Bitcoin market hilarity

Posted by Rob on 13 April 2013 | Comments

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I rarely watch TV, but somehow managed to be watching as Bitcoin hit the evening news. I was watching the NZ news which is as crap and watered down as any other country's mainstream news. Bitcoin being featured here and elsewhere around the world because the price had hit an all time high of $90 USD.

What followed was a massive spike in price up to $260 USD. On the way up to this price, the noise from people on the Bitcoin forum was that of amazed elation, everyone is getting richer! Its funny to read the wise-asses. It also brings out the optimism in people as the excitement gives people all the ideas bitcoin could be useful for.

Soon after the price crashes back down to ~$50 USD on the way down, all we can now hear in the forums is blame, and more wise-asses who come out of the cracks to proclaim "Bitcoin was just a bubble", "Bitcoin is failing, everyone knows that it was only a matter of time", and "Greedy people are killing Bitcoin..." and so on!

btc3

Hilarious!

So now there are heaps of newbs all coming into the Bitcoin world, and finding that the price goes down as well as up! What some of the newbs didn't see, or the olds have forgotten is that we already had a Bitcoin "bubble". The problem is there are now a whole heap of people who know about Bitcoin, but don't really understand what "Bitcoin" really is.

One of my friends was telling me (when the price first hit $90) "You need to get rid of your Bitcoins now, before the bubble bursts". I asked her "Do you know what Bitcoin is?". She told me "It's like a kind of share". So there is the problem right there. Poeple think that Bitcoin is a fad, they think its a successful company they have part of. Grab a bit quick but don't be caught holding it when the music stops.

What people don't realise is that Bitcoin is actually a protocol. Bitcoin describes how I can send a token digitally and irreversably from me to someone else. That thing happens to have value becuase people believe it has value. When people believe it has value, they will swap what they have of value for it. As it has this value we can use it as a currency.

Its also the best currency in the world, because it is borderless, central authorityless, semi-anonymous, and transfers are almost instant.

The other thing people fail to realise is that Mt.Gox IS NOT Bitcoin. Unfortunately at the moment we have this way of turning FIAT currency into Bitcoins that is too centralised. Mt.Gox handling most of the Bitcoin trading on the internet means that if there are problems with that process, then people assume that Bitcoin is failing. All the while Bitcoin is sat chugging away on mine and everyone else's computers, doing what it's been doing since 2009.