is on the New York Times reporting on Coinbase's most recent round of funding, mostly from the "legitimate" finance capital establishment. http://dealbook.nytimes.com/2015/01/20/coinbase-a-bitcoin-start-up-raises-75-million-in-vote-of-confidence/?_r=0 BTC (via Coinbase) seems to be receiving coverage and votes of confidence from the MSM (it's not true until the NYT says it is) and Wall Street, respectively, even while it's trading at the $200 range. Then again, maybe this news is just an effect of way too much hot money chasing any new investment opportunity...?
Crallask Posted January 28, 2015 Posted January 28, 2015 I work in the crypto field and do reports and investigations and the sort. The recent downturn of BTC price was caused by a former equipment specialist which sold Mining equipment dumping 120,000 bitcoins they effectively stole - yes, stole. (They would promise products - ship them late, USE the fucking equipment to mine coins for themselves after it had been purchased - saying products were delayed. Once the effectiveness of the mining gear dropped beyond a certain value due to how the hashrate was scaling they'd ship them out sometimes. This is a biiiiig fucking deal when you realize how mining difficulty and the expected delivery date would impact the RoI of this equipment.) The Bitstamp hack was big, but also keep in mind GOX which was 11 months ago and Mintpal back in October. (Three major exchanges failing in a year.) In addition to this you also have another group such as GAW making their own crypto currency which had a huge initial investment but flopped due to being a scam. (They guaranteed they could double its price from your initial investment - they fucking couldn't and it dropped from 10 USD to 2 USD) I'm really liking this conversation, gents -- keep it up, if you please -- it's very informative! I wonder what your take is on the New York Times reporting on Coinbase's most recent round of funding, mostly from the "legitimate" finance capital establishment. http://dealbook.nytimes.com/2015/01/20/coinbase-a-bitcoin-start-up-raises-75-million-in-vote-of-confidence/?_r=0 BTC (via Coinbase) seems to be receiving coverage and votes of confidence from the MSM (it's not true until the NYT says it is) and Wall Street, respectively, even while it's trading at the $200 range. Then again, maybe this news is just an effect of way too much hot money chasing any new investment opportunity...? Also, Auger. Coinbase has recently announced that they're going to be running the first licensed and regulated USD exchange for cryptos. I for one, welcome this. As we'll get to see how free market unregulated sectors fair vs this new breed of entanglement.
BaylorPRSer Posted January 28, 2015 Posted January 28, 2015 Could the feds snatching up Ross Ulbricht's bitcoins have put downward pressure on the price as well? I'm assuming they cashed out as soon as soon as they were in possession of them.
Crallask Posted January 28, 2015 Posted January 28, 2015 Actually they held a massive auction for them.
BaylorPRSer Posted January 28, 2015 Posted January 28, 2015 And I gather you don't see that incident as something affecting the price very much/at all.
Crallask Posted January 29, 2015 Posted January 29, 2015 I don't remember the date, but I believe the auction ended a year ago. The price has affected by a chain of events. Including at 1200 being false. it was blown up that high by the owner of GOX. People trusted GOX for the price of btc. Apparently there were 2 bots set to spam buy/sell orders that would up the price. This is feasible when you consider GOX stole large amounts of BTC over time - the height of the theft coming in at the end of its life. (Everyone saw the red flags then and jumped ship.)
Pepin Posted January 29, 2015 Posted January 29, 2015 I think what makes large purchases of BTC confusing is that if they happen to be rich, they are more likely to hold on to them as an investment. The appeal of BTC as a high risk investment is gaining attraction in finance, so the possibility of losing it all its value isn't much of a problem.
Crallask Posted January 29, 2015 Posted January 29, 2015 BTC is the biggest player at the moment and likely will be for at least another 3 years. I wouldn't be surprised if the price really did hit 10,000 like some people speculate. But I also think it has a number of flaws which alt coins can help address and that some alts are poised to match it if not overtake it completely in the long term future. (and no, I don't mean LTC or Doge.)
J-William Posted January 29, 2015 Posted January 29, 2015 I don't think that current low prices are in any way a reflection on the viability of crypto-currencies longterm... I'd be willing to bet substantial amounts of money on that. But I don't really love bitcoin as a low risk investment. I'm not sure where the price of bit coin will be tomorrow and I couldn't even guess if it will drop to zero in ten years because it has been replaced by a superior currency. I tend to think that bitcoin is here to stay and that current prices are just reflective of a maturing market in bitcoin that is not quite so wild with speculation. Personally I have no money in bitcoins and have only ever used them to make international money transfers. I can wholeheartedly recommend BTC as a way to transfer money, but holding it is only for people with money they can afford to lose.
firefop Posted January 29, 2015 Posted January 29, 2015 I think what makes large purchases of BTC confusing is that if they happen to be rich, they are more likely to hold on to them as an investment. The appeal of BTC as a high risk investment is gaining attraction in finance, so the possibility of losing it all its value isn't much of a problem. Your claim that BTC is considered a 'high risk investment' in finance seems counter intuitive to me, sure it's volatile in the short term, which makes it a high risk market to play in... but long term the price will continue to climb unless it fails completely (and by this I mean complete and catastrophic failure along the lines of quantum computers being able to break SHA256 in realtime). Right now there's ~13,776,375 bitcoins that have been created - the estimated inflationary period only lasts until 2136 before it becomes mostly trivial, as in double digits of satoshis. But this is open to some debate, because at some point the block reward is going to be less than the transaction fees and thats when it flips over to being deflationary. I would say if you'll plan on holding your btc for 10 to 15 years then buy buy buy.
Pepin Posted January 30, 2015 Posted January 30, 2015 Your claim that BTC is considered a 'high risk investment' in finance seems counter intuitive to me, sure it's volatile in the short term, which makes it a high risk market to play in........ I'd agree, though i would like to clarify that it isn't exactly my claim that it is a high risk investment, but rather it is a common perspective of outside investors. I think BTC is one of the best long term investments you can make. With your point about proof of work perhaps being broken by quantum computing or something similar, I was listening to an interview today on proof of stake, and that could actually provide a lot of protection. I am still not quite certain I understand it so I can't say how good it actually is, but if there is something which is more efficient than proof of work and is just as secure, then I would be in favor of it.
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