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How To Use Bitcoin – The Most Important Creation In The History Of Man

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psionl0 said:
I call it somebody looking at the bitcoin price history with his eyes closed.

If you look at the bitcoin price chart on a logarithmic scale - especially since October 2011, you will see that it is almost a straight line with a couple of higher than average price rises followed by a fall back to the trend line. The trend line shows at least a 5-fold increase in the price in each of the last two years.
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On reflecting on the matter this is not such a simple question. Is something volatile if it goes up more than down?

Beta > 1 for bitcoin

Beta is figured for a stock not in isolation but against some baseline, such as an index of stocks. Something with low beta would track the baseline closely while something with a high baseline would bounce around.

Using a stock market index as a baseline, bitcoin has outperformed it by a wide margin and has bounced around in price also. However, even at the lows it has been outperforming the market by a wide margin.

Volatility, of course has various meanings. That is one reason stocks are measured with beta, not with the phrase 'volatile'.
 
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psionl0 said:
I call it somebody looking at the bitcoin price history with his eyes closed.

If you look at the bitcoin price chart on a logarithmic scale - especially since October 2011, you will see that it is almost a straight line with a couple of higher than average price rises followed by a fall back to the trend line. The trend line shows at least a 5-fold increase in the price in each of the last two years.
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Yes, as I said, a generally upward trend.

It is a simple question for some of the posters here. By calling the price "volatile", you can imply that there is no average price increase over time.
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Not for me, since I've already said it has a generally upward trend.
 
Belz... said:
Yes, as I said, a generally upward trend.



Not for me, since I've already said it has a generally upward trend.
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Your use of the term "catastrophic collapses" was misleading at best.

When you compare the bitcoin price with the trend line, you get what you would normally expect if the price rises significantly faster than the trendline would indicate - a price correction back towards the trendline.
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Prior to October 2011 the price was more volatile. Of course, bitcoin was just a curiosity then and buyers were more easily spooked by bad news items such as the hacking of MtGox.
 
psionl0 said:
Your use of the term "catastrophic collapses" was misleading at best.
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Your graph is horrendously dishonest, since it goes from .0001 to 1000.

If you change the Y axis to an accurate figure, you get a far more accurate representation of Bitcoin's current state, and you can also clearly see the three major drops in value. Based on the history, a fourth one is coming soon, and all of them will have been in 2013.

Prior to January 2012, Bitcoin was effectively worthless, so "volatility" doesn't apply. Right now it's nothing more than a speculator's toy -- certainly nowhere near useful as a currency.

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remirol said:
Your graph is horrendously dishonest, since it goes from .0001 to 1000.
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A linear scale only shows the absolute change. A change in price from $100 to $200 is much more significant than a change in price from $900 to $1000.

If you want to see how the price changes percentage-wise then you need a logarithmic scale.

remirol said:
If you change the Y axis to an accurate figure, you get a far more accurate representation of Bitcoin's current state ...
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The last time you debated bitcoin prices you hadn't quite mastered the concept of price x volume:
remirol said:
Pennies are pennies, man. I blow more money on beer than I could've made with Bitcoin in that timeframe. (Jan to April 2011)
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psionl0 said:
A linear scale only shows the absolute change. A change in price from $100 to $200 is much more significant than a change in price from $900 to $1000.

If you want to see how the price changes percentage-wise then you need a logarithmic scale.
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Any scale involving money that involves amounts less than a penny is inherently dishonest; I would personally say that I don't give a damn about anything less than $20. My chart is both practically honest and accurately shows not only what you claim -- that there is currently a trend upward -- but also shows what _I_ said, which is that there have been three major drops and why I think a fourth is coming soon.

The last time you debated bitcoin prices you hadn't quite mastered the concept of price x volume:
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Dishonest quoting on your part. The full statement was:

remirol said:
Pennies are pennies, man. I blow more money on beer than I could've made with Bitcoin in that timeframe. To have a crash, you have to have somewhere to fall to.

(buy in on Jan 1 at $0.30 per for $100; cash out on April 1 at $0.80 per for, eh, call it $266 repeating? Why did I even waste time buying the equivalent of a penny stock in the first place if I wasn't gonna hold until it did something?)
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As you can see, I understand price v. volume quite well, and to make anything worth sneezing at in that timeframe on volume, you'd have had to dump tons of money into a "currency" with no track record of ever having done anything at all. Not a smart decision unless you can predict the future, in which case I suggest Vegas; it's easier.
 
mhaze said:
That's utter nonsense. I engage in transactions almost daily which involve various currencies, always one is translated to the other on a near instantaneous basis, a rate is locked in, and the deal is made. No different with bitcoin. Exactly the same. You may be taking some definition of currency which suits the end you desire to obtain, then making a little tautological or circuituous bit of faulty logic there. Instead, one must consider the actual dynamics of ecurrency, as it's mode of use and most efficient utilizations may differ from paper or metal currencies. Without doing that, your statements are false.

In a transaction from US/USD to S Africa Rand with bitcoin, bitcoin is the intermediary unit of exchange which eliminates the need for a trusted third party. Take a look at home many people just got put out of business because they were not needed any longer, and you'll see why there is a strong desire to keep people scared away from bitcoin.

Wait, that's what you were doing....

LOL...
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Oh, argument from "You're just scared!1!", followed by LOL. I'm so impressed.

As an intermediary for instantaneous transactions, yeah, it might work. So might rai stones. As for any other currency function, a currency that can change in value from pocket change to a condominium in Oslo in five years is just nuts. Much of business depends crucially on the currency being stable enough that accounts payable/receivable don't suddenly make drastic shifts because of the currency going haywire. It ain't rocket science.
 
psionl0 said:
It is a simple question for some of the posters here. By calling the price "volatile", you can imply that there is no average price increase over time. ;)
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No. Price volatility only means that it undergoes a lot of variation. It has nothing whatsoever to do with trends. If total variations upward > total variations downward, price increases. If it goes the other way around, it decreases. If they're roughly equal, price stays roughly where it is in the long term (but hits a lot of points both below and above that level during the time frame).
 
timhau said:
No. Price volatility only means that it undergoes a lot of variation. It has nothing whatsoever to do with trends. If total variations upward > total variations downward, price increases. If it goes the other way around, it decreases. If they're roughly equal, price stays roughly where it is in the long term (but hits a lot of points both below and above that level during the time frame).
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Since variance is a sum of the squares computation, it deals with the absolute value of the variations, and it does not know once taking that absolute value whether they are positive or negative.

Any given variance can be superimposed on any slope of a line. I would assume that Timhau is of the opinion that for a currency, a flat line would be best (or one that was slowly changing). However, in the 20th century we have dozens of spectacular cases of currencies changing value quite rapidly, always in the negative direction.

These cases are considered "bad" because the consumers lose money. They have been caused by war, or by governments printing money in peacetime.

However, Timhau attempts to impose on bitcoin a traditional currency model. Then he sees a round peg not fitting into a square hole and squawks.

"Flawed!"

This is a new currency model.
 
timhau said:
Well, that explains everything. It's a currency that pretty much sucks at anything a currency should do, but it's great because it's a new sort of currency.

Got it, thanks.
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Yes, it's great because it's a new sort of currency that allows instant transactions between any two people on the globe who have access to a smart phone.

....paypal only works in 78 countries...and has high fees...

I'm glad that you did, as you say "got it".
 
mhaze said:
Yes, it's great because it's a new sort of currency that allows instant transactions between any two people on the globe who have access to a smart phone.

....paypal only works in 78 countries...and has high fees...

I'm glad that you did, as you say "got it".
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What amazes me, is that despite the enormous appreciation of bitcoin over a short period of time, and despite the problems with Mt. Gox and the takedown of silk road, people still spend them. This flies in the face of the other thread in which multiple posters, usually the same culprits, claim that deflation is "bad". It seems that things getting cheaper, and not for the wrong reasons, and not having our purchasing power stolen by banks and governments is actually a good thing.
 
timhau said:
No. Price volatility only means that it undergoes a lot of variation. It has nothing whatsoever to do with trends. If total variations upward > total variations downward, price increases. If it goes the other way around, it decreases. If they're roughly equal, price stays roughly where it is in the long term (but hits a lot of points both below and above that level during the time frame).
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This makes more sense than what AdMan had to say about the matter.

However, even in the absence of these price fluctuations, the rapidly rising mean price of bitcoin prevents it from being the useful currency it would otherwise be. (See also my original point).
 
Tippit said:
What amazes me, is that despite the enormous appreciation of bitcoin over a short period of time, and despite the problems with Mt. Gox and the takedown of silk road, people still spend them. This flies in the face of the other thread in which multiple posters, usually the same culprits, claim that deflation is "bad".
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I'd venture to say that most BTC users don't have their entire wealth invested in it.
 
Tippit said:
What amazes me, is that despite the enormous appreciation of bitcoin over a short period of time, and despite the problems with Mt. Gox and the takedown of silk road, people still spend them.... .
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For me to spend a bitcoin, I have to be offered a somewhat better deal than what is offered with USD or any other worthless fiat. It seems like 10-15% discount will induce parting with a bitcoin. In other words, if a box of XYZ is $100 retail and is $65 on ebay, something like $50 will cause me to buy with bitcoin. Those prices are inclusive of tax and shipping. If the USD price of the item is equal to the bitcoin price, I'll spend the USD.

And even when I spend the bitcoin, I know it's ridiculous - I'm buying a starbucks $50 credit with a fraction of a bitcoin which if saved, might buy a thousand cases of beer.

Tippit said:
.... This flies in the face of the other thread in which multiple posters, usually the same culprits, claim that deflation is "bad". It seems that things getting cheaper, and not for the wrong reasons, and not having our purchasing power stolen by banks and governments is actually a good thing.
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Yeah. I was thinking it's a new dynamic, to be more explicit, that Greshams Law and velocity theory in the traditional sense do not apply to bitcoin.

In a very real sense, though, the theory and the details do not matter - if a currency owned by nobody except those who hold it has came to exist, outside the huge houses of cards structures created by governments, and said currency is reasonably stable then I'm getting in.
 
timhau said:
Remind me... why are we having this discussion? Bitcoin is very volatile, it's not an emotive term, and it's a property that is very, very undesirable in a currency. If you disagree with any of that, tell us what exactly it is you disagree with. If you don't... GOTO first sentence of this post.
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Because you are casting aspersions on the One True Currency.
:rolleyes:
 
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