Topic: Bitcoin's worth of the currency over 1 Billion USD

[Samker]

Bitcoin: http://bitcoin.org/en/ , the world's first open source cryptographic currency: http://en.wikipedia.org/wiki/Bitcoin , which has been on a tear since the beginning of this year, set a new record for itself yesterday afternoon as the price listed on the largest online exchange rose past US $92. With nearly 11 million Bitcoins in circulation*, this sets the total worth of the currency just over one billion dollars.

For a bit of perspective, that's how much Facebook spent on its acquisition of Instagram last April. But Bitcoin is not a company. It's a digital currency that runs on a global peer-to-peer network without the backing of a nation or any other central authority. The recent ascent has traditional economists scratching their heads.

“It’s something of a mystery that Bitcoin has a positive value at all since it wasn’t launched in the way a new currency is typically launched,” says Lawrence White, an economist who teaches the history of banking and money at George Mason University: http://mason.gmu.edu/~lwhite11/

“Typically, if a country wants to introduce a new currency, they make it redeemable for the old currency at a fixed exchange rate and then after a while they cut off the link and retire the old currency. But they launch the new currency by giving people a sort of firm expectation of what it’s worth. Bitcoin didn’t do that. It just launched itself by its own bootstraps and we don’t really understand how that worked, as economists. “

Recent events suggest that many of the people who are using Bitcoin don't want a re-iteration of these old models. Much of the new interest in Bitcoin is coming from places like Cyprus whose desperate proposals for economic reform threaten to plunder the savings of its people.

Take what happened on 19 March, for example. In its bargaining for a 10 billion Euro bailout from its European lenders, the Cypriot government instituted a bank holiday (which did not end until 28 March) as it considered economic reforms that would impose severe levies on many bank deposits: http://money.cnn.com/2013/03/25/news/economy/cyprus-bailout-banks/index.html
As the situation became more chaotic, Cypriots who found themselves suddenly cut off from their savings accounts began downloading Bitcoin iphone apps.

That day, downloads of Bitcoin Gold, an application that tracks the exchange rate of Bitcoin, soared, going from the 1171st most popular finance-related download to 104th: http://www.appannie.com/app/ios/bitcoin-gold/ranking/history/#start_date=2013-03-01&end_date=2013-03-29&view=rank&store_id=143557&device=iphone&vtype=day
Without access to their money, it's unlikely that many Cypriots were able to buy Bitcoins at that time. But interest in the currency peaked in other countries as well. Spain, which has kept a close eye on the developments in Cyprus showed a similar spike on 17 March and downloads in the U.S. jumped three days later, indicating that when government currencies fray, Bitcoin begins to look a little more like a safe haven and a little less like a crazy techno-utopian experiment.

But if Bitcoin is to function as a proper currency, people will have to be able to spend it as well as save it. This month, Bitcoin recruited a couple of high-profile merchants. On 14 March, Reddit began accepting the currency from customers signed up for its Gold membership. Two days later, Kim Dot Com announced via his twitter feed that people could start using Bitcoins to buy access to his new filesharing service, Mega.

Since then, transactions in the Bitcoin network have significantly increased. For most of 2012, before the price of Bitcoin began its dramatic upward surge, daily transactions totaled at about 200 000 Bitcoins. Now that number tends to be around 300 000, suggesting that more people are using the currency to make purchases.

BitPay: https://bitpay.com/ , one of the most successful Bitcoin payment processors reports a similar trend. This month alone they set a new personal record, processing $2 million worth of Bitcoin transactions for their clients— nearly two thirds of what they managed in all of 2012.

“We see somewhat of a wealth effect,” says Anthony Gallippi, the CEO and co-founder of BitPay. “As the price rises, people do tend to spend money. When the price falls is when they tend to spend less.”

All of this is a big deal for Bitcoin. But making it into the Billion Dollar Club is not enough to impress professional investors, it seems. When asked whether Bitcoin's aggressive ascent was turning any heads, Michael Kagan, the senior portfolio manager at Clearbridge Investments had this to say: “I just don’t feel comfortable getting involved with something vulnerable to being hacked or manipulated, and with no recompense if it is. If I wanted to invest in something as an abstract store of value, I would buy gold.”

Maybe someday Bitcoin will gain its Wall Street cred. Until then, early adopters can at least bask in the glory of bewildering a whole generation of economic theorists.

A billion dollars may be small on a global scale, but it's certainly hard to ignore. Perhaps Justin Timberlake put it best while portraying Napster co-founder Sean Parker in The Social Network when he said, “A million dollars isn't cool. You know what's cool? A billion dollars”: http://www.youtube.com/watch?v=4e0n7vTLz1U

(IEEE)

[devnullius]

So... Time to invest?

Karma!

Devvie


~~~ notemail@facebook.com ~~~

Conare nullius momenti videri fortasse missilibus careant
——
All spelling mistakes are my own and may only be distributed under the GNU General Public License! – (© 95-1 by Coredump; 2-013 by DevNullius)

[Samker]

So... Time to invest?

...

Not in this, maybe gold: http://www.bankrate.com/finance/debt/is-it-time-to-buy-gold--1.aspx

[devnullius]

Why not in bitcoins? If I read the article, it's only at its very early beginnings...

devnullius

[Samker]

hmmm, I'm a little bit suspicious about the online depositing "large" amounts of money. IMO, something "small" for current payments is Ok.

[devnullius]

... and BitCoins seems to go down with the rest of the regulated

FROM: http://www.newscientist.com/article/mg21729103.300-us-to-regulate-bitcoin-currency-at-its-alltime-high.html?cmpid=NLC|

COPY PASTE

" US to regulate Bitcoin currency at its all-time high

26 March 2013
Magazine issue 2910. Subscribe and save
For similar stories, visit the Finance and Economics and US national issues Topic Guides
LOOKS like Bitcoin has got too big to ignore. Virtual currencies are to be regulated by the US Treasury after the Financial Crimes Enforcement Network (FinCEN) moved to clarify their status under anti-money-laundering laws.

The move comes as Bitcoins doubled in value in just a few weeks to hit a record high of more than $70 each, possibly fuelled by the banking crisis in Cyprus and the rest of Europe.

Bitcoin is run on a decentralised network controlled by its users, making it difficult to regulate transactions within the currency. However, exchanges that swap Bitcoins for real-world currencies, such as MtGox, are another matter.

FinCEN's new guidelines don't mention Bitcoin by name, but say that anyone involved in exchanges of decentralised virtual currency for real currency must register as a money services business and obey existing regulations. The same applies for centralised virtual currencies, such as Facebook credits.

But in a peer-to-peer currency it is not so obvious what counts as an exchange. Bitcoin "miners", who run software to create Bitcoins, might also have to register if they sell the newly minted currency for its real equivalent. Patrick Murck of the advocacy group Bitcoin Foundation called the guidelines "infeasible for many, if not most, members of the Bitcoin community to comply with".

This article appeared in print under the headline "Virtual money" "

Bad karma everywhere

devnullius

[Samker]

D., is this here, yours first contact with coins?

[devnullius]

D., is this here, yours first contact with coins?

No. And yes. A friend of mine was "into bitcoins" way back in 2009. He collected about 125 of them. Few years later, new hard drives and all was gone when it hit +1000$. He has nothing He hasn't picked up the phone in two months : ((

Beginning this year I bought a few bitcoins at 150 to 200 euro. I spent most on it on Iboga - something I wanted to try (it did nothing: ). The spare change grew in the meen time and I almost forgotten about it. Because I also baught a Butterfly miner back in April, expecting it at the latest in september - just in time to make ROI in about 6 to 8 weeks. It became end December before BFL actually sent them out Total loss of money (and I WILL continue my article about them - tabs are open for ages: )

During the last hollidays, after failing to get investors on board, I decided to look for alternative currencies to mine. That led, among others, to Litecoin and bitcointalk.org with its giveaways. And I discovered a brand new Twitter account and was lucky enough to get in contact with "the guy" behind it. He is planning a forum dedicated to alternative cryptography giveaways. Can be any other day...

So that's where I am now: doing nothing except chasing giveaways, contacting people and keeping scforum updated ; -)

I see it as a "free" (excluding labor) lottery ticket. The more different coins I can collect, the bigger the chance it might actually be worth something substantial in 18 months. I do not know of any other lottery that gives better odds ;p

I'm in it to win it and I won't back down ;p That said, I do have to admit that there are more fun things to do - my Androïd board is waiting for too long now...

Anyways,

Karma

devnullius

[Samker]

I'm so sorry because of your friend, it's not easy to accept loss of $$$$$$.

I wish you luck with CC-bubbles: http://scforum.info/index.php/topic,8569.msg22248.html#msg22248 just be smart and sell or trade them on right time: http://scforum.info/index.php/topic,8552.msg22108.html#msg22108 

[devnullius]

Keep being critical - I do am changing some long-term investment strategies ; )

One coin that keeps chasing me is Datacoin. I really think it has something. I should buy some and keep it safe for a 2 years. It might pop up. For now, it's all air - the only value is the mining behind it and the trading of the coins. Most have nothing to offer. They are just new coins. A local supermarket could print plastic ones and call it "coins" too. You might even buy something for it, but I'm not gonna put my pension in it. Bitcoin is different. It is the coin to measure all other coins to. And for the lighter alternative crypto currencies... Well, it's a battlefield - some only valuable because they represent a popular meme :| Not touching those! I am still evaluating Litecoin. Till now tightly linked to bitcoin value, only substantially less. Lottocoin could become very popular too - gambling! Forbidden in many countries and through bitcoin exchanges easily available. crypty.com Even trades it!

So I truly believe "coins" are going to remain and become really valuable. Others will be nothing but air ;p

And I do worry about goverenment takedowns. Hopefully regulation will prevent shutdowns. It might even become an official currency, replacing or adding to the old school, resource unfriendly money system in place now.

And for Datacoin... It just keeps creeping around in my brain

Devvie