Bitcoin passed $30 today, and price parity with an ounce of silver.
Also, Reddit announced they’ll be taking bitcoin in exchange for Reddit-gold.
Market cap has pased $300m, still in its infancy in those terms, so still a good buy if you are willing to risk that it has a long-term future! Gonna be one hell of a payoff if it ends up supplanting fiat currencies the world over.
I can imagine a scenario where, one day, oil becomes priced in bitcoin rather than dollars. That would send shockwaves around the world.
It still isn’t money yet.
As it stands, I have about $2500 worth of bitcoin. Definitely interesting to see where this will go.
“It still isn’t money yet.”
Buy something with it. In that instant, it is money.
What do you buy with it?
whatever you want that is also for sale. what a ridiculous question.
A better question might be ‘what can’t you buy with it.’
For a start try: bitcoinstore.com
No, the question is “what do you buy with it?”.
Bitcoin store is an interesting idea. Some of the products, not all, are cheaper than you can buy elsewhere. That said, most people have to pay fees to purchase bitcoins in the first place, and that dampens or even negates any discounts.
I am not here to debate the merits of bitcoin - I already know what they are. What I am saying is that they are not a currency YET because they are not widely accepted. They may become a currency, as intended, at some point in the future, perhaps even in the near future. Bitcoin is not a currency right now. That is what I am saying.
When people start thinking about prices in bitcoin, and not US dollars or whatever other national currency they use, then bitcoin will be a true currency.
The “widely accepte” doctrine has been destroyed a number of times now.
It has no actual border, to way to determine when it has gone from not WA to WA. Can you give a determination on that?
Again, the only way to determine whether something is a currency is whether it is being used as a currency, not the number of times it’s being used as a currency or by how many people.
If you use plastic bottles as a currency one time, then it’s a currency right then.
Bitcoin is a currency for those who use it as a currency. If you don’t use it, it’s not a currency for you.
But to deny it’s a currency because most people aren’t using it as one, even though some people clearly are, is to use socialism as a definition and say it can’t be X because most people aren’t using it as X. What about the people who are? Is it a currency for them? Of course it is. Don’t be ridiculous.
Our very own Peter Surda makes a name for himself, is due to present at Bitcoin 2013: The Future of Payments conference in San Jose in May, and is interviewed by AmericanBanker.com here:
"I recently had a fascinating chat with the economist Peter Šurda to discuss how nonpolitical cryptocurrencies like bitcoin could alter the future of fractional reserve banking.
Peter is also a software developer experienced in the online payments industry and will present at the Bitcoin 2013: The Future of Payments conference in San Jose in May. His 2012 master’s thesis at Vienna University of Economics and Business was entitled Economics of Bitcoin: Is Bitcoin an Alternative to Fiat Currencies and Gold? He’s an abstract thinker, but the implications of his work are tantalizing: that digital money like Bitcoin opens up possibilities for banking without central planners or a lender of last resort, where interest rates and reserve requirements are driven purely by the market…"
Go get 'em, Pete!
Peter, I made a Reddit post for your interview here.
Definitely interesting to see where this will go.
Don’t come crying to me when you see how “interesting” your lost $2500 is.
I gave you all fair warning.
Make a prediction then. How long has Bitcoin got? What will precipitate a price-crash to zero? What do you expect the price of bitcoin to be on Jan 1, 2014? Let’s go. Let’s get some bets going. If I’m right, you pay me in bitcoin.
Peter, you’re front page of /r/bitcoin right now: http://www.reddit.com/r/Bitcoin/comments/1admpi/economist_pete_surda_explains_why_litecoin_and/
How long has Bitcoin got?
As you may know, Austrian Economics does not make such predictions. They predict that something will happen, but not when. This is not a cop out but something familiar to followers of AE.
Think of it as a doctor who notices that the patient has terminal cancer [= not satisfying regression theorem]. He cannot say when the patient will die, only that die he will, not of old age, and painfully.
Beanie babies were valuable for ten years before dropping to zero. The Ithaca Hour was walking dead for twenty. Other phony currencies were much shorter lived.
What will precipitate a price-crash to zero?
When the novelty wears off and folks get bored with this toy and decide to cash out. Or when the guys who started this pump and dump decide it has been milked to the last drop, or they need cash suddenly, and they dump. Maybe when Bernanke loses his nerve and stops printing more digital dollars, making the recession that much more visible, folks will need their cash and will try to get rid of their bitcoins. Bottom line, I don’t know. I’m not a prophet. What I do know is that Mises has proven bitcoin is doomed.
What do you expect the price of bitcoin to be on Jan 1, 2014?
I don’t know.
Let’s get some bets going.
This approaches the heart of the matter. Bitcoin is for gamblers, not for people who work hard for a living and want full value in return for their labors. Folks who refuse to be paid in lottery tickets. In other words, almost everyone.
If I’m right, you pay me in bitcoin.
Right about what?
Bitcoin offer several features of clearly superior utility over other mediums of exchange for online purchase. It’s about 3-4% cheaper to take an online order in bitcoin, due to not having to pay Visa or Mastercard. This represents a 50 - 100% profit margin increase for many small retailers. Also, they have no risk of chargebacks associated with bitcoin sales. Whether the figure is tens or thousands of dollars, money can be sent anywhere at low risk for a few pennies.
Lower transaction costs are a killer feature that can’t be matched by any other class of currency.
So quick question, will online purchases get rarer or more prominent in the future?
Chances are they will take over all purchase. All credit card purchases in stores already basically are online purchases. I’d go so far as to say most purchases are now online purchases, even ones in phsyical stores.
Bitcoin is money, and you are going to eat your words. This is not beanie babies, this is the new digital gold standard. You pin your entire case on Mises regression theorem, an explanatory, backward-looking theory not meant to exclude something like bitcoin from being considered money.
All your points have been anticipated in my blog. But you know that.
Wouldn’t the fee structure change if bitcoin became the method of online purchase everywhere? I’d expect it to get at the same level as credit cards are, because it’s what merchants accept with credit cards, though those offer lots of fraud protection aspects, so bitcoins could be cheaper (without the protection).
I don’t see any reason for the fee structure to change as things stand now.
There are transaction fees allowed/implemented in the BTC protocol. Entities which apply processing power towards validating BTC transactions (now called BTC miners) are currently rewarded by newly “mined” BTCs (inflation). As the number of transactions increases, and as the # of BTCs approaches 21 million, validation will increasingly become incentivized/rewarded by actual transaction fees (offered by the transacting parties themselves to incentivize quick validation of their transaction). In addition, any venue offering additional security, insurance, or convenience features would, of course, charge for the benefits it offers.