Can we stop with the bitcoin topics that are solely about the price? Sure, if a company starts accepting it it's news, if something happens to bitcoin network it's news, but not this. This is getting crazy. This is not 'pimp your currency' news (yes, I say that as a bitcoin dev). I'm sure everyone one HN has made their mind about it by now anyway...
Also, the US government doesn't really have anything to do with the USD; the USD is managed solely by the Federal Reserve, and the Federal Reserve is not a branch of the US government (it's a privately held bank; look it up).
"it's not nothing"
It's worse than nothing. The Federal Reserve can and does change the value of the dollar at will (it's called inflation). That's why you can buy a loaf of bread with your 5 bucks now, but in 10 years your 5 bucks probably won't even buy a candy bar.
Contrast that with gold. In 1913 (the year the Federal Reserve was created), you could buy a house with 100 ounces of gold. 100 1913 dollars is worth roughly 2 2013 dollars, but 100 1913 ounces of gold is worth exactly 100 2013 ounces of gold, and you can still buy a house with it (100 ounces of gold is $156,740 USD; no, this won't buy you a house in New York, but it will in most other parts of the country). That's what it means for a currency to be backed by something of value. Value doesn't change.
Just to pick some other dates:
100 ounces of gold in 2000 was worth ~$28k which wouldn't buy much house anywhere.
Also, comparing gold @ ~$20/oz in 1913 to a dollar stuffed under a mattress in the same year is a bit of a false comparison. The Compounding the same $20 in 10year Tbonds (a decent 'risk free rate' starting in 1928 (the first year I could find data) would yield ~$679 in 2000 (outperforming gold by over 2x) and ~$1385 in 2012 (underperforming slightly, but with almost no volatility).
You can't compare gold just sitting there with USD gaining interest in an investment for 90 years. Well you can, but then you'd be making a ridiculous comparison.
Tbonds are pretty much the definition of the "risk free rate of return" for USD. Is there an alternate (non-zero) "risk free rate" for gold that you would like use instead to make comparisons?
Because you're comparing the value of one thing over time against the rate at which you would gain value in a different investment over time. I can see an argument for why you might say tbonds have been a better investment than gold, per se, but that's not what I'm talking about. I'm talking about the necessary volatility of fiat money because it's not backed by anything of real, unchanging value. I'm talking about the purchasing power of the same amount of gold and USD over time.
"what are you using to measure the "volatility" you claim fiat money has so much of"
Inflation.
And 'unchanging' wasn't the best choice of words, but my point is that gold is not subject to the whims of monetary policy makers because you can't create more gold. Gold's value only changes when more gold is discovered.
And they used to be running on bartering, gold and silver.
Things change.
I wonder how "running" cyprus is now :P
I'd say the fundamentals could be found looking in the weaknesses in government/central bank fiat and the controls put in place on how freely people can obtain and receive goods/services.
But yeah, this is a bubble, but if you look at the fundamentals that governments/central banks are running on now, it just takes one country with a overly bloated private banking sector and dieselboom to apply his templates… :P
They are somehow different. Governments back currencies up with debt (it used to be gold) and/or natural resources.
Bitcoin is decentralized by definition, and that's a huge difference because only rely in market value (not saying is bad per se). This might change if governments start regulating and supporting the currency.
It seems like a price target of $400 misses the point.
Bitcoin is likely making order of magnitude changes in value, one direction or another.
Edit: Oops, didn't read the article first, the author isn't actually setting a price target because he doesn't like Bitcoin, but I still stick by my statement.
I'm sticking to my price target of $2 by late June/early July[1].
Still no sign of adoption by any popular retailers, the majority of demand is coming from speculators, and the exchanges are getting slower every day (MtGox is down as I write this and the queue to open an account is several days deep).
At this point, BitCoin is still more of a toy than a currency.
If you believe this so heavily that you are already quoting your previous comment, why not short Bitcoins at https://icbit.se/? Surely you'd make a killing on it if what you believe is true.
It's easy to make grandstanding statements from the sidelines. If you're wrong, no one really remembers. If you are right, you get to harp on it whenever the subject comes up.
Much like housing, shorting BTC is hard to do. I have no idea if https://icbit.se/ is reliable. If BTC crashes will they actually have any money to pay out? I've played around enough with real currency trading to know that even the big reputable companies screw over the little players all the time.
If you're not really willing to put money down on your prediction for whatever reason, you should at least use Prediction Book. I even made the initial prediction topic for you: http://predictionbook.com/predictions/17184
The ratio of trade volume to transaction volume has been trending downwards since the start of the year. In other words, the growth in goods/services exchange has outpaced the growth in speculation (in terms of BTC, not USD). [1]
Further, it's inaccurate to generalize performance problems to all exchanges. MtGox is the only exchange that has these kinds of issues. I've never seen any lag on any other exchange. I'm still baffled as to why they've remained so popular for so long, but I do know it's not for lack of other well-performing exchanges.
Of course no one - including you - will remember your prophecy come August, but I am pretty sure you are wrong. Why? Because history does not repeat itself, esp. not when it comes to speculation.
That is quite possibly one of the stupidest statements I've ever read on HN, let alone the wider internet. We don't study history because we seriously think we can avoid making the same mistakes, really. We study history because we need to know what other people are going to get us entangled in because "this time, it's different".
Noob question: as I understand Bitcoins are linked to values of other currencies. Is it possible to link it to a stable non-currency value/index? (I'm thinking about the Big Mac index here: http://en.wikipedia.org/wiki/Big_Mac_Index)
Or to put it in another way: it it possible to link a Bitcoin value (or any currency) to an index not influenced by greed? Could it be linked to the number of people alive for example?
To build a comparison of price indexes you have to have an exchange rate and products that are sold on two markets that use the two currencies separately, there's no Big Mac sold by BTC as far as I know, as such you have to find products that are sold in the market using the two currencies.
I can think of pot, and using silk road to build the index for BTC but as I see its prices are pegged to dollar and BTC is only used to maintain some anonymity of the transactions.
Slightly away from the crux of the article, I've seen a few people mention hacking as a reason why BitCoin is still risky. Are they talking about hacking of BitCoin at the low level, or hacks on BitCoin repositories?
during the first bubble i bought about a hundred bitcoins (2k usd worth), just after few days the bubble unfortunately popped and the price was back to 4-5, and i decided to sell them (it was my first "trading" experience, the stress of the losing was high), after a while (late 2012) i bought back what i had left for $9 and sold them for $13, now I just wish that I kept them instead when i bought them initially :-(
