If I go to my bank account and find it drained through theft and/or fraud, there are peoples and agencies dedicated to finding out whodunit and possibly getting my money back.
If I go to my computer and find my bitcoin[s] missing through theft and or fraud…?
A bit of a tangent: on NPR’s Planet Money, they goaded a couple a financiers to make a bet about the future of Bitcoin:
So, with a year left to go, it looks like Felix is going to win, right? Bitcoin hasn’t disappeared, but do 10% of Americans make a Bitcoin purchase in a given month, even if that given month might be December?
I have been reading up a bit about one of the rival cryptocurrencies, Ethereum, and it seems like that and similar currencies have put an extra piece in the puzzle that Bitcoin lacks - the Ethereum network incorporates not only blockchain, but also the ability to run actual useable distributed code, using the etherium currency to pay the owners of the machines the code is actually being run on.
I’m a total cryptocurrency noob, so I couldn’t predict how likely this is as a scheme to work - whether the Ethereum network ends up being something you would *want *to run code on, or if the existence of the necessary blockchain structure underneath makes it too inefficient, compared to other possible resources like cloud computing. But it seems like this is at least heading in the right direction. If you want your new cryptocurrency to have some intrinsic value, “is involved in the running of useful software” is the sort of intrinsic value you could reasonably expect to incorporate into it.
Does all of this have anything to do with what I saw this morning?
Walking to work, I saw a lone protester on the sidewalk in front of our county Public Utility District building, holding a sign that read:
BITCOIN
CAUTION PUD
ETA: Ah, here we go: PUD staff stretched thin from surge in bitcoin inquiries
(most of the story is behind a paywall, but you can get the gist)
Simple. Click on the little button that says “Forgot Your Password?” Then give them your mother’s maiden name, and they’ll email you a password hint.
Why would you want that? No real currencies have that feature. Back when real currencies did have that feature it led to wild economic instability. Read up on the gold standard. And not the CT stuff, real info.
A currency’s value should reflect the volume (quantity times velocity) of money in the economy it covers. Anything else added to the stew just sends the currency in directions that harm the economy. Imagine that Bitcoin was already a significant part of the US economy and was suddenly having this speculative bubble like it really is. Do you suppose that would be good news for people trying to conduct commerce using Bitcoins? Nope. More like abject disaster.
Also worth noting is that marrying executable applications to cryptocurrency is a *horrible idea from a security perspective. The more complex the code gets, the more likely it is that a usable exploit will be overlooked. That’s why all the big players - Microsoft, Apple, Google, Playstation, etc - have to release updates every ten minutes. Because inevitably one of the new features they’ve added will have a hole nobody noticed except a handful of industrious users.
Sure, you could patch Bitcoin or Ethereum every ten minutes too, but it’ll be small comfort to all the people who lost large sums of money in the time it took between the hackers becoming aware of an exploit, and the coders for that software becoming aware they need to patch it.
It dropped nearly 30% today (from 17670 to 10881) but has recovered at time of writing to a 20% drop. I’ve not really watched a bubble burst before - could this be it or it is usually done in a single stroke?
There’s no way to know, but a lot of asset bubbles display a “double-dip” pattern: A large, fast loss, followed by a partial recovery, followed by a prolonged, deep loss.
It was down 44% from Friday before going back up some.
I expect the panicked rush for the door from the “get rich quick” people is starting.
The ability to short the underlying instrument is generally a prerequisite for a liquid options market. If a market is reasonably liquid, professional options traders will usually be willing to write puts - provided they can hedge their exposure by shorting a proportion of the underlying.
The futures market may give some guide to whether it’s possible to borrow and short the underlying. In liquid markets, futures prices are tied to the cash price by arbitrage. A futures contract will generally never go to a large premium, because it’s always possible to buy the underlying and short the future to lock in a profit. However, the reverse is not necessarily true. If the futures price goes to a deep discount, the corresponding arbitrage is to buy the future short the underlying to lock in a profit. So if arbitrageurs cannot borrow the underlying, then there’s nothing to stop the futures price dropping far below the cash price.
Putting these elements together: the cash/futures relationship may give some guide to the difficulty in borrowing and shorting bitcoin; and options prices (if there ever are any) will tend to trade off the futures price, not the cash price (if they are out of whack).
Your first quote is the definition of shorting. The steps would be
(1) Negotiate a loan from someone who owns it;
(2) Sell in the open market (this initiates the actual short position);
(3) Some time later, buy back in the open market (“cover your short”);
(4) Return the borrow.
The loan market is in itself is an independent market in which you must negotiate terms. But note that even if you’re able to negotiate a non-callable loan, you will still certainly be required to post collateral equal to the prevailing market value throughout the life of the loan. Say you borrow one bitcoin and short it at $10,000, posting $10,000 (cash or equivalent) initial collateral to the lender. If the bitcoin market price now goes to $50,000, you must post a further $40,000 cash collateral to the lender (i.e. your mark-to-market loss), whether or not you decide to cover your short.
I so wish I had the technical know-how to launch a cryptocurreny, just so I could call it the Tulip.
The internet is a series of tubers.
Some days it seems mostly populated by goobers.
To me, the key point is that nothing is ever priced in bitcoins. For comparison: There are millions of sandwich shops in this country, almost all of which have published prices for their sandwiches as a certain number of US dollars. I can spend, say, $5 to get a footlong Italian sub. And I can be reasonably confident that if I go into the same shop tomorrow, I’ll still be able to get a footlong Italian sub for $5. Now, the sandwich shop could change the price at any time, to anything else they want, but they’re probably not going to. Even if the dollar changes in value, it’s just too much bother to change all of the menus and ads and cash register listings to be worth it. And the fact that there are all of these sandwich shops (and all of the other businesses with prices in dollars) that usually keep their dollar prices constant helps to keep the dollar itself stable: I’ll accept dollars, because I know that each one of them is a fifth of what I need to buy a footlong, and probably will be tomorrow, too.
Now, some of these millions of sandwich shops will also accept other forms of currency. For instance, one near the border, and frequented by tourists, might also accept Mexican pesos or Canadian dollars. But they won’t generally have a fixed price in those currencies: They’ll look up the current exchange rate, and convert the price in US dollars to the equivalent price in the other currency, and charge that. So I can buy my sandwich in pesos instead of dollars, but if I buy another one tomorrow, I probably won’t pay the same number of pesos for it, because the exchange rate fluctuates. And so these shops don’t do anything to stabilize the peso.
And while there are some businesses which will accept bitcoin, so far as I know they’re all more like the pesos case than the dollars case: They won’t list the prices as 0.001 bitcoin; they’ll list it as $10 worth of bitcoins at whatever the current exchange rate is.
So, if you’ve been following the news, the premise of this thread has proven to be true…Bitcoin has lost over 25% of it’s value in just 24 hours…this after being worth 1,000% more than it was this time last year.
CNN article ahoy: Bitcoin lost a third of its value in 24 hours
Gold was successfully used as a currency for about two thousand years before being replaced by fiat currency, and the periods of wild instability as far as I can see were caused by an attempt to peg the price of gold, the price of silver, and working currencies of entire countries together at a time of great political instability. Nonetheless, gold still had intrinsic value through all that period, and it still has intrinsic value now. People buy it, and that’s not insane. A cryptocurrency might be useless as a currency but that’s not a complete answer to the question “is it worth buying this cryptocurrency?” unless (as with Bitcoin) being a currency is all it does. If it does something else, it may have intrinsic value, and may be worth buying.
You can’t go down to your local supermarket with ten shares in IBM and pay for your groceries with them, and shares can be incredibly volatile and go all the way down to zero … nevertheless, people still buy them.
That’s all true, and that’s why very few goods are used as money. There have been lots of key goods used as money over the ages, and you still can’t go down to your local grocery store and buy stuff with gold nuggets, whiskey, cacao beans, cowrie shells, buckskins, or cigarettes. In fact, they won’t even accept Euros or Pesos or Yen or Canadian dollars.
That’s old news. It’s basically recovered at this point. Crazytown.
The “mainstream” argument in the bitcoin community these days is that the “currency” part of cryptocurrency is mostly a misnomer. That it won’t be used for daily transactions directly, but will still be a store of value, or that there will be systems based on it that will be used for daily transactions.
I’m not really convinced by that argument, but it’s certainly possible for Bitcoin to have some kind of non-bubble value and also not really be used for daily transactions.
If it becomes some super-portable gold-like store of value that can easily evade currency controls and be transferred quickly and easily (for some value of quick and easy. Certainly it’s still easier to send Bitcoin than a gold brick), then maybe it’s still useful and valuable.