$10,000 in sight for bitcoin as it rockets to new record high

To the moon!

what goes up will crash down. especially if it is a SCAM

It will be interesting to see how this ends. It may be the future of commerce or it may be a great scam. Nowadays currencies are basically dependent on the confidence of people in the system. They are backed by nothing else (i.e. the Federal Reserve Note in the U.S. or the Yen in Japan). Printing presses have been running wild in the past few decades so the value of these notes are dropping. I think a major crisis will send people scrambling for tangible and durable goods and assets rather than the crypto currencies. But who knows?

what goes up will crash down. especially if it is a SCAM

Good thing bitcoin isn't a scam.

And 'what goes up will crash down' refers to gravity. It's by no means a law in other areas.

I think a major crisis will send people scrambling for tangible and durable goods and assets rather than the crypto currencies.

I think you'll find the opposite. As bitcoin is not dependent upon any economy in the world, it becomes the one safe haven if everything goes to sh*t.

@Strangerland - I have to disagree with your last paragraph. It will be hard to go to the store and buy bread with bitcoins. You cannot eat it or do much with it. If the STHF I will take my small denomination gold coins, cash, and food put away over bit coins but who knows.

It will be hard to go to the store and buy bread with bitcoins.

For that degree of catastrophe, cash isn't likely to do you much better.

But if there are people with large amounts of money to store, and an existing internet, bitcoin will become the favored storage for money.

after gaining more than a fifth in value over the past three days alone.

Lol, no bubbles here!

I made a bit in Ether the other day... hoping the bubble continues for a bit longer yet.

Lol, no bubbles here!

No one can know whether it's a bubble or not.

I'm more of the opinion that people are finally coming to realize its actual value. A critical mass has been reached where people are stopping discounting it based on it being something new and different that they don't understand, and starting to look closer into it to understand why it's become so popular. And as they do this, they realize how powerful it is, and how it puts the power of money directly onto the people, instead of requiring banks and/or some other institution to get a cut of our lives. And as they see this, they are realizing that it actually has a LOT of value.

CME Group would start offering bitcoin futures

It’ll be interesting to see what happens when there is such ready means by which to short that which is in a bubble. It could roar higher faster for a time, but when it starts going down, those CME pros...

Strangerland. My thoughts are if SHTF cash on hand will be good for the first 3 days to a week. When people wake up and realize what's going down it will then move to food, small denomination gold and maybe silver and for those in the US probably ammunition. Here in Japan the latter is probably not applicable

Steangerland. A couple of final thoughts. I actually share your sentiments about banks but I'm a skeptic. Then again I learned programming using punch cards, went to work where we "listened and gathered information" and remember getting our first "supercomputer", an old DEC that took up a room and had a fraction of a fraction of the power of this I phone I'm using. My point is I could not fathom the I phone at that time and likewise maybe I can't fathom the future of these crypto currencies. The one obstacle I see are the central banks but I guess they'll find a way to start to play ball if this takes hold

My point is I could not fathom the I phone at that time and likewise maybe I can't fathom the future of these crypto currencies.

And you aren't alone. Bitcoin is quite difficult to understand. How it works is particularly difficult, as it's high-level technology, and the way it is implemented (as a decentralized network) is nearly as difficult to understand to understand as the actual technology being used (digital signatures, wallets, and the blockchain). Then you add in that it's an actual paradigm shift, requiring us to rethink how we use money, and for that matter, what money even is, and it opens up lots and lots of room for confusion. Generally when there is that much uncertainty and confusion in a new technology, it dies. It is a testament to the strength of the technology that it is still growing, and people are picking it up daily. I have conversations about bitcoin every week these days, when previously it was every month or even every few months.

The one obstacle I see are the central banks but I guess they'll find a way to start to play ball if this takes hold

The great thing about bitcoin is that it has completely bypassed the central banks. They don't have a say in it one way or the other. And that is why many of them are panicking. This is literally the newest wave of the internet (it could be called web 3.0). And just like music companies had to learn how to restructure their entire industry to deal with the fact that people suddenly could go online and download any song for free, banks will have to restructure their entire systems to deal with the fact that people can trade and hold significant quantities of money, in a secure manner, and don't have to pay a single sent to the banking institutions.

Many investors in Mount Gox would surely disagree that Bitcoin is 'secure'!

Many investors in Mount Gox would surely disagree that Bitcoin is 'secure'!

And those people would be showing ignorance as to the difference between bitcoin and an exchange.

But some people don’t mind looking stupid, and don’t brother to fact check themselves.

My issue is that what appears to be pushing up the prices is the eager punters who are hearing the news and are scrambling to get into this new craze. They arent in it because "its decentralized" or because "its sticking the middle finger to banks", but only because it appears to be a surefire way to earn lots of money.

They are punters, because they are taking a gamble on it. They dont understand how it works or why it works, maybe they read a wikipedia article or listened to a broker who tried to explain it, but in the end they are only buying because they think it might get to $20k, doubling their money.

And because they are just taking a gamble, the minute it starts dropping, they will cut their losses and sell, quite possibly leading to a crash.

today i stick to my plan and cash out of bitcoin. 11/28

If you can't afford to lose it then don't invest it....

Lol, no bubbles here!

Apple and Amazon have shown even sharper rises in the past, and they are doing fine now. For a transformative technology, these rises might not be bubbles at all.

There will some very heavy corrections along the way though, especially with new money coming in. Many of the new investors are simply trying to get rich quick, and lack an appreciation of what bitcoin can do for the world. The first bump in the road will send many of them scrambling to cut their losses. And then, after that, bitcoin will recover and continue to grow.

Actually, I am grateful for Mt. Gox. It was their collapse that made me want to learn what that "bitcoin thing" was all about. When I read up on it, I saw a mind-blowing technology, and a crash that had nothing to do with the integrity of bitcoin itself. So, I figured it was a good time to buy a few. In short, Mt Gox convinced me of bitcoin's value.

And because they are just taking a gamble, the minute it starts dropping, they will cut their losses and sell, quite possibly leading to a crash.

Sure, that can happen with any FX trading.

I am grateful for Mt. Gox. It was their collapse that made me want to learn what that "bitcoin thing" was all about.

That's about when I started taking more of an interest myself. I had heard of it previous to that, though I didn't really understand what it was.

Apple and Amazon have shown even sharper rises in the past

They may have had some big short-term moves, but did they also do 1000% in less than a year, 200% in two months, as well as 20% in three days?

When I see numbers like this it is when looking at the value of say, US dollars from the perspective of a Venezuelan or a Zimbabwean. They suffer from a reverse bubble when their currency collapses. (Bitcoin is certainly useful for people in such situations.)

Many of the new investors are simply trying to get rich quick, and lack an appreciation of what bitcoin can do for the world.

100% right. Or should I say 10,000% right :)

Certainly the majority of people I see with an interest in bitcoin etc are people trying to make some easy money (in legacy fiat currency terms).

Sure, that can happen with any FX trading.

I think the better comparison would be with individual stock trading. At least with major currencies the prices stay range bound, or when they do move in one direction it tends to occur over a very long time. When they move sharply (post-Brexit Sterling for example) it is still relatively tame compared with the moves in these cryptocurrencies.

I think the better comparison would be with individual stock trading. At least with major currencies the prices stay range bound, or when they do move in one direction it tends to occur over a very long time.

You cannot compare FX trading to stock trading, they are simply different things. Sure there is overlap, but its not equal. The definition of FX trading compared to stock trading is not the rate at which the value changes.

Sure, that can happen with any FX trading.

Two things make bitcoin incomparable to FX, One is that the price swings are a multitude greater in crypto, more comparable to margin trading.

The other point, about the new users, is the lack of faith in bitcoin. People generally have faith in major currencies, even bad ones. Most Germans held onto their Reichmarks in Weimar Germany well past the point it was obviously crashing to zero. Trust is powerful. Bitcoin simply doesn't have that trust yet. So a small seed of doubt (some shady Wall Street CEO saying it's a scam, or an exchange collapsing, or an unfriendly comment from a major government) can throw bitcoin into a tailspin.

I would see that as a buying opportunity, depending on the cause, but a 70% crash is a possibility. Which is why it's a good idea to take some profits at a time like now.

This stuff does my head in.

Question 132: Say bitcoin continues to become more popular as a means of exchange, and so people/companies/whatever want to convert more of their "normal" cash to bitcoin. What happens to that "normal" cash if there is less demand for it?

Answers please in a form that a 5-year-old can understand.

The way things are going it might as well be the Infinity Standard. Why buy anything? lol

bitcoin continues to become more popular as a means of exchange, and so people/companies/whatever want to convert more of their "normal" cash to bitcoin. What happens to that "normal" cash if there is less demand for it?

There is no difference here between bitcoin and FIAT currencies. If any currency, bitcoin or otherwise, loses demand, the price drops until people think it’s at a rate where they feel it’s worth buying again.

Two things make bitcoin incomparable to FX, One is that the price swings are a multitude greater in crypto, more comparable to margin trading.

It’s a currency, so it’s FX trading no matter which way you cut it. But it’s definitely a lot riskier than FX trading with FIAT currencies.

You cannot compare FX trading to stock trading,

i was saying bitcoin speculation is more akin to individual stock trading, than foreign currency trading.

margin trading in general can of course be volatile due to leverage, but with bitcoin the notion of leverage strikes me as redundant given how much the value of bitcoin itself changes in a given day. A major currency moving a single percent a day is a pretty big move, but I see certain cryptos having moved 50% today.

It’s a currency, so it’s FX trading no matter which way you cut it.

to avoid anyone getting the wrong impression, under the legal framework here in Japan cryptocurrency is regarded as a payment method not a normal currency, and treated as assets for tax purposes. FX trading profits are taxed the same as futures at about 20%, whereas crypto profits are to be taxed as miscellaneous income - if applicable.

Question 132: Say bitcoin continues to become more popular as a means of exchange, and so people/companies/whatever want to convert more of their "normal" cash to bitcoin. What happens to that "normal" cash if there is less demand for it?

a fun thought experiment!

i think that depends on the degree to which you mean ‘more popular’.

at moment I don’t see it being popular as a means of exchange at all (it is this year’s number one speculation vehicle though I feel).

if taken to the extreme, and shops stop accepting yen as payment (this might be illegal) then the central planners would go nuts, but this is unlikely, I feel.

in a less extreme case the demand for bank notes would decline to some extent.

but this is Japan, most old people love their bank notes.

any such disruptions are more likely elsewhere in younger demographic countries I think.

which makes me curious about Turkey. They have a young population, and high inflation / depreciating currency at present - perhaps the next hyper inflation case. If people in places like that start preferring bitcoins to dollars, then some interesting precedents might be set.

@Strangerland

There is no difference here between bitcoin and FIAT currencies. If any currency, bitcoin or otherwise, loses demand, the price drops until people think it’s at a rate where they feel it’s worth buying again.

There is one huge difference. What can the guardians of a fiat currency do to prevent the price dropping in the event of a sell-off which Bitcoin cannot? Can you explain that to us.

Kobe White Bar OwnerToday  10:39 am JST

"today i stick to my plan and cash out of bitcoin. 11/28"

Wow, taking some profit I could understand. But cashing out, just before Wall Street and more mainstream adoption? ouch....

But cashing out, just before Wall Street and more mainstream adoption? 

Peak media hysteria is usually a good time to dump these things.

The easiest money has probably already been made.

People when are new to speculation especially should take care not to get taken in by the hysteria. What will happen is the speculation pros will make a killing at the expense of the novices.

Hard to say if we are at peak hysteria yet, but if the 7 o’clock NHK news runs bitcoin popping 10K then that’s a big warning signal.

What can the guardians of a fiat currency do to prevent the price dropping in the event of a sell-off which Bitcoin cannot?

it seems you already have an answer to this question, so let’s hear it.

The dialogue in this article will sum up the bitcoin situation...

https://www.google.com.au/amp/www.marketwatch.com/amp/story/guid/69C6AA1A-520C-11E7-9F99-6F119A47A1EE

It all comes down to individual choices. If someone is convinced that Bitcoin is the way to go then they should go ahead and invest in that. If it does collapse and they lose everything then they have only themselves to blame. If they gain from it then good for them. Others who are not convinced by this Bitcoin scheme due to a series of flaws should just stay away from it!

@Strangerland

it seems you already have an answer to this question, so let’s hear it.

It's not a trick question. I'm just referring to all the institutional tools which are available to manage the money supply in order to achieve price stability and avoid excessive inflation or deflation (interest rates, bonds, foreign currency reserves, the effects of fractional reserve banking). When you tell albaleo that both buyers and sellers of this surplus currency will just sit around and wait for the value to drop, that's actually the least likely scenario. It's far more likely that steps will be taken to shrink the money supply. Bitcoin is not capable of doing this. It has none of these rather cool government issued fiat currency apps built into it. That is the huge difference in my opinion.

Thanks for the various responses. Those should help generate my next 500 questions. (Head still hurting though.)

@M3M3M3

I'm a little intrigued about the role of "the guardians" (nice expression). What happens if they start stocking up on bitcoins? (Or perhaps they already have.) Or what if they start creating their own crypto currencies? (Is that even possible?)

Sorry if my questions don't make sense.

@albaleo

I'm a little intrigued about the role of "the guardians" (nice expression). What happens if they start stocking up on bitcoins? (Or perhaps they already have.)

By guardians I'm just talking about the national central banks (like the Federal Reserve or Bank of England). I don't think central banks have bought any Bitcoin. They have no real incentive to do so and it would be entirely inconsistent with their mandate. But if they are buying for some reason, then I guess the price will just keep rising as they pay more and more for a diminishing supply of Bitcoins on the market.

Or what if they start creating their own crypto currencies? (Is that even possible?)

In theory, I think it is possible to move an entire national currency onto a distributed ledger. But that would probably be very different from Bitcoin. Instead of having a predetermined and fixed amount of currency like Bitcoin does, the central banks would want some way to shrink or expand the money supply to maintain price stability, keep inflation low, keep unemployment down, and do all the other nice things that a government issued and controlled currency can offer us. I'm not a computer expert, but I think it would also be technically difficult given the current state of technology and the number of transactions that would have to be processed. I believe bitcoin can only handle about 8 transactions per second, and some of the newer cryptocurrencies have only been able to boost this to around 50 per second. By contrast, Visa, Mastercard, and bank cards can process and confirm tens of thousands of transactions per second since they are not on a distributed ledger.

Sorry if my questions don't make sense.

Not at all, your questions make perfect sense to me. I have some formal education in economics but I'm definetly not an expert on cryptocurrencies. I think very few people are and I'm sceptical of those who claim to be. You need to have a very solid understanding of economics, computer science, cryptography, and now even the physics of power consumption to fully appreciate what is going on and whether this has a viable future or not. Very few people can wrap their heads around even one of these disciplines let alone all of them. Personally, I think blockchain technology looks promising and it might even be what the internet was 25 years ago, but Bitcoin will probably end up being the AOL or Netscape in this analogy. It was a pioneer but it will be replaced by something more popular in due course. We already see much more versatile cryptocurrencies gaining popularity.

It all comes down to individual choices. If someone is convinced that Bitcoin is the way to go then they should go ahead and invest in that. If it does collapse and they lose everything then they have only themselves to blame. If they gain from it then good for them. Others who are not convinced by this Bitcoin scheme due to a series of flaws should just stay away from it!

You mean like pretty much everything on this entire planet?

When you tell albaleo that both buyers and sellers of this surplus currency will just sit around and wait for the value to drop, that's actually the least likely scenario. It's far more likely that steps will be taken to shrink the money supply. Bitcoin is not capable of doing this.

That's a feature of bitcoin, not a demerit. It means that the value of bitcoin is left to be the value of bitcoin, without artificial interference for governments.

But to counter your point, how do you explain what happened to currencies in Argentina and Zimbabwe? They collapsed and just kept collapsing, and I don't know if any steps were taken to shrink the money supply, but if there were, they didn't work.

@Strangerland

But to counter your point, how do you explain what happened to currencies in Argentina and Zimbabwe? They collapsed and just kept collapsing, and I don't know if any steps were taken to shrink the money supply, but if there were, they didn't work.

These countries basically went bankrupt, that's what happened. Shrinking the money supply to keep prices stable or to defend the exchange rate was no longer a priority or even an option. If the reserve bank of Zimbabwe had tried to issue treasuries paying even 1,000,000%, it's doubtful that anyone in there right mind would have risked buying them thus no money could be taken out of the money supply. Not all countries and currencies are created equally. The odds of something on this scale happening in any major first world country are astronomically miniscule but Bitcoin advocates seem to be obsesed with this remote possibility.

That's a feature of bitcoin, not a demerit.

I certainly see it as a demerit of any currency. How could it not be? A currency is supposed to be kept stable in order to act as a medium of exchange. If I wanted an appreciating store of wealth, I would buy assets like property, stocks or even gold. But this is the problem with Bitcoin isn't it? Is it a currency or a store of wealth?

@M3M3M3

People have been investing in property, land, art, gold and silver for thousands of years.

None of the above will go out of fashion for the foreseeable future.

Bitcoin is flavor of the month now but in the future there will be something new-already, there are alternatives out there which will impact the value of Bitcoin.

Advances in computing,especially quantum computing may threaten information stored on present day computers.Also, at present any computer connected to the net can be accessed with sufficient determination.

Anything from an emp blast to a power current surge to a worn out hard drive can wipeout your Bitcoin investment.

Any government impacted by other mediums of exchange can shutdown Bitcoin exchanges,limit or tax internet access or even prohibit certain financial transactions.

If governments fear control is being lost then Bitcoin becomes a scapegoat.

Bitcoin is still a massive unknown.....

These countries basically went bankrupt, that's what happened. Shrinking the money supply to keep prices stable or to defend the exchange rate was no longer a priority or even an option. If the reserve bank of Zimbabwe had tried to issue treasuries paying even 1,000,000%, it's doubtful that anyone in there right mind would have risked buying them thus no money could be taken out of the money supply. Not all countries and currencies are created equally. The odds of something on this scale happening in any major first world country are astronomically miniscule but Bitcoin advocates seem to be obsesed with this remote possibility.

The point here is that you claimed the difference between FIAT currencies and bitcoin was government protection, but these examples show that even FIAT currencies can collapse.

I certainly see it as a demerit of any currency. How could it not be? A currency is supposed to be kept stable in order to act as a medium of exchange.

Maybe fiat currencies. But bitcoin is outside the FIAT system, and my personal opinion is that it should stand for itself, even if that means fluctuations in value. But that’s just an opinion.

Is it a currency or a store of wealth?

It’s a currency, and a currency can be used to store wealth, which I’m sure you’ll see if you open your wallet.

Bitcoin is flavor of the month now

It’s well crossed that line years ago. It’s a paradigm shift, and it uses the internet in a way it’s never been used before. It’s not going abywhere.

at present any computer connected to the net can be accessed with sufficient determination.

This shows a fundamental non-understanding as to how bitcoin works. The system understands any computer can be compromised, and the entire structure of the system is built to work around that. It’s the solution to the two-generals problem: https://en.m.wikipedia.org/wiki/Two_Generals%27_Problem

To successfully hack the bitcoin system, you’d need a computer with more processing power than 50% of all the bitcoin miners combined. So even if/when quantum computing happens, the miners will upgrade to them as well.

Anything from an emp blast to a power current surge to a worn out hard drive can wipeout your Bitcoin investment.

An EMP blast would need to take out every bitcoin miner on the planet to take down bitcoin, and every hard drive on the network would have to be taken down to wipe out your bitcoin holdings.

Any government impacted by other mediums of exchange can shutdown Bitcoin exchanges,limit or tax internet access or even prohibit certain financial transactions

This is the biggest risk to bitcoin, but I don’t see enough governments coming together to do this at a degree to which they could affect it.

@Strangerland

No, you don't.

The same way those 'ignorant' (your word as I recall) first adopters at Mt Gox didn't.

History shows control of systems not in the hands of the masses but in elite groups and organizations.

An example might be the various peoples' revolutions - all started and fomented by elite groups.

Well, I would put money on it that either governments (they make the laws) or banks (they control politicians) will not allow Bitcoin or other similarities to usurp the fiat monetary system.

From a tech analysis Bitcoin might be super secure etc etc but if the use,the tracking and control of, is open to scrutiny, which is possible then it can become uneconomic for certain users to transact with.

As soon as Bitcoin becomes open to manipulation (which it can be) then controls will be imposed in some way....

Keep eyes peeled on how the market in crypto-currency futures unfolds/evolves. This is the point at which hard core speculators will hone negative positions.  

The Ethereum project could well provide a sneak preview into the future development of Blockchain with applications running on 'smart contract' platforms      

https://www.ethereum.org/

Japan was quick out the blocks to embrace crypto currency as legal tender.

I am drawn to the theory that Satoshi Nakamoto is not a individual, but a group of software developers.