Hacker News Reader

If we look at bitcoin for what it is (the technology and theory behind it), it hasn't lost any real value. If it did (e.g., if a major flaw were discovered in the technology to render it useless), then people wouldn't still be trading bit coin.

There are believers in the Bitcoin platform who are investing significant time and capital in improving it.

Then there are the traders, many of whom could care less about the underlying technology. They are in it for pure speculation, and care only about the flaws of the Bitcoin ecosystem because as long as it impacts their investment. This subpopulation is really not much different than the people who trade (and shill for) penny stocks.

>If we look at bitcoin for what it is (the technology and theory behind it), it hasn't lost any real value.

The question should be: Does it have any value in the first place? It is essentially a really cool monopoly money system. Bitcoin is taking pokemon cards.

A bitcoin is essentially a fancy cell on a very secure distributed excel file. Great, but that doesn't mean it will be currency.

>underlying value do not rely on public opinion

Oh very much so. A bitcoin's value is 100% based on what the public values it at.

> A bitcoin's value is 100% based on what the public values it at.

So just like any other currency and commodity then? Intrinsic value doesn't exist. Everything is relative to where you are and what you're trying to achieve.

We have to remember that for every bitcoin sold (at any price), someone on the other side of the transaction is still buying those bitcoins.

Actually, "an exchange made it look like someone bought a coin." https://willyreport.wordpress.com/

Bitcoin probably can't ever prevent good old insider manipulation, because every exchange affects every other exchange due to arbitrage. A price jump of $20 on BTC-e will swiftly travel to Bitstamp and everyone else. So if BTC-e decides to do something similar to what Mt. Gox did, there's nothing stopping them. All it takes is one shady popular exchange.

Bitcoin's dependency on exchanges is its greatest strength and weakness. Without exchanges, you probably wouldn't be able to sell bitcoins locally except in a sporadic way. There wouldn't really be an agreed-on price. But with exchanges, herd dynamics are always in full bloom, and you won't ever escape them.

EDIT: People buy and sell bitcoins at current market rate, and current market rate is defined by exchanges. That means if an exchange decides to make their own price artificially jump up, then everyone else's price will jump up too. That means bitcoin's price will be defined partly by whatever insider manipulation is going on at the time.

Bitcoin doesn't depend on exchanges any more than your HN karma might depend on exchanges, yet karma still has value in its own sphere - with or without an exchange rate. Anything that can be traded will be traded on a market if there is demand for it. All of that (everything that happens due to market forces, manipulation, etc) is irrelevant to bitcoin as a technology.

People have a habit of concentrating on the sizzle, not the steak.

Because the libor scandal, gold fixing, and central bank puts don't happen in the real market? US congress can even legally get away with inside trading, having laws against it really only allows those in power to punish those without it.

My comment says "Bitcoin insider trading exists, and here's why." Your comment is completely unrelated.

Your comment contributes practically nothing, insider trading exists in every market, bitcoin is no different in that regard.

Is the index a reflection of the price of sales or the price of bids ?

If I go the the store I am told "this is going to cost you $1" not "you set the price by buying that for $1"

For a real example, read this :

http://mechanicalforex.com/2015/01/trading-a-real-market-wha...

> We have to remember that for every bitcoin sold (at any price), someone on the other side of the transaction is still buying those bitcoins

An alternate explanation is that supply is holding out, demand is spooked, and existing trading activity has little relation to supply and demand. Economic liquidity is not equal to book liquidity and trading volume isn't equal to the health of a market (especially when Bitcoin holders can generate fake volume at a very low cost). This is why buying assets headed south--called "catching a falling knife"--is a classic trap for amateur traders.

This is going to be especially true for Bitcoin because there's no viable way to short it that I know of--no way to depress trading demand unless you're unfortunate enough to own some already. There's nothing that can try to force Bitcoin to it's supply-demand equilibrium price, nothing except time.

exchanges like bitfinex allow shorting.

So what you're saying is, this is actually good for bitcoin?

I understand you're poking fun at the common expression used by bitcoin fanboys (or to mock them), but in reality this is neither good nor bad for bitcoin. I personally feel no differently about bitcoin today than I did when I first learned about it (trading at < $1 at the time).