UKC

Anyone else noticed the the steep rise in the price of Bitcoins recently? The price has doubled in the past month.

One guy who bought $22 worth in 2009 saw the value go up to $850,000.

The current price rise has been linked to the Chinese support for the currency so I'm guessing its probably not just a spike.

So is it a good or a bad time to buy? Anyone else investing in these or any other crypto-currencies?

In reply to stp:

I think it's very difficult to predict what will happen with Bitcoin. The economy that drives it's value is, I imagine, very much different to those of normal currencies.

Presumably there'll be quite a few articles on the drivers behind Bitcoin's soaring value on the interweb. I'd read those carefully and then invest no more money than the amount you can afford to lose.

In reply to stp: What stops Uncle Sam taking this whole thing down overnight?

In reply to woolsack:

Bitcoin isn't inherently tied to the US any more than the Internet is tied to the US.

In reply to needvert:

The current Internet is heavily tied to the US, hence the proposals every now and again for alternate control structures.
For Bitcoin I suspect if the US wanted to play games they could screw it up in short order.

In reply to dissonance:

Yes, a when rather than if situation. It probably suits them to leave it and let it run for the time being

In reply to dissonance:

That's true of many currencies, though. A lot of smaller currencies are tied to the value of the USD so by manipulating that they could probably screw a few people over. They've also got a lot of buying power, so they could buy large chunks of currency and then sell it off cheaply to drive down the value of the currency.

In reply to woolsack:

Bitcoin is peer to peer. There is no central authority or governing body, no single place to attack. THat's the beauty of it. It was designed that way deliberately to make attacks difficult. The guy who designed it said that while attacks have been successful against centralized services like Napster, peer to peer networks like bittorrent have been more resilient to attacks and survived.

There are other attacks possible, like a 51% attack, but these seem unlikely. However ultimately if an attack were successful there are already a number of other crypto-currencies so people would just move to one of those. So for Uncle Sam there might not be much point in just getting everyone to shift from one version to another.

Of course because its new and untried its well dodgy and there have been some massive fluctuations in price. But when you look at the state of the economy with all the money being printed nothing is totally secure anyway. It's really a case of which one is least bad.

Aside from it's use value and value as commodity Bitcoin has a nice ethos behind it too - which is to free money from the underhand machinations of governments and banks. If you can do that and make some money at the same time its a win-win.

In reply to stp:

Napster was peer to peer.

In reply to Jonny2vests:

Napster wasn't a fully peer to peer system in that it was dependent on a central server to index downloads. To destroy a system like that its only necessary to take out that one server. That server was not a peer in that its role and function was different to the rest of the network. There is no equivalent to that in the Bitcoin network: no single point that can be attacked that will crash the whole network.

In reply to stp:

Make what you will of this regarding the safety of bitcoins from the beeb ...

"A man who ran an online "wallet service" for storing Bitcoins has claimed hackers stole virtual currency from his site worth more than one million Australian dollars."

http://www.bbc.co.uk/news/technology-24871444

In reply to Jonny2vests:

"Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own." - Satoshi Nakamoto

In reply to foxwood:

Yeah people steal stuff, whatever it is: cash, credit cards, card fraud, jewelry.. anything they can. Nothing is 100% safe. Even banks can shut their doors and refuse to pay people their money.

I think because its new all kinds of people are getting involved, some a lot more professional than others.

The safest way I've heard of storing bitcoins is offline. One guy I saw on Youtube, who's been very involved computer security and is currently writing a book on Bitcoin for MacMillan says he prints out his private keys onto paper then stores them in a safe.

There's a new British firm 'Coinbase' who say 90% of customer savings are held offline too. They've got a whole list of other security measures too and they certainly look a lot better than a one man outfit in Australia.

It's also possible to buy physical coins and cards now too.

In reply to stp: All the hallmarks of a bubble? I currently use transferwise to change £ into € and vice versa but this might be a cheaper way...interesting.

I doubt I could persuade my French landlady to accept bitcoin payments though....

In reply to stp:
Could be due to that cryptolocker e-mail virus we read about; an email attachment that encripts all your data and charges you for the encription key to get it back to rights. You have to pay in bitcoins (they're untraceable), so it will create demand.

Has this anything to do with climbing?

In reply to stp:

Pish.

In reply to Fultonius:


Certainly possible. I did hear one commentator say that Bitcoin has out performed all other commodities for the past 2 or 3 years.

I think a main barrier is that people don't understand it. In fact most people don't really understand basic computing let alone the ins and outs of cryptography. Glenn Greenwald couldn't even set up encryption for his emails and understanding how crypto currencies work is a lot harder it seems to me. It's said you don't need to understand how a currency works to use it (who really understands how the economy works?) but I think because it's still relatively new and unknown if you don't understand it you're gonna feel pretty insecure about it. So yeah, unless your landlady is some kind of mathmatical genius, she'll probably prefer pounds or Euros for the moment.

In reply to stp:

Mental: the price has just leapt another £100 since Friday - now around 400GBP !!

Couple of good short vids explaining the basics:

3 mins: vimeo.com/63502573

PBS 8min report: youtube.com/watch?v=SGPXEka6oUQ&

In reply to stp: I know - Kind of wish I'd bought some when you said! Does seem a bit over inflated though in my uneducated eyes.

I can't get the bitcoin wallet to link to the network so I can;t even start collecting free coins yet

In reply to Jonny2vests:

No it wasn't. Napster used a central server, the downloading was peer to peer.

In real peer-to-peer you don't need a fixed central tracker/server.

Back to bitcoin, wasn't it recently shown that you need considerably less than 51% for the 51% attack.

In reply to stp:

I heard $15 and now worth $430,000!!!

Yet reading an article the other day on the history of bitcoin the highest dollar value was $266 per bitcoin which would give my $15 man a net value of $3,990. Still not bad but still 100 times less than the reported value.

I've not checked any of these figures.

In reply to krikoman: Oh! I might be wrong (there's a first time for everything)

they have been as low as $0.05 per Bitcoin so if you bought $15 or $22 dollars worth you'd have 300 or 440 BitCoins which at $600 (today's price) would be $180,000 or $264,000. Still a long way from reported values though.

It would still be nice to have.

In reply to Philip:


Hadn't read that but given the current prices such an attack would be hugely expensive unless the percentage was very low.

Even if you had the capital if you crash the system you surely lose all your money. I guess it would have to be done by hacking/stealing peoples coins. But the more professional and secure exchanges are becoming the harder that will be - seems like storage is already being taken offline and put into vaults.

In reply to stp:

This is incredible. I remember looking at this a few months ago and saw the price was up to something like £150. I remember thinking at the time, Wow, imagine the money you could have made if you bought them for pennies. I'm amazed they have gone up from that valuation - I thought they must have peaked. Surely this now must be the peak? They can't keep going up.

As an aside, i read somewhere that the first real world transaction was a guy buying a pizza with bitcoins. He paid something like 10000 bitcoins for the pizza and bought it as a novelty. He must be punching himself now. At today's prices the pizza he bought cost him about $5 million. Ouch.

In reply to M0nkey:


They can because as more people want them. The way the system works is that supply from 'mining' is more or less fixed. I have no idea how that part works - it involves computers (usually special computers) solving complex problems which get harder and thus take longer to solve the more people that are mining.

There's a fixed amount of bitcoins that will ever be produced: 21 million which is not that many if one is thinking in terms of 1 coin each amongst the world population of computer users.

One commentator on Russian Today was saying he thought the could easily be heading for $10,000 USD. So if true still a great investment.

I think some confidence can be derived from the increasing amount of infrastructure that is being invested in for Bitcoins. I read somewhere that Bitcoin total value is currently around the same as the Apple Corporation (well that was a few days ago so might be more now.)

In reply to stp:


Those bitcoins can be split up though down to 8 decimal places.


although a shit currency.

In reply to dissonance:


That may be true, but it's not the issue here. If say 200 million people each want to hold £100 of their money in the form of bitcoins, then there is no getting away from the fact that this will push the value of 1 bitcoin up to £1000.

In reply to jonny taylor:

Unless bit coins are divisible. e.g. imagine you can get Bitcoin dimes, which are worth 0.1 bit coins. Then, with your example above, the exchange rate could be ~95 bitcoins to the pound. According to dissonance Bitcoins are divisible up to 8 decimal places.

In reply to stp:

The only thing I can tell about the price of Bit coins is that it is highly volatile and any theory about whether the price will go up or go down is likely to be bullsh*t. So probably worth a punt for 100 quid but I won't be putting my life savings into it.

In reply to Bob Hughes:

It's possible I'm being dense today, but I don't see why that alters what I said. Yes, you can get bitcoin dimes, but if you currently hold 1 bitcoin and the scenario I described takes place, then that doesn't change the fact that you still hold 1 whole bitcoin, which is inevitably worth £1000.

Yes, that doesn't cause a problem for the currency per se, as they are divisible. The limited pool of whole bitcoins does however mean that anybody who holds a whole bitcoin now would be holding something that has appreciated in value in proportion to demand for the currency.

I know little about economics, but it strikes me that this is an interesting feature of the currency (value directly proportional to demand), which I suspect is more hidden in conventional currencies due to the ability of governments to "print money" - and which perhaps makes bc more akin to stocks and shares, albeit ones that aspire to be treated as a general purpose currency.

In reply to jonny taylor:

Because if I have 100 pounds which I want to hold in Bit coins, I don't care whether I hold 200 Bit coins or 20 bit coins so long as the number of bit coins is worth 100 pounds.


If I hold 1 bit coin and people buy 200m*100 pounds in bit coins, the value of my bit coin will undoubtedly rise but not necessarily mathematically by the amount of additional demand * the number of bitcoins in circulation because, in the case of currency, supply isn't the same as the number of items in circulation.

In reply to Bob Hughes:

I was commenting on the question of whether the price of bitcoins (i.e. 1 unit of bitcoin) was going to rise in future. We seem to be talking about two unrelated things here.

I bought one bitcoin last week. I plan to hang onto it for a while and see where it goes. In a couple of years I'll be thinking either (a) well that wasn't a good use of my money or (b) shit, I wish I'd gone all-in.