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<blockquote data-quote="Brackson" data-source="post: 243721" data-attributes="member: 34747"><p>Due to my new obsession with Bitcoin, I'll be writing a piece on the recent spike in its price.</p><p></p><p></p><p></p><p><strong><span style="font-size: 22px">Rise in Bitcoin prices: From $20 to $200 in one year.</span></strong></p><p>As some of you may know, Bitcoin is an online decentralized currency, ran solely by its users to maintain and support it. Recently, Bitcoin's price has risen dramatically, from a mere $20 per coin at the beginning of 2013 to a whopping $200, multiplying itself by 900 percent, and it's expected to rise even more. In this article, we'll be looking into some possible causes for this spike in price.</p><p></p><p><strong>#1: ASICs and other Bitcoin mining hardware.</strong></p><p>ASICs (application-specific integrated circuits) are basically hardwares that can be designed specifically to mine Bitcoin at a very fast speed, or hash rate. Mining Bitcoins (in laymen's terms) basically means solving a long mathematical problem and getting paid for it. This is done to put more Bitcoins into the economy and confirm Bitcoin transactions.</p><p></p><p>In late 2012 and early 2013, companies such as Butterfly Labs started accepting pre-orders for ASIC hardware. In January 2013, Butterfly Lab's smallest and most popular miner (Jalapeno) could mine at 7 giga-hashes per second, with the price tag of about $300. At the current mining difficulty and conversion rate of that time, it would be equivalent to $25 per day, and you would be able to break even after roughly 15 days. People flooded BFL (Butterfly Labs) with orders, and by the time that BFL started delivering their miners, the amount of profit people could earn with the Jalapeno was $9 per day. Two months later, that would go down to $1 per day. Now, it would earn you around $0.14 per day, and, with power fees, this won't even allow you break even over time.</p><p></p><p>In the past months, <a href="http://www.pcworld.com/article/2058940/record-bitcoin-payment-of-1-million-spent-on-new-mining-hardware.html" target="_blank">using Bitcoin mining hardware to generate a profit has become very popular</a>. People have invested more and more into mining hardware, thus driving up the mining difficulty wildly and keeping the rate of Bitcoin production unstable, which directly affects its price.</p><p></p><p><strong>#2: Silk Road</strong>.</p><p><a href="http://www.theguardian.com/technology/2013/oct/02/alleged-silk-road-website-founder-arrested-bitcoin" target="_blank">The closure of an illegal website ran on the Tor network called Silk Road</a>, which sold drugs and drug paraphernalia, could be the reason why this spike has occurred. The FBI seized this black market on October 2, 2013, along with about 4 million dollars in Bitcoins, which is approximately 5% of the Bitcoin network. This crashed the price, but has since recovered and is rising rapidly. Some say that this is because the news of this has struck the interest of many more users into the 'bitcoinverse', and they have bought Bitcoins and are holding on to them in the hope that there's is a rise in value so they can sell them for a profit. This process has increased the demand of Bitcoin, and the supply couldn't match, thus driving up the cost.</p><p></p><p><strong>#3: US Government Shutdown</strong>.</p><p>Due to <a href="http://en.wikipedia.org/wiki/United_States_federal_government_shutdown_of_2013" target="_blank">the recent issue in Washington that resulted in a Government shutdown</a>, people have started to lose trust in the dollar. Having a small reserve of Bitcoins just seems to make sense after this.</p><p></p><p><strong>#4: China.</strong></p><p>With the creation of <a href="http://btcchina.com" target="_blank">BTC China</a>, an online Bitcoin exchange site, Bitcoin demand in china has increased dramatically. <a href="http://baidu.com" target="_blank">Baidu</a>, a popular Chinese search engine, has now begun accepting Bitcoin for some of its premium features as well.</p><p></p><p><strong>#5: After all of this, people still want to invest in Bitcoin.</strong></p><p>Yes, that's right. People still see a chance to make a quick buck if they invest in Bitcoin now, and sell it for a profit at a later date. While this method may still work, it is very risky. Bitcoin's cost has been proven to dramatically fluctuate, as you can see <a href="http://www.forbes.com/sites/timothylee/2013/04/11/an-illustrated-history-of-bitcoin-crashes/" target="_blank">here</a>. This is most likely a phase, and according to the theory of supply and demand, once enough supply is made (mined) to match the demand of its users, the price will go down.</p><p></p><p>Although determining the source of fluctuations in crypto-currencies is near impossible, these are most likely the culprits of this year's major growth in the value of Bitcoin.</p></blockquote><p></p>
[QUOTE="Brackson, post: 243721, member: 34747"] Due to my new obsession with Bitcoin, I'll be writing a piece on the recent spike in its price. [B][SIZE=6]Rise in Bitcoin prices: From $20 to $200 in one year.[/SIZE][/B] As some of you may know, Bitcoin is an online decentralized currency, ran solely by its users to maintain and support it. Recently, Bitcoin's price has risen dramatically, from a mere $20 per coin at the beginning of 2013 to a whopping $200, multiplying itself by 900 percent, and it's expected to rise even more. In this article, we'll be looking into some possible causes for this spike in price. [B]#1: ASICs and other Bitcoin mining hardware.[/B] ASICs (application-specific integrated circuits) are basically hardwares that can be designed specifically to mine Bitcoin at a very fast speed, or hash rate. Mining Bitcoins (in laymen's terms) basically means solving a long mathematical problem and getting paid for it. This is done to put more Bitcoins into the economy and confirm Bitcoin transactions. In late 2012 and early 2013, companies such as Butterfly Labs started accepting pre-orders for ASIC hardware. In January 2013, Butterfly Lab's smallest and most popular miner (Jalapeno) could mine at 7 giga-hashes per second, with the price tag of about $300. At the current mining difficulty and conversion rate of that time, it would be equivalent to $25 per day, and you would be able to break even after roughly 15 days. People flooded BFL (Butterfly Labs) with orders, and by the time that BFL started delivering their miners, the amount of profit people could earn with the Jalapeno was $9 per day. Two months later, that would go down to $1 per day. Now, it would earn you around $0.14 per day, and, with power fees, this won't even allow you break even over time. In the past months, [URL='http://www.pcworld.com/article/2058940/record-bitcoin-payment-of-1-million-spent-on-new-mining-hardware.html']using Bitcoin mining hardware to generate a profit has become very popular[/URL]. People have invested more and more into mining hardware, thus driving up the mining difficulty wildly and keeping the rate of Bitcoin production unstable, which directly affects its price. [B]#2: Silk Road[/B]. [URL='http://www.theguardian.com/technology/2013/oct/02/alleged-silk-road-website-founder-arrested-bitcoin']The closure of an illegal website ran on the Tor network called Silk Road[/URL], which sold drugs and drug paraphernalia, could be the reason why this spike has occurred. The FBI seized this black market on October 2, 2013, along with about 4 million dollars in Bitcoins, which is approximately 5% of the Bitcoin network. This crashed the price, but has since recovered and is rising rapidly. Some say that this is because the news of this has struck the interest of many more users into the 'bitcoinverse', and they have bought Bitcoins and are holding on to them in the hope that there's is a rise in value so they can sell them for a profit. This process has increased the demand of Bitcoin, and the supply couldn't match, thus driving up the cost. [B]#3: US Government Shutdown[/B]. Due to [URL='http://en.wikipedia.org/wiki/United_States_federal_government_shutdown_of_2013']the recent issue in Washington that resulted in a Government shutdown[/URL], people have started to lose trust in the dollar. Having a small reserve of Bitcoins just seems to make sense after this. [B]#4: China.[/B] With the creation of [URL='http://btcchina.com']BTC China[/URL], an online Bitcoin exchange site, Bitcoin demand in china has increased dramatically. [URL='http://baidu.com']Baidu[/URL], a popular Chinese search engine, has now begun accepting Bitcoin for some of its premium features as well. [B]#5: After all of this, people still want to invest in Bitcoin.[/B] Yes, that's right. People still see a chance to make a quick buck if they invest in Bitcoin now, and sell it for a profit at a later date. While this method may still work, it is very risky. Bitcoin's cost has been proven to dramatically fluctuate, as you can see [URL='http://www.forbes.com/sites/timothylee/2013/04/11/an-illustrated-history-of-bitcoin-crashes/']here[/URL]. This is most likely a phase, and according to the theory of supply and demand, once enough supply is made (mined) to match the demand of its users, the price will go down. Although determining the source of fluctuations in crypto-currencies is near impossible, these are most likely the culprits of this year's major growth in the value of Bitcoin. [/QUOTE]
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