Skip to comments.The Bitcoin Price Just Crossed $1,000 Again
Posted on 01/06/2014 6:28:35 AM PST by Errant
The price of bitcoin has, once again, reached $1,000 on popular bitcoin exchange Mt. Gox.
The first time the price of bitcoin reached this level was on 27th November after interest in the cryptocurrency spiked across the world, but primarily in China.
A few weeks later, the price started to tumble after Chinas central bank imposed restrictions on the involvement of the countrys banks and third-party payment processors in bitcoin.
On 5th December, the central bank said Chinese financial institutions were no longer permitted to work with bitcoin exchanges or other bitcoin companies. That same day, the price fell from $1,135 to a low of $870, according to the CoinDesk Bitcoin Price Index, which averages prices across Mt. Gox and other leading bitcoin exchanges.
Two days later, the price fell to a low of around $558. Over the following week, the value fluctuated relatively mildly before the Peoples Bank of China took further action.
Payment processor ban
It was on 16th December CoinDesk broke the news that the central bank had met with representatives from the nations largest third-party payment processors and informed them they were no longer permitted to work with bitcoin companies.
The authorities made it clear they were not taking action to prevent individuals from owning, buying and selling bitcoin, but by restricting the involvement of banks and payment processors, they made bitcoin trading rather difficult.
As soon as the regulatory news broke, panic selling began and the price of bitcoin plummeted again, with many digital currency naysayers predicting the end was nigh.
On 18th December, the price dipped to around $422, but there have been no dramatic crashes since then. In fact, the general trend has been upwards, with the price on the CoinDesk BPI at the time of writing being $927 (it has not yet crossed the $1,000 mark today on the BPI).
Garrick Hileman, economic historian at the London School of Economics, commented: Bitcoins price continues to show remarkable resilience in the face of regulatory restrictions and criticism from some of the worlds most influential economists.
Aside from price resilience, bitcoins general popularity in China doesnt seem to have abated either, with massive Chinese web portal Sina.com.cn recently adding bitcoin market information pages to its site.
Despite repeated statements from the Peoples Bank of China appearing to prevent widespread bitcoin use, it also appears trading remains active at Chinas busiest bitcoin exchanges. After BTC China scaled back its banking relationships in December, Huobi took the number one spot by managing over half of all Chinese bitcoin transactions. Some exchanges have found ways to continue accepting bank deposits, and there is speculation Huobis CEO is channeling funds into the exchange through a personal bank account.
Exact information on the absolute latest bitcoin news in China and exchange trading volumes, however, can be difficult to verify quickly.
How do you make change?
Since it’s divisible by up to 8 digits, you don’t have too. This means you can have .00000001 of a Bitcoin verses only .00 of a dollar.
Best Johnny Carson voice:
I DID NOT KNOW THAT...
:) That’s okay, a lot of other people don’t know it either. Thanks for asking!
So, the ownership chain “splits” when the BC is divided like that?
You could call it that. Its just a transaction entry in the distributed ledger (blockchain) of a fractional value from one address (wallet) to another. Likewise when someone makes a big transfer from hundreds of factional bitcoins received into their wallet.
"Economist John Williams thinks 2014 will mark the beginning of hyperinflation. Williams contends, You are going to see, early on, a crisis in the dollar that will start to trigger the inflation . . . as the inflation picks up, thats going to savage the economy, which is already in a depression. It never recovered. Forget what you have heard about the so-called recovery. Williams says, The consumer is in trouble. There is nothing happening to turn the economy around. The weak economy is bad news for the dollar. According to Williams, Anything that would suggest deficit deterioration here, and a weak economy would do that, will have a devastating impact on the dollar. And if foreigners start selling some of the 12 trillion U.S. dollar based assets, such as bonds and currency, things will turn ugly fast. Williams says, Were dependent on the rest of the world continuing to go along with us and continue to support the dollar. Thats not going to happen. So, the big question everyone is asking is when will the buck take a hit in value? Williams says the dollar will likely begin selling off before the middle of this year, and he adds, Its really going to be a currency panic . . . when the fundamental selling pressure really starts to pick up, when the selling gets heavy . . . in turn, the weakness will be seen in a spike in oil prices and a spike in gasoline prices. Williams says there will be a panic out of the dollar and he predicts, Once you see a massive sell-off here, I see the game as being over.
Strong words from a VERY respected analyst.
It’s not a coin, and it’s not a currency.
What are you buying when you buy a bitcoin? An entry in a digital log.
What is the price? It’s what someone else is willing to sell it for at that moment.
I wouldn’t be surprised if the US government declares it illegal and demands taxes on the accrued value that anyone holds.
Then the demand will fall, and the asking price will drop. Hard to know how the IRS will calculate the increase in value.
Will they treat it like Paypal and regulate it?
Or maybe they will throw their hands up in despair, and just outlaw it altogether!
It’s a big risk.
I'm no tax expert, but pretty sure any gains would be taxed as such (capital gains) once they're sold, just like stocks and etc. Our tax system relies upon self-reporting. Anyone would be wise to follow the law in that regard.
As for regulation, FinCen has issued guidance on certain aspects already.
As for risk, what isn't? Don't put all of your eggs in one basket. Especially in these times we're living in. I'd be sweating bullets right now if I had a huge 401K I was relying on for my future well being, as an example.
Actually, the most likely scenario is that the California State Franchise Tax Board will begin auditing businesses that accept Bitcoin in the state, or sell bitcoins, and assign sales tax fines to the sellers.
Any barter transaction in California is subject to sales tax, which must be paid for in cash at the time of the transaction. This policy is duplicated by many states (see BXI and later versions), though California is unique in recognizing the difference between retail and wholesale transactions.
As the old BXI cases show, however, the barter medium is also not exempt from sales taxes; someone buying Bitcoin will likely find that the seller was supposed to collect sales taxes at the time of the sale.
Now maybe there’s been some little known change that is specific to bitcoin or virtual currencies, but none that I’ve heard about yet.
To all interested in this subject:
Bitcoin is a protocol of which Bitcoin the currency is a small but powerful part. There is a massive infrastructure being built around Bitcoin the protocol that is going to change the world.
Can you not see that the financial shell game of the central banks is coming to an end? It is and it will. I have weighed the risks and benefits of my decision to adopt Bitcoin and I am prepared to live with the outcome, come what may.
Bitcoin for lack of a better term in my view is a God sent lifeboat and I suggest you get in any way you can as a hedge against the Ponzi scheme of the counterfeiting federalists.
If you don’t think so, thats cool with me. If you feel strongly that Bitcoin is a Ponzi scheme I respect your feelings, I just think your wrong about it. Everyone has to make their own decisions in life and live with the consequence, I respect your decision even if I think you are wrong.
For those who dismiss Bitcoin out of hand I leave you this.
“There is a principle which is a bar against all information, which is proof against all arguments and which cannot fail to keep a man in everlasting ignorancethat principle is contempt prior to investigation.” - Herbert Spencer
Very respected? Hardly.
Yeah, Williams and a number of others have been warning for years now. I guess we can’t say we haven’t been warned. This is the first time I remember him narrowing it down this close (i.e., 2014) though.
He said in a couple of months, in 2010, IIRC.
Got a link?
I sense alarm in Mr. Williams voice toward the end. Obviously something has him worried when this was recorded - around 2011?
He said Hyperinflation "could" begin in 6 to 9 months at the time of this recording. We're all in awe by how long this as been going on and timing something like this has too many variables to be able to do so accurately.
My Interview Notes:
When you see panic selling
Next 1 year to 5 years - host says he said
US has no backup system
"Could" be 6-9 months - watch dollar panic selling
Yeah, he's a bit of a drama queen.
Obviously something has him worried when this was recorded - around 2011?
I think December 2010. So he's had no luck the last 3 years. Despite trillions in QE. Maybe when the Fed stops pumping money into the system, he'll get his inflation?
"Could" be 6-9 months
Or 36 months? 60 months?