Bitcoin Forum

If someone had a hundred thousand dollars, they could buy at least 210,000 bitcoins, which is 1% of all the bitcoins that will ever be issued. Of course it would be stupid if everyone did that, because it would mean that only 100 people could ever play with bitcoin.

On the other hand, if bitcoin grow to 210 million users, the average user will have just 0.1 BTC, and we can be ten times as wealthy as average just by hoarding one coin. Some people think bitcoin might one day need to be subdivided beyond the eighth decimal place, but even at 8 decimals each bitcoin would be worth about a million dollars in today's terms.

Obviously there's an optimum value somewhere between those two extremes. How many BTC should one aspire to hold, before freely trading the rest?

for those of us without hundreds of thousands of spare USD to throw around... the more important question is how much can you afford to risk? because at the moment, bitcoin does carry with it some significant risks. think of it as diversifying into another asset. :)

Nobody can look into the future, spending them al for goods now can save you a lot of money or you can make big profits by keeping them al.
If you buy for example a mp3 player now for 200BTC and bitcoins become worthless, you got a free mp3 player.
If Bitcoin becomes bigger as paypal and you saved al your coins you are a milionair.

Nobody can tell you what to do, but my opinion, spent some, save some. Just like you do with "normal" money. To give you amounts like how much to spent and how much to save, is impossible, I can't look into your wallet. ;)

if one person bought 210,000 bitcoins for 100,000 dollars, the next person would have trouble accomplishing the same feat.  There is also a matter of timing. There aren't 21,000,000 bitcoins available today- there are 4.7 million- so this mass buying would have to occur 150 years from now or whatever.

The goal of this project is to create a better vector for the transmission of value - better money.

We need this better money to conduct our commerce. To trade and create wealth.

Do not horde the bitcoins. Spend them. The have no inherent value, their value is in their utility. To not spend them removes that value.

If you want to horde money with no inherent value, there are lots of bullshit national currencies. If you want to save up and invest in your future, use gold.

Accept the bitcoins for business. Spend the bitcoins for business. We need an economy, not some pretend commodity trading game.

I disagree. Hoard them if you can stand it! As the value rises you will all be tempted out of your stashes.

I am accumulating because I know I will spend a lot on coffee in the short term, and I need to make sure I still have 10BTC left in 2030 to buy my spaceship.

I'm still mainly hoarding at the moment. But I don't intend to keep it that way.

I partially agree.  Indeed there is no real point in hoarding any kind of money.  There are much better ways of investing :  shareholdings, precious metals, gov. bonds (if you like this crap), and so on...

However, saving money is not that bad either.  It's pretty much a matter of personnal choice.  But I don't think it's bad for an economy.  Besides, "economy" in some languages (such as french) litteraly means "savings".

I'd say it's ok to save in monetary units when you have some value to preserve, but you don't trust any other asset.

Idem.  I hope there will be more stuffs to buy in the future.

You've nailed it there. Maybe I'll put 10 BTC aside, and spend the rest :-)

Now here's a thought. Suppose that I expect BTC to rise in value by 50% every year. Then, I just decide what I want my annual income to be. Suppose I want to be able to spend $20,000 per year. Here's how to do it: start with $60,000 worth of BTC, and in the first year spend $20,000 worth. The left-over $40,000 of BTC increases 50% to be worth $60,000 again. Every year I could spend $20,000 worth, forever, if the value of BTC rises at the expected rate.

Obviously, for different rates of increase and annual spending amount, the initial bitcoin amount varies.

Anyway, that's hypothetical for me. As nanotube reminded us, we have to be willing to lose it all, so I'm not going to be hoarding anywhere near that level.

It is unreasonable to expect that the rate of increases that we have seen in the past year will continue.  Personally, I expect that the market will continue to expand for about another year, and then the dramatic increases will taper off as the system begins to mature.  So by 2012, the rallies will no longer be so dramatic, and by 2015 either everyone and your grandmother will know what Bitcoin is or the entire system will have failed or obviously will fail.  By then the GPU miners will be old hat and you will be able to buy hardware based computer cards designed specificly to mine Bitcoin and/or any related cryptocurrencies.  Nor do I expect that Bitcoin will be the only one by this time, if it proves at all successful. 

For sure this will happen by 2015. Even then, I think Bitcoin will still be too hard to use for many people (i.e. those who type Google into the search box when they want to go to google.com). So it will languish for a few years before finally crashing or soaring. My guess is 2020.

Ideas take time to mature. Even Google, with its megabuck funding, only became used by grandmothers 10 years after it was conceived.

I am assuming we're in the starting period. It seem very very very slow growth. Then we hit a period, then BAAAAAAAAAAAAAAM. We follows the J-curve until growth taper off.


The hard part is maintaining momentum until we get to the growth spurt.

I have to point out at this point, that the concept that Bitcoin is based upon was conceived at least 15 years ago.  It's based directly off of a technical paper from 1995, which in turn is based of other similar concepts a decade older.

And your grandmother doesn't have to use it, to have heard of it.  I think that it is actually quite unlikely that very many people who trade in bitcoins in the future will actually use the Bitcoin network in any direct sense.  More likely there will be a number of different Mybitcoin.com's with different foci, targeting different niche user groups like banks do now.  I doubt, seriously, that Paypal would cease to exist in a Bitcoin dominated future, as they would simply adapt to the currency like they have for every other currency that exists in any major online market.

Have you been paying attention for the past six months?

We are doing fine at the moment. We just saw a few new services opening up.

Ah, I see.  You speak of the 'seen' without regard to the evidence of the 'unseen' market.  Just as the movement of the trees tells you that the wind is real even though you cannot see it, the movement of both the difficulty and the market price tells you that the network is in an expansionary period that any reasonable person might call a 'growth spurt'.  I would bet dollars to donuts that there is already much trade of the currency in the darker markets of the world, particularly in the US.  It wasn't the black markets that brought down the Soviet Union, it was the black markets that kept the important things going.  The same is true here in the US, and most of Europe.

I wonder if there is a copy of Mybitcoin.com running as a tor hidden service, obscuring much economic activity even from the blockchain.

If someone is running such a thing, I want to know.

ribuck--

i did the loan math, and here's the results:

if bitcoins increase relative to the dollar at 50% a year, why don't you take out a $300,000 15yr loan repayable at 7% per annum.  yearly payments equal $28,212 on the loan, you can pay yourself $20,000 per year in salary, and only by the end of year 7 do you have to sell out some bitcoins to cover your dollar liabilities.  At the end of year 15, you will have paid $394,968 on your original loan of $300,000, you will have paid yourself $300,000 in salary, and you will be left with 69,785 BTC which will be equal to 10.2 million dollars.

In the retirement plan you designed at the end of year 15, you will have paid yourself $300,000 in salary and be left with 137 BTC, equivalent to exactly 30,000 dollars.

the rate, by the way will be 219 USD/BTC

My economics professor in college said a good economy is when the amount of money spent equals the amount of money saved.  For example, if I made $100 a week then I should spend $50 and save $50.

Also, right now bitcoin is not very liquid.  If it was more people would be spending.

If bitcoin is based on computer power shouldn't it follow moores law?

Thanks for working that out. It sounds like a plan!

No, actually, I wouldn't have the guts to borrow $300,000 to speculate. I'll stick to hoarding a few thousand BTC, and spending any others I get.

It's very interesting. If nobody ever spends a Bitcoin there is no economy and no value, only scarcity which makes people think there is value.

The smartest strategy is indeed to hoard all and wait for the _others_ to spend, but if everyone keeps a few thousand, you basically end up with a very small community of cryptogeeks and still low value.

At least that's my amateur economics opinion. It could even be the case that there are simply 100 criminals on the forum trying to make people believe there is actual value in these things, drive the price up and then quietly exit the market. Next year they could be telling stories on tv saying how they made millions off a bunch of idiots from the Internet.

I understand that creating bitcoins was pretty easy in the beginnning. In fact it seemed like it was really easy to find bitcoins considering there are already so many, at least when I look at my generation speed (CPU only, 2k hash/s). Is that impression wrong? How can I be convinced that the starters of this network didn't do a big precomputation before starting the network? I suppose it must be possible to see the balance of everyone in the network considering there is a global history. Is that correct?

Moores law doesn't say anything about "computer power", only the amount of transistors on a chip.

True, but Moore's Law (if it holds) does set a lower bound on the growth of computer power.

If you can increase the number of transistors, you can do more things in parallel. Any other improvements (such as increases in clock speed) will increase computer power beyond the growth in the number of transistors.

Ever since about 2006 (and even before that), the clock speeds have flatlined due to physical limits. The only way processors are still getting faster is by adding more parallelism (and thus more transistors).

Only for a given size of transistor. Every time they find a way to make the transistors smaller again, a further clock speed increment becomes possible.

over 9000

the answer is obvious.  :D

all of them...

Yes, that would be enough for me, and additionally I would want the same number for each of my family members.

No, from economical perspective the computing power is irrelevant. It merely acts as 'clock', each block is analogous to at tick. The difficult computations are to prevent the people from making the clock tick faster than it should (if it does the system autocorrects). People can turn back the clock (by building on an old block), but they cannot make it go forward fast, because you would have to generate more ticks and that need lots of computing power (more than the network if you want to overtake it).

Peter

I don't think it'll be hard, btc is already a valued commodity. This forum represents a hardcore of bitcoin fanatics, many of which are skilled developers or have various other talents and are into the idea, I think alot of people here are also wealthy and have alot of disposable income to spend on their hobby. Effectively the community is like... incubating tthis money, filling it with value while it steadilfy matures. There's a lot of sunk time, effort and personally interested money in bitcoin already, it's not going away.

This kernel of interest could keep bitcoin alive and developing in terms of human talent, services and infrastructure for years.

Then there's the QQ-factor, and the slashdot effect and the persistance of bitcoin fanatics asking for payments in bitcoin. When it takes off in somewhere like India or finally get's (attempts at) shut down in China, well.

Think pandora's box, but good.

I don't even think there'll be competitors. It's a digital commodity, not a company and not an app. Supernormal profits will bring participants to bitccoin, not to compete with it. It's not like you can invent a decentralised un-controlled competitor to bitcoin and then somehow make a profit from going up against the established open-sourced alternative.

Good point.

I don't see any reason why a similar cryptocurrency, or even another blockchain (am I talking out of my ass here?) couldn't compete against the current Bitcoin blockchain. Back before legal tender laws and the creation of the central bank, private mints were in competition with each other. Perhaps another system has some features Bitcoin doesn't, or for whatever reason gains hold of a niche. This is not a bad thing in any case. Especially if any competing currencies have decentralized transactions and non reversibility like Bitcoin, trading would be extremely simple. Perhaps even completely transparent. They could easily exist side by side.

My opinion: adding another blockchain (if it was possible) would lower the total value of BTC IMHO.
There are going to be 21 Million BTC in total, since we have a "fixed" quantity of money, inflation is kept under control. As other said, it's just like gold, there's a scarce quantity out there.
Then someone comes in and opens another blockchain/cryptocurrency. Since for the end user paying with BTC or "new bitcoin" (hereafter NBC) will be absolutely indifferent, this will mean that suddently a huge mine of gold is found somewhere. Newcomers and old miners will start harvesting the NBC and when enough NBC will be around, BTC value will drop. If the end user is given the opportunity to use both NBC or BTC, it will take time for both of them to lever, but the ones already owning some BTC will probably suffer a lot from this situation.

Speaking of scarce resource, I guess that at worst, 0.0000001 bitcoins (7nth decimal point) are gonna be worth one candy. Since I can buy candies at 5€cents, I expect 1BTC not to rise at more than 500'000$ in value :P
This reminds me of a story on a comix, with the main characted being sent to a parallel dimension in which 1£ was worth so much they had to pay a coffee with μ£s (micropounds).

Let's speak also a bit about psychology: normal people tend to think at a small number as a small value. For this reason I don't actually expect people to accept buying bitcoins if their price gets too high. I guess a show stopper will be when 1 BTC will be worth more or less a dinner at the restaurant. This realistically means we are never going to see people get bitcoins for more than 20/30$ each: the only way out is to give 0.001 BTC a brand new name, maybe "SBC", small bit coins. :P

What will hoarding do?  It will drive up the exchange value of BitCoin...that will cause more people to desire bitcoin as they see the price rise.  As a consequence, more people will start to turn in their currencies and gold in exchange for BTC.  People will also start offering more and more products and services in exchange for BTC.  They'll even offer those products and services at a big discount compared to traditional currencies because they'll be mindful of the rising value of BTC.  This is all good for the viability of BTC.  If everyone is trying to spend it, then that's basically pushing *down* the value of BTC and that is not good for BTC.  The key is to offer more and cheaper ways of exchanging BTC for other currencies and metals.  If people can readily see a deep and liquid exchange market, they'll have no problem holding a portion of their savings in BTC.  So, hoard away people!!!

Unless the inventor is yet another Satoshi, bitcoin is going to win by pure momentum.

Indeed.  The first-to-market advantage is a tough one to overcome.  Betamax was certainly superior to VHS, but not by a large enough of a margin to matter.

To me, enough Bitcoins is an amount sufficient for a rainy day fund, and enough to pay my daily expenses when i will be too old for anyone to hire me...

Besides that, if i can earn as many bitcoins as i spend, it will be enough for me...

So at least 100 people offer goods and services for BTC right now. Is a new user really going to be indifferent between accepting Bitcoin and Newcoin when no one accepts Newcoin yet? Who starts taking it first?

To answer the question in the topic . . . Four.  Four Bitcoins is enough.  The rest is just for show.