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Old 04-07-2013, 08:11 AM
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Bitcoin bubble?

Bitcoin is a form of decentralized digital currency exchanged through a computer or smartphone locally or internationally without an intermediate financial institution. And in the last two years, a massive increase in value is seen over the idea. Some call it the last in the lines of bubbles (irrationaly inflated prices), what do you think?

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A buying frenzy has sent the value of the total Bitcoin stock past $1.5bn and the price of a single Bitcoin has doubled in less than two weeks. Having passed $100 on April 1, it peaked at $147 in the small hours of Wednesday morning.Untethered to any real asset, the Bitcoin’s price is determined only by speculation on exchanges around the world, the largest of which, Mt Gox, reported technical difficulties on Wednesday as interest rocketed.

“Trading tulips in real time,” declared the veteran UBS stockbroker Art Cashin in a note to clients. “It is rare that we get to see a bubble-like phenomenon trade tick for tick, but all that may be changing before our very eyes.”The currency was created four years ago by an unknown computer scientist and the limited stock of “coins” grows according to a predetermined algorithm. A small number of online services accept Bitcoins as payment but the value appears correlated less to their use than to talk on Twitter, blogs and in the media. But the Bitcoin is nothing if not volatile. For example, a 2011 spike took the price of a single Bitcoin from $2 to over $30 – and back again.
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Old 04-07-2013, 08:24 AM
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“Trading tulips in real time,” pretty much sums up my opinion.
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Old 04-11-2013, 10:20 AM
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Bitcoin hits new high, then nosedives in flash crash

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Each "coin" has been worth less than $10 for most of the currency's history, but this week the value surged past $200 - with the recent bailout crisis in Cyprus seen by many as one of the triggers of the surge. Wednesday saw a "flash crash," as the value dipped close to $100 before recovering.
http://www.cbsnews.com/8301-34227_16...n-flash-crash/

Does it sound like an engineered crash by the central banks?
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Old 04-11-2013, 09:11 PM
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It is too volatile for the vast majority of investors.
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Old 04-12-2013, 02:15 AM
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I find it pretty hard to generate bitcoins... it takes a lot of CPU power and electricity
 
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Old 04-12-2013, 05:40 AM
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Originally Posted by bluemouse2 View Post
I find it pretty hard to generate bitcoins... it takes a lot of CPU power and electricity
Could you explain where is the difficulty in the process of bitcoin creation? Maybe I'm oldfashioned but without some sort of central bank supervision over the currency who can stand behind the value of one bitcoin
 
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Old 04-12-2013, 06:08 AM
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Originally Posted by kju385 View Post
Could you explain where is the difficulty in the process of bitcoin creation? Maybe I'm oldfashioned but without some sort of central bank supervision over the currency who can stand behind the value of one bitcoin
When central banks manipulate their currencies and inflate their value away, it's difficult to characterize those actions as "standing behind" their currencies.
The fact that there's no central bank that can manipulate bitcoins is a positive feature, not a negative one.
 
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Old 04-12-2013, 11:01 AM
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The fact that there's no central bank that can manipulate bitcoins is a positive feature, not a negative one.
Not entirely sure about that. I'm sure it is while the value grows, but when it stops growing? Who will prevent the subsequent panic and total collapse of value if there is no one to intervene? Who is responsible? Free market alone can create viscious circles when things go bad. I believe the minimum regulation framework is always welcome. And I don't see it here.
 
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Old 04-12-2013, 12:24 PM
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Who supplies these bitcoins and can they be "traded" like shares? Or are they purely a form of digital currency? I mean say you had $500 worth of bitcoins and the value increased, could you sell them back to the trader for actual cash or would it just mean they would be worth more when using them as a currency?
 
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Old 04-12-2013, 02:30 PM
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Originally Posted by toddmeister View Post
Who supplies these bitcoins and can they be "traded" like shares? Or are they purely a form of digital currency? I mean say you had $500 worth of bitcoins and the value increased, could you sell them back to the trader for actual cash or would it just mean they would be worth more when using them as a currency?
I think the video below answers the basic questions. As far as I can tell, they are highly speculative and in comparison to shares highly unregulated.

[YT]Um63OQz3bjo[/YT]
 
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Old 04-12-2013, 10:53 PM
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Originally Posted by kju385 View Post
Not entirely sure about that. I'm sure it is while the value grows, but when it stops growing? Who will prevent the subsequent panic and total collapse of value if there is no one to intervene? Who is responsible? Free market alone can create viscious circles when things go bad. I believe the minimum regulation framework is always welcome. And I don't see it here.
I think it's better if the free market handles those viscious circles, rather than turning control of them over to a few individuals.
History repeatedly shows that when a few people have that kind of power, they eventually abuse it.
If I'm going to lose my money at the blackjack table, I'd feel much better about it, knowing it was a fair game.
 
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