Quote from: ElectricMucus on October 26, 2011, 02:36:47 PM

As soon as you Bulls are not trying to appeal to fear I would join you. Till then see you at $1... or a fraction of that... it's all about the state of mind.

The decrease in external currency flow volume is a strong indication that the current exchange rate has stabilized for now.

Granted, the continuing inflation of the Bitcoin unit base will provide substantial downward pressure for a while yet. This requires inflow from other forms of wealth to be offset, but considering the overall size of the Bitcoin economy, not much is necessary. Any excess from another wave of interest would easily drive up the exchange rate.

If BTC holders with large balances decide to sell as the price rises, that would serve to maintain stability during inflow.

Note the volume in currency (USD):

A Logarithmic representation makes it easier to see the magnitude and stages of decline, while the standard chart below (with Bitcoin volume) shows the gradual tapering of absolute price volatility.

Paying attention to the BTC volume versus the USD volume is interesting. It is apparent that there is very little flow entering or leaving the Bitcoin micro-economy. Therefore, the volume in BTC won't change the exchange rate much despite coming into a fairly steady range of almost double that from before the June spike high.

What that suggests is there is a significant amount of wealth (relative to Bitcoin, not major currencies) that has split off from other currencies and taken up residence in the Bitcoin economy. In other words, the pool (EUR, USD, etc) has been drained slightly while the cup (BTC, NMC, etc) has been filled up; June was an overflow that simply saw the excess spillover from the cup and return to the pool. As offered earlier, additional waves of interest are likely to deposit additional reserves of wealth so long as the underlying technical structure of Bitcoin (encryption, triple-entry accounting block chain, sovereign usage over persistent network domination, etc) remains intact.

There is a danger that funds stored in Bitcoin could become trapped rather quickly should a major internal component be compromised, but it certainly doesn't seem that anything in the immediate future has the capability of doing so. Could the exchange rate go lower from here? Absolutely. The Bitcoin economy is small enough that it could very easily suffer a mortal blow that would marginalize its relevance for an extended period. However, I don't see anything on a 6-month horizon that would cause such a situation.

Quote from: HappyFunnyFoo on October 26, 2011, 02:44:39 PM

I'm not short bitcoin, even though I think the value of each coin will hit a couple of cents within a year as speculators flee, too many people try to mine, and another digital cryptocurrency replaces bitcoin. I choose to hold stable currencies like the dollar and other investments that are less volatile.

Bitcoin is useless as a currency (nobody would use USD if it took 5 minutes to confirm correct change, and is why nobody uses btc), will be replaced by better crypto-models (blockchain on every client, and it's absolutely gigantic, built-in deflationary currency model creates too much scarcity, and good currencies are liquid), and 95% of coins are held by speculators or the original creators.

What "stable" currencies? Both the Euro and USD have experienced tremendous volatility of ~25% over the past few months (major peak to trough ranges) after having seen ~10% overall rise/decline (respectively) in the first half of 2011. All other currencies are buffeted by action in the majors, some experiencing much greater swings.

A decline in Bitcoin to a superior alternative would not be instantaneous, but a process. It is also unlikely that a completely overwhelming competitor would arise in such a short period, especially when there are trade-offs to any design decisions. There is room to improve on Bitcoin, but it still remains an elegantly simple system. Besides, expecting Bitcoin to be replaced instead of improved upon is a blind assumption.

Perhaps your definition of "useless" could be expanded upon. Bitcoin is useless for purchasing goods and services at the vast majority of establishments, yes. It would also be difficult to use gold and silver, stock certificates, gov't bonds (held by "speculators"?) or most foreign currencies for that purpose. However, it performs exactly as it is supposed to when acting as a currency for storage and transfer of wealth. It takes up to 72 hours for most international wire transfers, sometimes longer. Bitcoin generally does this in a matter of hours at most. Gold and silver offer a great degree of individual control over the monetary unit without a centralized authority, as does Bitcoin.

The death of Bitcoin has been greatly exaggerated.

Quote from: ElectricMucus on October 26, 2011, 03:57:39 PM

Quote from: BadBear on October 26, 2011, 03:55:44 PM

Quote

author=BitMagic link=topic=48850.msg594281#msg594281 date=1319642888]

Quote from: cypherdoc on October 26, 2011, 02:20:57 PM

6/7 days up.

You have a ridiculously short memory. Up from...$2.5? Nice. Good luck recovering your losses. What you buy at, $28?

Not only that, sold his gold to invest in btc. True ~~believer~~ bagholder right here.

fuck...

It's ok, he didn't sell all of it...

Quote from: ElectricMucus on October 26, 2011, 04:26:45 PM

Bulls make profits, Bears make profits, Pigs get slaughtered.
go fuck yourself.

Bulls... check.
Bears... check.
Pigs... check.
Sheep...

Are you calling him a sheep?

Quote from: tvbcof on October 26, 2011, 06:25:48 PM

...

But the salary keeps rolling in so I've been taking a position in BTC to see what happens there. It's a much more exciting investment and it is my fondest hope that 1) it will live and become a game-changer, and 2) that I will have enough of a position to contribute to making the game go the right way even if it means a personal monetary loss. Both are what I consider to be very long shots.

If I sell BTC or PM's, I will end up with USD which I don't need and tax hassles which I don't want so it is pointless to me. Plus, I don't think that the fireworks in PM's have even started yet. BTC...not so sure

Excellent: those are some truly critical points. Much of the professional investment community is looking to dividend paying stocks to bolster their portfolios during stagflation. Plenty have already sought out tax havens. Both of those are subject to political machinations, so how long until a greater percentage of the progressives in the investment world decide that Bitcoin offers potential returns in addition to relative tax freedom without the typical barriers (offshore presence with an international trust or business incorporation, foreign bank accounts, legal fees etc)?

Quote from: FreeMoney on October 26, 2011, 07:02:32 PM

Dunno about the two of you but my memory goes back to 3 cents.

I like long-term. Another visual representation of USD flowing into BTC.