[NBLUG/talk] BTC got pumped and dumped harder than any coin yet

Allan Cecil ac at sonic.net
Sat Dec 7 11:16:14 PST 2013


The events of recent days requires providing some context.  First, the 
Bitcoin exchange rate started a meteoric climb a few weeks ago, largely 
driven by interest out of China of using Bitcoin as a form of savings 
and investment.  The Chinese government took a stance that implied they 
would not regulate Bitcoin exchanges but that they were watching what 
was going on.  Earlier this week new regulations were announced stating 
that traditional Chinese banks were barred from participating in Bitcoin 
exchanges for the time being but that exchanges could continue to 
operate (although the translations of the announcements caused some 
amount of confusion with US media reports framing it as if it were an 
outright ban).  This caused a noticeable dip, but it wasn't until the 
next day when the two major Bitcoin accepting businesses announced they 
were holding off on accepting Bitcoin as a form fo payment that the 
major slide started occurring.

Now is a very good time to point out that Bitcoin is acting a lot more 
like an extremely volatile commodity than a currency, in part because 
the volume of trades that are normally present in a typical currency is 
not yet present.  I anticipate slow wider adoption by businesses until 
price stabilization occurs, but wider adoption will be a key component 
in increasing volume.  This sets the stage for Bitcoin to continue to be 
a Wild West of financial instruments for the foreseeable future, albeit 
a potentially lucrative one.  If you do decide to invest in Bitcoins 
either through purchasing mining equipment or through buying Bitcoins 
directly, always keep in mind that Bitcoin is a deflationary currency.  
That characteristic makes it unwise to borrow Bitcoins as repaying them 
will "cost" more than what was borrowed in a value sense.  I learned 
this lesson the very hard way when I used Bitcoins to buy mining 
equipment that then did not recoup the number of Bitcoins I spent on it. 
  It wasn't technically borrowing, but the effect was the same.

This article is extremely enlightening and worth reading, despite the 
somewhat misleading title:

http://bitcoinmagazine.com/8778/bitcoin-chinas-new-special-economic-zone/

I'll stop rambling but as always, exercise caution and common sense when 
working with high risk opportunities.

See you at Tuesday's general meeting,

A.C.
******



On 2013-12-07 10:36, Zack Gold wrote:
> My opinion is that crypto-currency is in its infancy and what we're
> experiencing is an idea 'growing up', and seeing what happens when it
> matures. It seems to be very unstable, at the moment, and the future
> is very uncertain. Though, if I had some 'pocket change' lying around
> I would invest a minimal amount out of curiosity.
> 
> On Sat, Dec 7, 2013 at 12:59 PM, Michael Tucker <mchltckr80 at gmail.com>
> wrote:
> 
>> Good morning,
>> 
>> Now that we have seen Bitcoin get manipulated all the way up to and
>> above $1300USD, should the crypto-currency guru's think about
>> building a little redundancy into the equation to protect the future
>> of peer-2-peer currency? LTC has been referred to as a pump and dump
>> by more people than BTC, however; now I am beginning to hear those
>> who have money talk about it being a ponzi scheme. As if the
>> american dollar doesn't have a pyramid on it and the stock market is
>> never manipulated. Wether it is fontas, or the banking industry
>> manipulating crypto-currency right now, it needs to self regulate in
>> order to prevent the cronies on capitol hill from taking it and
>> making it their ......  As these coins are developed off of open
>> source code and a transparent process,  if and/or when they fail
>> they will effect the open source movement as a whole. I believe this
>> is a good topic of discussion for NBLUG and would like to extend you
>> an invitation to post your praise or critique of crypto-currency
>> through a response to this post.
>> 
>> Thank you,
>> Michael
>> _______________________________________________
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> 
> --
> 
> Zack Gold
> Former NBLUG Scribe
> 
> Links:
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> 
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