back to article Bitcoin breaks US$1,000

Bitcoin has surpassed the US$1,000 mark for the first time in three years. The high water mark was breached Monday trading at US$1,019 at the time of publication. It follows a steady increase in the value of the crypto currency in recent months buoyed by China's devaluation of the yuan, the removal of high valuation bank …

  1. Roq D. Kasba

    Sudden crash coming again?

    Seeing as there is still no material grounds for the valuation, and that with no underlying asset the exposure is 100%, are we just waiting for another big crash? The whole of the value is based on faith in people you probably can't trust (after all they're actively seeking an unregulated money transfer/launder), so maybe another trading platform theft will do it. Must say as a store of value it seems risky, and as an exchange platform it seems volatile.

    1. Tom 64
      Paris Hilton

      Re: Sudden crash coming again?

      It seems less likely than before, which was an obvious bubble. However I expect to see a downward adjustment from profit taking, and an abundance of fraudsters and thieves crawling out from under their rocks as this news breaks.

      Paris because, well... wtf

      1. Anonymous Coward
        Anonymous Coward

        Re: Sudden crash coming again?

        Pssst.....wanna buy some tulip bulbs.

    2. RIBrsiq
      Holmes

      Re: Sudden crash coming again?

      >> * no material grounds for the valuation

      >> * no underlying asset

      >> * The whole of the value is based on faith in people you probably can't trust

      Yes, I see what you're saying and I mostly agree with it.

      But then I look at the traditional monetary system and think "what is, when get right down to it, the actual difference?". I mean, at least with crypto currencies everyone sees the ledger!

      1. DavCrav

        Re: Sudden crash coming again?

        "But then I look at the traditional monetary system and think "what is, when get right down to it, the actual difference?"."

        You might not see the difference, but most other people do. The fiat bit of fiat currency, means that a government declares that you must pay taxes in that currency, and acts as a lender of last resort. This creates a base demand for that currency. In the UK, and I expect in other countries, it is illegal for employees to be paid in tokens other than cash (to effectively outlaw the company store), so there's also a big demand from there.

        In other words, pounds are wanted by people in the UK because otherwise they go to jail for tax fraud. What is the underlying asset and demand for bitcoins?

        1. nano200

          Re: Sudden crash coming again?

          Go to jail for not being paid in GBP as that equals tax fraud? So if my European customer sends me EURO I go to jail?

          Money does not have to be government issued for me to conduct a transaction. This applies to EURO, Yen, Bitcoin and other barter goods. As long as I declare my income, I can accept whichever payment method I prefer.

          It will make the books difficult for my accountant if I received 4 goats for a shell script, but it is none the less up to myself and my customer how we exchange services, goods and payments. Declaration has nothing to do with means of payment.

          Saying Bitcoin is somehow not legal to accept is pure FUD. People are just using GBP as means of payment because "everyone has it". Choosing to use Bitcoin as a means of transaction does not equal tax evasion, or tax fraud as long as I declare it.

          1. fandom

            Re: Sudden crash coming again?

            How does:

            "it is illegal for employees to be paid in tokens other than cash"

            turn into:

            "So if my European customer sends me EURO I go to jail?"

            You wouldn't happen to be a fan of politics, would you?

        2. Lars Johansson

          Re: Sudden crash coming again?

          Most people who think they do are actually mistaken. There are no underlying assets to any of the world's major currencies, and haven't been since the US pulled out of the Bretton Woods accord in '71.

          You say the government acts as a lender of last resort (actually, most central banks are independent these days) but fail to notice that it (and the central bank boards) is largely made up of "people you probably can't trust". With the latest few rounds of quantitative easing, I'd drop the "probably".

          One of the major benefits of Bitcoin and similar crypto currencies is that QE or classical inflation is simply not possible du to the deliberate limitations of mining. The value of the Bitcoin is entirely down to the relation between supply (limited by mining) and demand (highly varying), and the efficiency of the market (questionable). Its volatility and vulnerability to speculation and manipulation is mostly down to the low volume of real-economic transactions conducted in the currency.

          1. Pascal Monett Silver badge

            Re: "classical inflation is simply not possible"

            Instead, it has been replaced with modern inflation, which means that the price varies daily by so much that a fiat currency would be declared bankrupt in comparison.

            We're just going to have to wait until this thing either boils over or is folded into international trade with proper rules and regulations. Until that time, it's just a risk.

            1. Lars Johansson

              Re: "classical inflation is simply not possible"

              That's not inflation, that's volatility, which I did address in my post.

              "Modern" inflation, or that prices steadily increase over time whether or not the supply of money does seems inevitable (though no one seem to be able to explain why to any satisfaction).

              The volatility of Bitcoin, or any minor currency, is mostly down to the volume of real-economic transaction conducted in it; the greater volume, the more stable the currency. Bitcoin is in it's infancy here.

              "Proper rules and regulations" would require at least some form of governing body (made up of people you probably can't trust) which defeats the whole point. The algorithm is the regulation.

              1. Bronek Kozicki

                Re: "classical inflation is simply not possible"

                The volatility of Bitcoin, or any minor currency, is mostly down to the volume of real-economic transaction conducted in it; the greater volume, the more stable the currency. Bitcoin is in it's infancy here.

                and, quite likely, it will stay in infancy until some other cryptocurrency replaces it (or alternatively, it simply dies out) . This is because number of transactions per second is limited by block size, and there is no consensus to increase the block size.

          2. h4rm0ny

            Re: Sudden crash coming again?

            Correct. The amusing (and valuable) thing about BitCoin is that it is a literally fiat currency that behaves in all meaningful ways like a non-fiat currency.

            1. Cynic_999

              Re: Sudden crash coming again?

              Huh? How is Bitcoin a fiat currency? Which government or entity do you claim is backing it? On the contrary, Bitcoin is, by design, actual money. Money is anything that people have decided to use as a medium of exchange, but in order to be workable it must have the following qualities:

              1) Inherently limited in supply and not abundant

              2) Durable

              3) Divisable

              4) Agreed to be used by sufficient people as a medium of exchange.

              Bitcoin has by design the first 3 of those qualities, and the only question is whether point 4 will continue to hold true.

              Currency OTOH is something that is supposed to *represent* money while not itself having the qualities of money, but just being more convenient to use - bits of paper are easier to carry around and exchange than pouches of gold dust that must be carefully weighed out for every transaction.

              Cash notes are obviously not limited in supply - the mint can print as many as it is ordered to print regardless of whether the money it is supposed to represent exists or not. Its value depends on the government who order its printing to play fair and ensure that no more cash is printed than the government holds a reserve of money of (used to be gold). Which it in fact has not been the case for many decades, making the currency fraudulent and all trades using it an act of faith.

        3. Cynic_999

          Re: Sudden crash coming again?

          "

          In the UK, and I expect in other countries, it is illegal for employees to be paid in tokens other than cash

          "

          Rubbish. Many people are paid at least part of their remuneration with things other than cash. Share options. Company car. Lunch tokens. Housing. Free or reduced company products. Duck ponds. Moat cleaning etc.

          Still others receive their income in currencies other than GBP. So long as all of the remuneration is declared to the tax office - which will put a taxable value on it no matter how it is paid - it is not illegal. I could certainly be paid in bitcoins if I so desired and my employer agreed. I would simply declare the amount in my tax return and the tax office will decide how much income tax I will need to pay (which I have to pay in GBP of course).

      2. wolfetone Silver badge

        Re: Sudden crash coming again?

        "no material grounds for the valuation"<br />

        "no underlying asset"<br />"

        "The whole of the value is based on faith in people you probably can't trust"

        Are you on about Bitcoins or normal currency?

    3. Version 1.0 Silver badge

      Re: Sudden crash coming again?

      " faith in people you probably can't trust " - that all sounds good except that I see exactly the same issues with fiat currency and for the most part they all get resolved in the same way. If you get screwed over you don't do business with them again whether they are a vendor in China or a Credit Card company on the west coast of the US.

      I have made payments via all these people and payment via Btc is both faster and cheaper than wire-transfers and credit-cards. A wire transfer costs $45 and a credit card costs 2-3%, a Btc transaction generally costs about 25c is is completed in minutes, not days or weeks.

      By worst experience to date has been with a credit card company who sat on $28k for four months demanding copies of invoices, quotes, paperwork etc and continually refusing to release the money (having taking it from my customer) due to "procedures" and this was just a local (US) sale.

    4. h4rm0ny
      Joke

      Re: Sudden crash coming again?

      >>"Seeing as there is still no material grounds for the valuation, and that with no underlying asset the exposure is 100%, are we just waiting for another big crash? The whole of the value is based on faith in people you probably can't trust (after all they're actively seeking an unregulated money transfer/launder), so maybe another trading platform theft will do it. Must say as a store of value it seems risky, and as an exchange platform it seems volatile."

      My first instinct is to ask you whether you're talking about BitCoin or the dollar.

      But then I remembered that the dollar actually is backed by something - USA's willingness to invade if you decide not to use it!

    5. Cynic_999

      Re: Sudden crash coming again?

      "

      Seeing as there is still no material grounds for the valuation, and that with no underlying asset the exposure is 100%

      "

      You could say exactly the same about the British Pound. Which, unlike Bitcoin is currency, not money.

    6. rdhood

      Re: Sudden crash coming again?

      "The whole of the value is based on faith in people you probably can't trust (after all they're actively seeking an unregulated money transfer/launder)"

      So, if I don't want the government or my CC company knowing (literally) every single thing I purchase, then I am seeking an unregulated money transfer or money laundering? I can't simply want to keep my business private? And If I want to deal with someone that only takes bitcoin, which of these two categories do I fall into? And if I am in, say, Venezuela, and I wanted to keep ANY wealth while my country is pissing away the economy, then I am money laundering?

      You have reduced bitcoin to the realm of criminals, and missed the point entirely.

      1. Anonymous Coward
        Anonymous Coward

        It will crash if China cracks down on it

        Most of the holdings are supposedly in China or related to Chinese trade. The post-Trump spike is probably because of interest in using bitcoin as a way of dodging the tariffs he claims he will put on Chinese imports (and China would no doubt slap on US exports)

    7. BackupVault

      Re: Sudden crash coming again?

      "with no underlying asset" and "The whole of the value is based on faith in people you probably can't trust"

      You mean like the entire worlds banking system you are part of at the moment? You do realise that the pounds in your bank are not backed by anything either?

      1. Anonymous Coward
        Anonymous Coward

        Re: Sudden crash coming again?

        The pounds in the bank most certainly are backed by something - the British government. They've decided pounds are the official currency of the country, required for all debts to and payments from the government, and legal lender for all transactions between parties - unless the laws are different than in the US you CANNOT refuse to accept payment in pounds for a debt owed by another party. You can refuse to accept payment in bitcoin, or gold.

        There is nowhere in the world where bitcoin is legal tender in this way, thus if people decide to stop using it, its value drops to zero. People can't decide to stop using pounds unless the UK ceases to exist.

    8. reddiesel

      Re: Sudden crash coming again?

      That didn't take long....

      http://uk.businessinsider.com/bitcoin-price-falls-on-january-6-2017-1?r=US&IR=T

  2. Anonymous Coward
    Anonymous Coward

    Maybe it was caused by a lot of people taking advantage of DNM seasonal sales?

  3. frank ly

    It's bad, the news says so

    Here's a recent article that appeared in The Independent newspaper 26 Dec:

    http://www.independent.co.uk/news/world/politics/bitcoin-is-being-monitored-by-an-increasingly-wary-us-government-a7492796.html

    The first thing it does is to associate alternative currencies with white supremacists. It quickly goes on to mention terrorists and criminals:

    “And it runs contrary to the very fundamentals of the transparency and accountability that we’ve tried to build for the last three decades to tackle terrorism, human trafficking, money-laundering and many other types of criminal activity.”

    Here's a good one:

    "This ability to financially disrupt, disable and dismantle nefarious networks, is crucial to US national security, USTreasury officials say. "

    It goes on with more:

    "...and refers to bitcoin as a revolutionary innovation that’s “breathtaking in its ambition” and striking for its “attempt to overthrow a sovereign authority.” "

    I suspect a move against Bitcoin in the near future, after a few more articles to prepare us for an extension to the continuous war on terror.

    1. Preston Munchensonton
      Joke

      Re: It's bad, the news says so

      Indeed, war on drugs and war on terror will both inevitably lead to a war on Bitcoin, since the only people using it are human traffickers, drug dealers, ISIS, and Jimbo Wales. This has to STOP!

      1. Version 1.0 Silver badge

        Re: war on drugs etc etc

        Most terrorist fund and drug transactions appear to be executed in US dollars cash which is a lot harder to track than Bitcoin transfers.

        "Many solutions were suggested for this problem, but most of these were largely concerned with the movement of small green pieces of paper, which was odd because on the whole it wasn't the small green pieces of paper that were unhappy.”

    2. allthecoolshortnamesweretaken

      Re: It's bad, the news says so

      No protection without taxation. That's the deal.

  4. Mage Silver badge
    Facepalm

    Irrelvant value

    As it's tulips bubble /pyramid scheme and secondarily a vehicle for money laundering, of course it will keep going up till it implodes.

    It's a totally impractical system for the mass market. Look at time now to process the block chain. Imagine if it had even a tiny fraction of IBAN transactions.

    The idea of a non-government currency isn't entirely stupid. The actual implementation of Bitcoin is stupid.

  5. werdsmith Silver badge

    $1000. I'm going to cash half of mine in for about $800 per BTC and take the family on a really nice holiday. Even if the remaining half crashes and disappears to zero I will still have my investment back manifold.

    I never understood all those people in these comments over the months who slagged bitcoin. I mean WTC? I'm f***ing quids in.

  6. Mark 85

    Some questions...

    I'm still wrapping my head around BTC and there's some things I can't quite grasp..... and no, I'm not a miner nor do I have any.

    1) I mine, I have a wallet, and the wallet gets corrupted. Do my BTC's disappear or can they be recovered somehow?

    2) Since there's a finite amount to be mined, do the corrupted ones get regenerated or are they "lost:?

    3) What will happen when all the BTC's that can be mined are mined? There are those who hoard (ok.. invest) in them and hang on to them. They are effectively out of circulation. Does this increase the value of those in circulation?

    4) For those hoarding them... let's say in a local wallet or even a cloudy one, if the wallet gets corrupted and can't be restored, is all lost?

    There's some redundancy in my questions but as I said, I'm still wrapping my mind around them as something other than a medium for funds transfer.

    1. Yet Another Anonymous coward Silver badge

      Re: Some questions...

      1, They disappear, exactly the same way as all those people in the Japan Tsunami who had millions of Yen in their homes because they didn't trust banks.

      2, They are lost - it's not a problem anymore than all the gold coins lying on the bottom of the atlantic in shipwrecks

      3, Yes, you will just trade fractions of a bitcoin

      4, If you don't have a backup yes. Fortunately it is a lot easier to backup a wallet than backup a vault

    2. Orv Silver badge

      Re: Some questions...

      #3 is actually a bigger problem than it might seem. Bitcoin is designed to be deflationary -- that's a big part of its political ideology. But when the value of a currency is expected to rise over time, it doesn't circulate -- people hoard it instead.

      1. Cynic_999

        Re: Some questions...

        "

        But when the value of a currency is expected to rise over time, it doesn't circulate -- people hoard it instead.

        "

        To an extent, but not everyone sees Bitcoin as just an investment, and the annual loss of bitcoins will be low enough to make the rise in value extremely slow, meaning that there will be plenty of far better investments. It would be worse than holding cash in an interest-bearing bank account. Land would make a far better investment, for example. It is attractive as an investment at present due to its volatility, not its eventual long-term slow & steady increase. If Bitcoin becomes as popular as the various currencies, the percentage hoarded for long-term investment will become miniscule compared to the amount used for transactions. More foolproof ways would also be devised to prevent the loss of Bitcoins. At present my Bitcoin wallets are backed up in 5 different places, so I am unlikely to lose them, but I must admit that I am the only person who presently knows the passwords, so should I get run over by the proverbial bus, those BTC will be permanently out of circulation ...

        1. Anonymous Coward
          Anonymous Coward

          Re: Some questions...

          " It would be worse than holding cash in an interest-bearing bank account."

          But better than holding currency in a failing government or one with skyrocketing inflation. If I lived in Argentina or Venezuela, I'd be (or would have been) finding a way to hold onto my life's savings before confiscation through hyperinflation took it all. SEVERAL WEEKS AGO (emphasis added to show that this is not an isolated problem with the Wiemar Republic from a hundred years ago), people in Venezuela were carrying their cash in wheelbarrows to purchase a quart of milk. The paper money was ALMOST worthless, and the Venezuelan government invalidated the current currency and put out new bills. They gave a very limited time/location to exchange old bills, so many people lost what little they had left.

          Or, lets have a look at Cyprus ... they confiscated nearly 50% of customers accounts in 2013.

          Or, lets have a look at Argentina. Imagine having 10,000 in that country in 1980, and how much would be left now.

          Governments are full of bureaucrats with an insatiable need to control how much money people have and how they spend it. Take a look at the this list: http://www.tradingeconomics.com/country-list/inflation-rate . There are 20 countries with annual inflation above 15%. That is enough reason for bit coin without resorting to proclamations that bit coin users are illegitimate criminals.

        2. Yet Another Anonymous coward Silver badge

          Re: Some questions...

          >It is attractive as an investment at present due to its volatility, not its eventual long-term slow & steady increase.

          To some people, but if you are the type of person who today owns a few bitcoin you are unlikely to be a starving 3rd word peasant. You are likely to be able to afford not to sell it for $1K when you have the chance in a few decades of owning 1/20Million-th of the major word currency.

          1. Orv Silver badge

            Re: Some questions...

            While it's possible some sort of cryptocoin will become the major world currency, I don't think Bitcoin will be it. It's just too clunky. There's no way the blockchain could handle the transaction volume of becoming the major currency of a decent-sized country, much less the world.

            Bitcoin also implicitly assumes that our network infrastructure will continue to exist in a usable, end-user-controlled way in the future. It's no good as a hedge against a worldwide market collapse, because it can't be used disconnected. It's also no good as a hedge against totalitarianism, because the government can always kink the pipes.

        3. Orv Silver badge

          Re: Some questions...

          "To an extent, but not everyone sees Bitcoin as just an investment, and the annual loss of bitcoins will be low enough to make the rise in value extremely slow, meaning that there will be plenty of far better investments."

          It's not loss I'm concerned about. I agree that loss is trivial. It's the limited total number, vs. a growing economy. The algorithm, by gradually reducing the supply of new coins, was explicitly designed to create deflation. I think this was partly an ideological choice, and partly a way to reward early adopters. (It's not quite a pyramid scheme, but if you squint at it it does look kinda triangle-y.)

    3. Tom 64

      Re: Some questions...

      Not a lot of point in mining on a standard PC these days, you have more chance of winning the lottery than gaining BTC by mining yourself.

      If your wallet gets corrupted your, BTC are lost unless you backed it up or can otherwise recover the data.

      1. Cynic_999

        Re: Some questions...

        "

        If your wallet gets corrupted your, BTC are lost unless you backed it up or can otherwise recover the data.

        "

        Yup. And if your physical wallet gets lost or put in the wash, your £ notes are lost unless you ... erm ... no, they are lost no matter what precautions you might have taken. No way to back up a £50 note ...

        And physical wallets are tempting things to steal. No gain for a person who steals my bitcoin wallet - only I (and people I have trusted to have the PW) can use it.

  7. BucketOfRocks

    Let's all write about stuff we don't understand ...that's really going to help

    More people in China trade bitcoin.....ok I do think there are more people in China.......I heard they have more car accidents there, so must be bad drivers....i heard they love to gamble....wonder if that is why they love BTC? Most shark attacks occur in shallow water......wonder why that is? Psycholoy and econ are interwoven...so tough to say what is responsible for what. Yes, bitcoin values have increased....yes they will fall.....but this is capitalism, so that seems normal. Until the nerds abstract some complexity and make it easier for the person who doesn't give a F, few people are going to open an account on line, buy bitcoin, download a wallet, create a paper wallet...etc.......volatility will continue but it will be very stable at some point in time.....but with less than 15 million people with a wallet...that time has not yet come

  8. lorisarvendu

    Bitcoin - asset or currency?

    Yes I know it's a currency really, but many of the discussions I've read online over the years seem to argue this point. Like if I buy an object of value (house, car, antique furniture, whatever) and I sell it for a profit, I'm not liable for tax unless I do it enough times for the IR(S) to consider I'm using it a source of income.

    On the other hand, if I put any amount of money into a Savings Account, then no matter how much or little interest I make, I'm automatically taxed on it. That to me is a difference between an asset and a currency.

    So what about Bitcoin? In the last 6 months the Dollar value of 1BTC has doubled. For Tax purposes, is Bitcoin an asset or a currency? I could have bought 10 BTC on eBay for £250 five years ago. If I sold them today I'd make about £80,000. Would that be taxable?

    1. Yet Another Anonymous coward Silver badge

      Re: Bitcoin - asset or currency?

      Depends on your country, in most places capital gains would apply whether it is an asset or a currency.

      Buy some foreign currency and sell them later when they have appreciated (or the pound drops) and you are liable for capital gains, same as if you buy gold.

      IIRC the US government ruled that it was an asset, no different from art, gold or beany-babes

      1. lorisarvendu

        Re: Bitcoin - asset or currency?

        I wonder how they would know? Not sure how the Inland Revenue finds out these things, since there shouldn't be any direct connection between my bank account and my Tax records.

  9. lorisarvendu

    And back down it goes...

    $884 (according to Preev - 9th Jan)

  10. mrarunlama

    It is interesting to see that most of the experts are highly bullish on bitcoins in 2017. Joe Lee, founder of Magnr expects bitcoin to stabilize around $1500. Other analysts have set the target of $1400, $1150, and so on.

  11. Nano nano

    That's "buoyed" ...

    no further comment

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