Bitcoin Forum

http://bitcoincharts.com/charts/mtgoxUSD#tgSzm1g10zm2g25zvzps

http://i48.tinypic.com/35ba1dv.jpg

Most definitely current super-growth will also peak out at some yet unknown value (triple digits, in my opinion), then gradually fallback to a lower level (above 32, but lower than 100), recuperate for a year or two, then a third huge wave would start, with a bottom of this year's high, whatever it will be.

As nobody can possibly predict what the current peak may be, the best possible speculation strategy still is "buy some when you can, buy lots when the price goes down".

http://bitcoincharts.com/charts/chart.png?width=940&m=mtgoxUSD&SubmitButton=Draw&r=&i=&c=0&s=&e=&Prev=&Next=&t=S&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&v=1&cv=0&ps=1&l=1&p=0&
http://bitcoincharts.com/charts/mtgoxUSD#tgSzm1g10zm2g25zvzpszl (http://bitcoincharts.com/charts/mtgoxUSD#tgSzm1g10zm2g25zvzpszl)

Certainly below $32. There is no basis for a genuine price rise to $32. Bitcoin is not used much, except for speculation.


You mean, sell all now, buy back not before half a year has passed and the price has stabilized. Whether it will stabilize at a single or double digit figure, nobody knows yet.

How much money do you think Wordpress or Namecheap takes in through their new bitcoin acceptance? Do you think the figures are in any reasonable relation to the current mountain of speculation money? Of course they aren't. Bitcoin is still not used much for any real economy purpose.

The price will continue to rise as long as enough new "speculators" stream into the market and part with their money. As soon as they are all in, the price will drop like a stone, too fast for practically all of them to sell at a gain. Mt.Gox will drop dead for the most part, as usual in extreme market movements.

http://bitcoinmagazine.com/bitpay-exceeds-2-million-in-transactions-month-to-date/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+BitcoinMagazine+(Bitcoin+Magazine)

 ::)

Oh, come on, don't let the facts get in the way of a good religion. Bitcoin is useless except to buy drugs and weapons on SR and maybe to do a spot of money laundering. The real value of a BTC is between $1 and $1.5  ;D

We're going down to $5 again soon.  No one wants these stupid things.  Just in it for the paper. ::)

Couldn't that be said of Bitcoin speculators? They think BTC is embarking on global acceptance and is going to save the world in less than a month, and for these reasons it should immediately be valued at $10000/coin.

The biggest claims to fame at this point are Wordpress (an open source CMS that most none-techies don't know or care about), and Namecheap (a niche registrar -- would be understandable if GoDaddy took BTC). Plus a handful of fly by night service providers and everyone is equating it to global acceptance.

Global acceptance would put each BTC at roughly 1,000,000, not 10,000.

1% of Bitcoin's potential as either a currency, a store of value or a payment processor (the three sides of the Bitcoin, so to speak), puts us easily around $10,000, so from that perspective, we're correcting upwards.

Would love to see how you came to these numbers and ultimately your conclusion. Please lay that out for me with as many facts as possible because I've thus far failed to see what has caused a 500% move in valuation in less than 3 months. Burden of proof doesn't fall on me, I'm just asking for proof, everyone else is making the claim that this is all sensible movement.

I'm curious what you would consider proof.  I mean, you must not be reading the same forum I am because there is proof all over. No one will waste their time with you until you lay out what you are expecting.

Actually, since a BTC is currently selling for $88.40, the burden of proof to show why that shouldn't be so very distinctly rests on you  ;D

Exactly!

There are markets all over the world where BTC is selling right now for ~$90.

If you don't think it's worth it, the burden of proof is on YOU.

As far as I can see, the user base is expanding, and speculation:usage ratio is stable or decreasing.

I'm expecting some reasonably sound metrics on a fundamental adjustment that is commanding a 500% increase in valuation. What I'm getting is statistics about reddit readership and pointing to fringe services like Wordpress, Namecheap, Reddit and Mega. Does no one have hard statistical data of new user adoption that is said to be causing this move? I haven't seen it, all I see is "look at this useless number that can indicate one of several different things, but I'm going to cherrypick the one that makes me say I can get $100 for my BTC."

You say it but you don't show it, what the hell. Can I see some reporting on hard numbers? Did MtGox publish some whitepaper on this? I don't understand.

And about people saying burden of proof rests on me... so when I go and buy a vehicle, the burden of proof is on me to find out why this vehicle is worth the price tag? It's not the person suggesting a value? Keep in mind I'm not suggesting anything, I'm just asking for why this move is occurring. Now, in addition to not receiving feedback that holds water, I'm getting trolled about needing to prove why I think it shouldn't be worth $88, when I'm not even saying it shouldn't' be worth $88.

This reads to me like "no proof will satisfy me".  You really can't get more wishy-washy and moving-goalpost prone than "some reasonably sound metrics"

Well, if you can't point to anything that perhaps the community would consider a valuable indicator, I guess I'm wishy washy.

Furthermore, any chart zoomed out to years-long timescale of nascent market, will look absolutely like that -- exponential or above growth as new users flood in. The previous crash happened at a totally different point of development of Bitcoin.

BTC is not immune to crashes -- but posting a zoomed out chart does nothing to show it will crash now.

Here is a more sensible chart. It's not even log scale!

https://ferroh.com/charts/10day_small_zero.png?1364400244

Hell, over 60 days it doesn't even look that bad!

https://ferroh.com/charts/60day_small_zero.png?1364400244

Ack, your comparison doesn't hold water. It would be more accurate to say you observe a transaction where both the car seller and buyer agree on a price, and after the fact you ask for a justification... well, the justification is that presumably the seller and the buyer have analysed the market and come to the conclusion that that is the right price for the car in those circumstances. Nobody is suggesting YOU should buy a single Bitcoin... but we are saying that since the price is what it is, then it is what it is, which is about the most philosophically consistent position one can take.

So you focus on what you consider an ill-conceived metaphor instead of the point at issue. Clearly I won't be getting any answers which just further indicates to me that there might not be anything behind this move. Which is fine, it'll play out as it will. Appreciate the feedback guys.

No - you're 100% correct.  The only merchants which accept btc are currently illegal (SR etc) or quasi-legal (gambling sites) or fringe tech sites (with the possible exception of WordPress.)  When Google, Amazon, EBay or even GoDaddy start to treat bitcoins with a modicum of respect perhaps the current valuation would make sense.  Until then we are in a speculation bubble - there's no saying the bubble can't goto triple or even quad digits, but it's still a bubble.

I've been (VERY) wrong about how high the price would go so far - but eventually some sort of sanity has to win out (probably..  lol)  I still think the true present value of a btc is about $8-15USD after the coming correction - time will tell.

I actually posted this twice in this forum already -- there's a search function you can use. It's not like "is BTC overvalued?" is a rare topic on this subforum, after all :-)

Anyway; I'll bite. Here you go:

http://www.jfwhome.com/wp-content/uploads/2013/03/btratio-1024x607.png

You can see that the overall level of speculation is high, but as a ratio to overall transactions, it has actually been decreasing since late last year.

The previous bubbles are very pronounced if you zoom out, but -- I'll be honest -- it's impossible to establish cause/effect for these ones. Jury's still out IMO:

http://www.jfwhome.com/wp-content/uploads/2013/03/btspikes-1024x587.png

You can also check blockchain.info "my wallet" adoption as a surrogate measure of overall usage. Find that yourself.

As far as I can see, the user base is expanding and accelerating -- not linearly but not quite exponentially either, with a significant increase in gradient this year. This should be having an exponential impact on the price. That's what I'm seeing.

Here's CNY:BTC over the past year on a log chart. Doesn't look unexpected to me.

http://www.jfwhome.com/wp-content/uploads/2013/03/btcny.png

I'm interested in discussing both points of view sensibly, but may I ask you to tone down your attitude a bit please? "What the hell" indeed -- and quite why you "expect" anything from the rest of us is beyond me.

You both forgot gambling!

BTW, I should also add -- I wouldn't deride WordPress, Reddit or Namecheap. The first is an Internet phenomenon with a massive network effect. The latter I would consider the #2 registrar after Godaddy. WordPress is beyond huge.

Yes, they are just Internet names, but we have to start somewhere and the network effects from these big names in the industry will be very positive. If adoption continues in this vein, BTC will have a very high future utilisation.

Furthermore, it is entirely reasonable to speculate on the future trade value of BTC now, not after the fact. Bitcoin market cap is still far below that of PayPal and will be for a long time.

Also--An insurance company is now accepting bitcoins (the one that I work for). https://bitcointalk.org/index.php?topic=155036.0

Not trying to advertise, but it's a real business, and judging by some of the companies that have contacted us, there are quite a bit more businesses beginning to accept bitcoin that are actual brick and mortar businesses, not just things like Wordpress etc.  

I do feel that the extreme increase in bitcoin price in such a short time IS overall hurting some adoption, as even though we accept Bitcoin, right now it looks like it would be a terrible idea to sell or pay for anything in something that is rising so quickly, so in that regard I think it's difficult to get people who WANT to pay with bitcoins.  For us at least, it would be better if the price stabilized so that it could be used without fear of drastic appreciation/depreciation in a short period of time.

Ken

@BitPirate

Sorry but you're using past performance as evidence of future performance, so I'm disregarding it. And the announcements of Wordpress and Namecheap were months ago, so it would be quite a delayed reaction if that's what's causing this move.

The only thing of value to me that you've mentioned is wallet adoption, so I'll look into that.

I'm content in letting this rest as it is, but I appreciate your help.

Wordpress is fringe now?

Alexa Traffic Rank    
Global Rank  22


I fully respect your position </sarc>

I'm thoroughly devastated.

I'm not at all predicting future performance. You may want to re-read. I was providing a case for Bitcoin's value not being overblown. Actually you didn't ask me to predict future performance. Which is good, because I can't.

What I can tell you is that the risk of failure is fairly constant over time. I also _consider_ that the risk of a steep decline is offset by buying pressure at lower prices. There was strong evidence for this during the block chain fork.

Hope this helps.

Its one of those, prove what I'm thinking type discussions!

Only a fool would argue that the price today is not speculative driven.  However, whether it actually grows to 000000s is anyone's guess, hence speculation!

The real value of bitcoins is whatever someone is willing to pay for it - its that easy.  At the moment, everyone is buying it as a shortcut to a happy retirement, and while it might happen, in most cases, I don't think it will.

However, being early adopters as long as you know when to sell, what have you got to lose?

IMHO the current value of Bitcoin is mostly due to speculation and its usefulness as a safe store of value.

It is not reflected anymore by the current Bitcoin economy.

That doesn't mean it can't go up a lot more.

Just where the top will be nobody knows because we're in uncharted territory, also with the Euro crisis.

I don't expect much of a fallback though, maybe down the 50s at most.

Another possibility is that we get several months of stability at a certain price while the Bitcoin economy catches up, like in the first half of 2012.

Of course the market is driven by speculation! You all know that's how markets work, right? If people think that the net-present-value of something is higher than it's currently trading at, they're going to buy it, even if that NPV is dependent on *future* flow.

So, about that...

On the store of value side, we can run some quick calcs to discover that if about 2% of the world's private-investment demand for gold (which is about 16% of total gold) shifted to bitcoin, it would demand a price of about $1500/btc.

On the transactions side, if 10% of total global black market transactions get done in bitcoin, with a btc money velocity of 5, that also commands a price of $1500/btc.

Now, let's say that price is the success case, and if it happens at all, it won't get there for 10yrs. Let's also say that there's a 75% chance that bitcoin completely fails in that timeframe.

So we have a 75% of $0/btc in 2023, and a 25% chance of $1500.

Using an 8% discount rate, that puts fair *current* value at $173.

Just a quick example, but you get the idea... The analysis people really need to make is what they consider the success/fail cases to be, what the probability and timeframes on them are, and whether they have sufficient risk tolerance.

http://leecollinsfiction.files.wordpress.com/2012/10/success-kid.jpg

 ;D

interesting numbers

The bitcoin market has a total valuation of $1 billion. How come, if BitPay only moves $2 or $3 million? Who is moving the other 99.7%?

To me it is obvious---the speculators. The bad ones, actually, the newbies who buy because the price is rising. The trend followers. They are on their way to wreck bitcoin's remaining reputation.

Perhaps the other 99.7% is not moving at all ...  ::)

The thing is, there are lots of speculators out there. It's also a question of how long it will take the media to become bored.


Of course we will oscillate downwards, too, before we get there.

Also, everybody should look at the logarithmic charts. Things are put into perspective then.

https://bitcointalk.org/index.php?topic=156049 "Logarithmic Scale - tl;dr!: USE IT!"

22nd largest website on the Internet by Alexa rankings. Biggest blog platform.


http://en.wikipedia.org/wiki/Namecheap (http://en.wikipedia.org/wiki/Namecheap)

http://www.reddit.com/r/technology/comments/nmsiu/godaddy_supports_sopa_transfer_your_domains_today/ (http://www.reddit.com/r/technology/comments/nmsiu/godaddy_supports_sopa_transfer_your_domains_today/)
http://www.reddit.com/r/technology/comments/nokde/it_sounds_obvious_but_godaddys_sopa_flipflop_is_a/ (http://www.reddit.com/r/technology/comments/nokde/it_sounds_obvious_but_godaddys_sopa_flipflop_is_a/)
http://www.reddit.com/r/technology/comments/nuimq/tell_reddit_its_dec29_transfer_your_godaddy/ (http://www.reddit.com/r/technology/comments/nuimq/tell_reddit_its_dec29_transfer_your_godaddy/)

Namecheap has 3 million domains and iconic status on Reddit.


Name me one person who says Bitcoin has "global acceptance."

"Fringe"?

http://www.alexa.com/siteinfo/wordpress.com (http://www.alexa.com/siteinfo/wordpress.com)
http://www.alexa.com/siteinfo/reddit.com (http://www.alexa.com/siteinfo/reddit.com)

Yes, socially they are fringe. Get some perspective, please.

But there is a more basic error in the core argument here. It goes, "The price has increased 600% or so, but X, Y, and Z site adoption still doesn't add up to much." The underlying assumption being that a 600% increase would only be justified by something like broad mainstream adoption. No, mainstream adoption of Bitcoin justifies something more like a 1,000,000% increase in price, conservatively, and I don't think that's even controversial.

The error is to look at absolute value as a indicator of relative appreciation. Last year the big (legal) things in Bitcoin were homemade coffee beans and alpaca socks - pretty much the same as in 2011, as far as I know. Then, suddenly, BOOM - 22nd most trafficked website on the Internet, followed by a steady stream of relatively very positive news.

Mainstream transactions going from alpaca socks and coffee to WordPress, Reddit, Mega, and Namecheap justifies way more than a 600% increase in value.

Moving the goalposts now?  ::)

Besides, what the hell isn't fringe? You want facebook? When facebook is using Bitcoin the price will wayyy the hell more than 600% higher. I think you may want to think things through a little more before posting.

Considering all of our posts are opinion, maybe you should, too. :)

Sure, granted, but the point is that these sites are way bigger than anything we had before the big rally started. It's the relative difference. We are still at piddling valuations, even after 600% growth.

An increase in merchants accepting BTC is not nearly as important as the increase in consumers adopting BTC and using it for every day payments. Merchants have no incentive not to accept something that is becoming du jour. It boosts their cool factor (if the cool kids are doing it, well...we're cutting edge, too.). They would accept dirty gym socks if that was the new craze (and no, I'm not calling BTC a fad) and there was market for exchange.

There will be a diminished return in the BTC price boost that accompanies news of future merchants accepting BTC unless consumer adoption really kicks in. Yes, Wordpress is big because it was one of the first well known (in many circles) entities to accept BTC. The 10th or 20th well known entity will not impact the price very much if at all (unless it's something ridiculous, like Wal-Mart), but may serve to moderately bolster the network effect and brand appeal with which BTC derives its all of its value (otherwise LTC, PPC and every other variation would also be worth something).

No, the key is consumer adoption because this barrage of good news can easily turn sour if merchants start reporting how little BTC is affecting their sales. $2M a month at Bitpay is negligible (and likely unsustainable without a second round of funding in the not-so-distant future). To one who says current BTC price valuations are 'piddling', well so is the current revenue stream generated by accepting BTC (as far as I can tell, but correct me if I've read the tea leaves incorrectly).

I agree with Crazy in that fundamentals are murky at best. I'm a Bitcoinophile and am bullish on the concept and utility, but the more I read the motivations and conclusions drawn on this forum, the more I wonder how many other people are buying in after coming to the same conclusions with, it seems, a very disjointed view of market price vs adoption, and the less bullish I become regarding current price. There is certainly room to run to 3-digits.....markets tend to stay irrational far longer than we predict....and there is the chance that this is not irrational (quite possible). I guess the fact that markets tend to stay irrational longer may be a perfect reason to buy for some investors. :)

I agree that investors should take into account the potential for success/failure (NPV). IMO, a 25% chance of BTC succeeding is absurdly optimistic, but I realize you were simply offering an example. BTC will either fail completely or succeed completely, and the goals are monumentally high. I hope complete success is higher than $1500 per coin because if it's not, we are definitely in a bubble. If complete success = $100K or $1M (or whatever) per coin at some given time in the future, as many have stated, and there is a 25% chance of that success, this would be a no-brainer....BTC would be the lottery ticket of the century. Poor souls spend hundreds per month on lottery tickets with much much lower odds. I think the odds of success with BTC are much much lower than 25%.

Last I heard Western Union pays and receives in the respective local currency. With bitcoin you would need two extra exchanges.

Of course, in the far future people can buy their bread and butter directly with bitcoin, but until we get there, Western Union has the advantage.

This is what I got out of this thread:

Bears: "but you haven't proven that bitcoins are worth $88"

Bulls: "we dont have to prove it, look at the price bitch"

LOL  ;D ;D ;D

Glad you're using the NPV and Expected-Value framework approach. Not sure how else one can arrive at a respectable buy/sell decision.

I used to think the success case probability was a lot less than 25%. But, over the last year, there have obviously been a lot of very positive developments in the bitcoin ecosystem. I've also thought a good deal more about the nature of money, why humans used to use gold, why paper money, both backed and unbacked, developed, etc. I've come to appreciate bitcoin even more as a truly pure form of money pretty much perfectly fit for modern times. I outlined much of this the other day in cypher's gold thread: https://bitcointalk.org/index.php?topic=68655.msg1651425#msg1651425

Some of those conclusions actually require me to dramatically up the $1500/btc value in the success case, though the duration for the mega-success case to happen is longer than 10yrs, and, yes, less than 25%. However, for simplicity, I'll stick with my (0.75)($1500) + (0.25)($0) in 10yrs framing for the time being. I think that's valid even if bitcoin remains relatively "niche". The mega-success possibilities are just icing on the cake...

No.  Western union has little independent shops that pay local currency for a tiny taste of their fees.  Western union takes hours to process.

With bitcoin you can walk into the tiny shop, agree on an exchange rate and have the funds at there address in seconds and confirmed in a few minutes.

There is work in teaching the independent shops how to use it, but the advantage is strongly on bitcoin's side.  I was discussing the details of implementing a charity to do this with Mexican laborers today.  It won't be that hard to make it happen.  Big companies are slow and complacent.  By the time they notice the new bitcoin sticker in their retail outlets half their fee volume will be gone.

Thanks. Agreed. 100%. It will take a serious wave of adoption and buy-ins to counteract it, and I just don't see that happening. But I also cannot underestimate the exuberance.

Comparing piddling transaction usage and user/merchant adoption to a piddling BTC market cap and coming up with a meaningful answer is hard. What is not so hard, though, is comparing relative changes in those values. Did one advance from piddling to tiny while the other one didn't? Then we may have reason to believe the price will move up or down to correct the disparity.

The price stayed around $13 for a long time, indicating that that may be a stable valuation for Bitcoin given the level of awareness and economic development at that time. What has actually happened in the past few months, by my reading of the many fundamental indicators, is that transactions and user/merchant adoption have increased from negligible to piddling and are perhaps broaching tiny, while the market cap has risen from negligible to slightly non-negligible, bordering on piddling.

In other words, the price seems to have moved up less, in relative/percentage terms, than the fundamentals have. YES, aside from the basic concept and system, the economic fundamentals remain piddling. What matters is that they have increased very rapidly even while still being piddling. A number can remain extremely tiny while experiencing tremendous (percentage) growth; conversely, a number may be very large and grow only a tiny amount. The mere fact that the absolute growth of the system is low tells us nothing at all about what the percentage growth of the price should be. What matters is the system's relative growth.

Hence when asking if the recent uptrend is justified, the question is not one of absolute valuation but of the relative change in that valuation. From where I stand, it looks like we have seen tremendous relative change in the fundamentals. Exponential growth, even. Once again, this won't feel anything like tremendous absolute change. It's like watching bacteria divide in a petri dish. Yet the price growth that this underpins will feel tremendous provided the absolute amount you invested isn't tiny.

tl;dr: Don't confuse relative change with absolute change.

I think what you're getting at here is that in the success case, looking back at a bitcoin chart from inception, anything that happened under triple-digits will look like a flat line that barely budged a few pixels.

Yeah, that's one way to look at it. WordPress, Reddit, etc. may look like unimpressive or even like flatlining in the grand scheme of things, but if Bitcoin is to succeed then all the recent price action will also look like flatlining in the grand scheme of things. The real question for speculation purposes is something like, "Which flatlining is flatter?" To me the latter looks flatter, which means the price can be expected to continue rising until it unflattens more.