Bitcoin Forum

It seems to me that the price of BTC right now ($100-ish) is "our" price. 

BTC is hard to obtain.  Only those of us who know how to acquire it, can get it. 

Therefore its value is high.

The average person out there still has no means by which to obtain it.

To me that is "Scarcity".   

To me that justifies its $100 value.

Fast forward a bit - to when people can obtain bitcoin easily.   

Why won't its value take a sharp skydive when it is abundant, and easy to obtain?

Suddenly its not so hard to get.

Suddenly its not scarce.

Quantity of coins will also be going up.  Even less scarcity.

Scarcity increases value.  Easy to acquire decreases value. 

No?

-Burger-

It will be easier to aquire Bitcoins, but harder to aquire the same amounts of Bitcoins.
There are 21 mio Bitcoins max, simple math tells us that the price has to skyrocket if Bitcoin goes mainstream.

It will only be harder to *Mine* the same amounts of bitcoins.  It wont be harder to acquire the same amounts.  
It will become significantly easier to acquire them if you are purchasing them straight-out.
The only way they'd be harder to acquire in the same amounts, is if the price went up.
But when something becomes easy to acquire and quantity (mined) is going up, its value goes down, compared to when it was hard to acquire and quantity was limited.
Isn't that the process?

There wont be a cap on the number of available coins for 40 years.  
So its limit wont have any relevance until that time comes.
Once they are easy to obtain, their quantity will continue to rise.
During this time period, I am theorizing that their value will decrease significantly.
No?

-Burger-

If every person in the world would use Bitcoin there would be 1/600th BTC on average per world citizen.

Once again you are referring to 30, 40 years from now. 
I am referring to the next 5 to 20 years.
The time period where BTC is easy to get, and its quantity is increasing.
Value of $100 should go down.  No?

The price will rise,just look at the past

I might be wrong but I'm quite sure the more people have bitcoin then the price will likely go up.

I think it may have something to do with supply and demand but there again I could be wrong.

Only if demand stays the same, I don't think that will be the case.
Also I don't think the hard cap of 21 mio will change.

But feel free to sell all your coins or even short them, if you believe otherwise. ^^

Wrong, max numbers of bitcoin is 21 millions and more than half are already in circulation.

So no, they will NOT be abundant and the quantity of coins won't go so up, at most 21 millions.

If more people start buying bitcoin then its price will increase, since the total number of bitcoin does not change. As i said, more than half already have been mined. It is not you can suddenly create 100 millions btc

This is entirely backwards! The amount someone is willing to pay for something is at most its utility less the transaction cost. Reducing transaction costs therefore increases the amount people would be willing to pay.

But it also completely misses the big picture. The supply of Bitcoins is effectively fixed. The demand, however, is not. Increasing adoption means increasing demand.

Bitcoins value will be the same as ever other thing in this world is based on, simply what someone will pay for it. Therefor bitcoin will never reach a million a coin or anything close to. Simply because no one will ever pay 1million for it.

You will always have other currencies accepted. Bitcoin will never be that needed for the price to go insanely high.

The price of bitcoin is actually too high if you consider the competition from other alt-coins, but people are seldom rational when it comes to economics.
Just like other technology wars or brand wars, the winner takes it all and thats why bitcoin has sustained the price around 100$.
Most people and most merchants ignore or don't know about alt-coins.

In the long run I think other coins will take some more market share and outperform bitcoin as an investment.
If bitcoin becomes to mainstream and becomes too regulated, the need will emerge for less regulated and more anonymous coins.

100% agree with this. Bitcoin paved the way and deserves credit for its accomplishments but you are right, there are improvements to be made and another coin will surely catch some notability.

Quite interesting this topic just above "Why do most Bitcoiners seem intelligent?"  ;D

Rather than "scarcity" , one possible perspective is look at Bitcoins from the point of the economic principles of Supply / Demand.
When Cypress bank accounts were being raided the price shot up, because "heck" there was a big demand , Cypriots were trying to get their money out of the country and used Bitcoins, so they bought Bitcoins as a store of value.

Cypriots demand drove the Bitcoins price up.

The same will happen as economic instability is increased around the globe.  When people realize that they need to get their savings out of banks fast, and gold/silver is too heavy to carry around and unsafe (killed for it) they will discover Bitcoins and used it to store value, as more people subscribe to this idea the higher the price.

Argentina is also a good example.  http://www.coindesk.com/why-bitcoins-are-60-more-expensive-in-argentina-than-the-us/

This is also well documented in the most recent "The Genesis Block" report.
http://thegenesisblock.com/bitcoin-mid-year-review-and-outlook/

Just like a hot stock on the stock market, when the demand is there people will drive the price up. 
This can be said about more average joes and janes learning about Bitcoins and wanting to try it out and use it for exchange.
The more people get on the bandwagon the higher the price.....demand.  

Think "Supply / Demand", but your are correct too that "scarcity" has some factor in it.

My 2 cents.

CryptoCoinMKT

LOL

Key word ... most.

I am playing Devil's Advocate by creating this thread.  I don't necessarily believe what I am saying.  And I hope I am wrong.

I am buying up BTC like wildfire, but I have always had this nagging fear that once "Average Joe" can get their hands on it with a simple click, its value will decrease.

Why?

Because I equate "supply" as increasing, when "average joe" is able to easily get bitcoin.

I am not talking about literal "supply" here.  Im talking about *availability*.

I equate "insufficient supply" as the current status, where availability to the general public is extremely limited.

Right now BTC is not easy to get.  Therefore "supply" (availability) is limited.  

This has created "demand" among all of us.  Not the general public.

That's why I said $100 is "our price" ..... $100 is what BTC has settled at for "our little world" of QT wallets and mining.

Later, when BTC becomes simple for the general public to acquire, because there are tools, websites, apps, which make acquiring it simple for the average person - SUPPLY increases.

Availability increases.   Now anyone can get 10 BTC ....

No longer 10 internet geeks playing with BTC, now there are 10 internet geeks and 300 average joes who have it.

Increased availability. 

Price goes down.

This is a temporary, not permanent thing.  But I do believe it will happen when BTC goes mainstream at first.

That would be increased demand.  Even if you want to play semantic games about "increased available supply" surely you can see that we are looking at increased demand under that scenario. 

Now Bitcoin might not RISE further under increased demand simply because the current price has some "future expectations" built into it.  It is possible that demand rises (but slower than some expect) and thus the price declines (less of a speculative) premium despite there being higher demand.

Most people ignore alt coins because alt coins are worthless. Anybody can make an alt coin as easily as I can take a green piece of paper and write "1 dollar" on it. That doesn't make it money.

Sorry, you have it backwards. You should read a basic economics textbook. It's straightforward supply and demand. When demand goes up and supply stays the same (or in the case of bitcoin, goes up very slowly), price will go up.

People are presently not paying premiums to acquire bitcoins and they are certainly not scarce. You are confusing transaction cost with supply. The supply is not changing if the transaction cost goes down. In fact, as many others said here, if the transaction cost goes down, bitcoin price will only go up!

wow, such a badly thought out argument!

It is indeed basic supply and demand. Bitcoin is intrinsically a deflationary currency since its supply is fixed at 21 million. Does that mean its price will go up in the future? Only if demand continues to grow to outpace supply, and that's not a given.

Bitcoin has been around for a few years and it hasn't yet proven itself valuable enough for consumers. Merchants are incentivized to adopt it due to the low fees and no chargebacks, but what does the "average Joe" benefit from, as compared to traditional fiat money? Not much.

In fact, since its existence, bitcoin has been used extensively for speculation, gambling, drugs, and pornography because it provides much added value in those fields: instant and anonymous transactions, low fees, etc. But the value of a currency is only as good as its usability in trade/commerce, and instant and anonymous transactions don't add much value in the world of (traditional) e-commerce.

A more creative model must be found for bitcoins in e-commerce, and until then, bitcoin's value will be based on pure speculation and will keep the "average Joe"s out. Indeed, why would the "average Joe" go through the trouble of adopting a currency that's based on Cryptographic Hash Functions (??), Proof of Work (??), and Public/Private Keys (??)? These terms are not very accessible to the non-analytical mind.

I'll take basic economics for 100, Alex.

I think what OP is getting at is that there will be a perceived decrease in scarcity when there are more readily-available outlets for people to trade in Bitcoin. Now you sort of have to know someone who knows someone or know the secret handshake. The amount of work or knowledge necessary to obtain Bitcoin will in fact decrease. The cost to obtain Bitcoin (separate from its trading value) will go down.

A good analogy for why this doesn't match up with reality is this:

Imagine a store that sells only one thing. Lets say it is hot cocoa. This store is at the top of a big hill which is surrounded by trees and covered in snow. Everyone in the town near the hill is shivering and cold, because they have never heard of hot cocoa. One person climbs to the top of the hill, which is very difficult because the snow is deep and the hill is treacherously steep. That person gets to the top and the proprietor of the store has four steaming hot cups of cocoa, which the proprietor offers him at a dollar per cup.

The climber, however, has left his wallet at home. He fishes through his pockets and finds a dime. He says, "sorry, that's all I've got." The proprietor looks around, sees he has no other customers and is unlikely to sell any of his cocoa, and says, "what the heck, no one wants this stuff anyhow" and sells the cocoa for a dime.

The next day, the climber brings three friends, and they've all brought their wallets. It's a tough climb to the top but everyone gets to the cocoa store and spends a dollar on the hot cocoa. Everyone feels so much better after a lifetime deprived of hot cocoa that on the way down they start shoveling a trail through the snow to make it easier to get to the top of the hill.

The following day, there are eight people. The trail made climbing the hill much easier. They all get to the top, but there are only four new cups of cocoa. The first four people get their cocoa, and when it comes to the fifth, they ran out. So one person without cocoa offers one of the people with cocoa a dollar for half of their cup of cocoa. The first people in line dole out half their cocoa, make their dollar back, and think, awesome! I just got my cocoa for free!

A few months later, there is a road going to the top of the hill and regular bus service. Everyone wants cocoa and it's not hard to get to the store anymore. The proprietor is trying his best to make as much cocoa as he can but even hiring a couple of people to help he can't make more than a hundred cups of cocoa because the cocoa machine only makes one cup at a time. But four hundred people are visiting every day because everyone knows where the cocoa shop is and how much better it feels to shiver in your wintry fairytale existence with a belly full of cocoa, and no one has to work hard at it, just hop on the bus.

Um. Then the writer realized he'd spent a half hour of his life on a stupid fable about cocoa. A half hour he'll never get back.

The moral of the story is: some people, like me, ought not be allowed on the Internet.

The end.

This is great and I think it's applicable to the bitcoin economy. We're currently in the process of paving that path, but we still don't know how many people will venture across it and whether or not there'll be an oversupply of cocoa.

Was it broken?

Availability != Supply

More people selling gold does not increase the supply of gold.

The increased availability may reduce the marginal price, but this will be very minor compared to the real price.
It will likely reduce volatility though.

I believe if there will be attempts to regulate, it will apply to all cryptocurrencies

Yes, oversupply = little demand relatively to supply.

Only if the value is derived from fiat like Bitcoins do.

As you said, quantity will not increase following the increase in price, so the supply curve should be a vertical line, actually that line will tilt towards left since the supply of bitcoin will decrease with a higher price (people will spend less coin to purchase the same thing)

BTW, the demand curve may not be like that either, since for bitcoin the demand will rise following a price skyrocket of bitcoin, and it will fall after bitcoin price crashed

Anyway, when demand rises, the price will go up

21E6/7E9 = 1/3000

Think back to all those holiday seasons in which a new gaming console was coming to market. Supply was limited to around 25%-50% of target capacity, but increasing, and they were widely available. Every store was getting them in stock and anyone could just walk in and buy one. Pretty much exactly the scenario you are describing here.

So according to you, since you can get one anywhere, the value would go down. Therefore we'll just go to craigslist and... Hey! What the hell? Everyone's got a 400% markup on these things!

Fast forward 6 months or so, everyone who REALLY wanted one got it, and you can generally find them on store shelves (supply is way up). The secondary market value is almost exactly the retail value.

This would indicate that supply vs demand is what drives price (as they say on the first day of economics class) and not availability, as nobody ever said.

Who said anything about anyone paying one million for a bitcoin?  By the time the price is one million USD/BTC, people will be buying milli-bitcoin (millies) and micro-bitcoins (mikes).  When the unit of everyday interest shifts to millies and then to mikes, why will the price of an entire bitcoin scare people away?

Do you shy away from U.S. currency because 100,000 dollar Federal Reserve Notes have been printed?  If your answer is no, then why would people shy away from millies and mikes just because there is a unit of bitcoin that is worth a lot?
 

There is a lot of evidence that fiat currencies will collapse.

Bitcoins are really like new gaming consoles, or the occulus rift, or google glass.

People who have nothing to do with them get them and sell them to suckers who desperately want them because it's trendy.

When the average Joe buys bitcoin, he will be buying small fractions of a bitcoin because the price is so high.

Explain how people will do things like using Silk Road and bypassing Western Union when sending money without a cryptocurrency.

I haven't said there is no use for them. Those things I mentioned are really cool things too.

I fully support cryptocurrencies, and Bitcoin, to the extent it makes sense.

But then there needs to be allowed more than 7 transactions / second, or your example does not work.

Depends in what you can buy with a bitcoin.  If I can buy a million beers with one bitcoin, bitcoin is worth a million beers.  Or 1.2 million doughnuts.

bitcoins don't derive their value from fiat.  We just denote their value in fiat money because that is the most easy and convenient way to represent the value.

More demand for bitcoin equals higher prices. Unless we move the decimal place, thus increasing the supply of BTC. 210 million total BTC anyone? ;)

I think you left out a very important aspect that your story does not address, and I think you should give yourself more credit, because your story was interesting to me! If the shop owner wanted to sell the cocoa for 1 dollar, but decided to sell it for .10 cents to the first person because he forgot his wallet. Either this first person basically received 9 cups of cocoa for free(he has basically bought money), or the initial value of the cocoa is now .10 cents(that's what he bought it for) It can be assumed that if the shop owner sold 1 cup for 10% of his original valuation of the cocoa, his $1 valuation of his cocoa is not correct(im not saying higher or lower). Also, if he was willing to sell a 25% stake of his total stock of cocoa for only .10 cents(22.5% loss), It creates a scenario such as what we have seen with bitcoin.
A large portion of the original btc's were sold at very very cheap rates so you run into a very possible scenario of overvalue. For example. if the guy decides not to drink his .10 cent cocoa and instead goes back to town and sells it to someone for $10 and then the guy goes back and buys the other 3 cups for $1 each, but the shop owner says no not gonna happen. Now the guy is left with 10 dollars and no cocoa(He's a day trader, so he's happy he made a good profit, but he has also been alienated by the store owner because he would not sell him his other 3 cups for $1 each(the owner wants everyone to have a taste, i.e support the btc community, don't horde coins, etc).  


The shop owner hears through the grapevine that his precious cocoa has been sold for 10x his intended value, and the man doing it has made a profit of nearly 100x(he bought it for .10). So just like any good businessman, he has to increase prices exponentially of its actual value due to the original man selling his first cup for $10. If he sold his original cup for .10 cents and it was then sold for $10 he decides just as the first cup he sold went for 100x it was originally bought for(.10 cent), he decides to use that same principle on his original valuation of his cocoa. The cocoa now costs $100 per cup. His price had to increase over 1000x its original sale price before he has even made a dime(well he did make 1) The next day people eagerly line up to buy as many $100 cups of cocoa as they can. Turns out there are only 3 more cups left for the day. The first 3 people in line get their $100 cocoa. "Man that's a steal they said" As time passes the demand for his cocoa increases, but he only has 2 cups of cocoa for the next day. He cannot continue charging $100 as it's taking him an increased amount of effort to produce the same amount of cocoa.(increase in difficulty) and he's also running out of cocoa(fixed amount of btc) So he increases the price to $300 per cup. The next day he only has 1 cup and it gets sold for $1000(they love supporting their local cocoa community) The cocoa guy continues to raise his price while at the same time having less and less cocoa available. Eventually he has to sell in quantities lower than 1 cup.(millicoins w/e you guys call them) and people eventually start trading their cocoa for other things because cocoa has gained such a great reputation(average joe adoption). Well, unbeknownst to everyone in the community the man who originally received the first cup of cocoa never actually drank it(he stored,horded,speculated w/e) So it is now known that this one man holds an incredible amount of wealth in cocoa, based on very little if any risk.

No matter how much the people love their cocoa, are they really going to allow this one man to hold so much wealth and control over them just because he has the cocoa? I don't believe so(some may say that is the situation today), and just by the very nature of how being wealthy works there is only so much you can buy with wealth. Think about the billions of dollars bill gates has donated, do you think having one person in control of that much wealth devalues or increases the value of the wealth in which they are measured in? In the case of the man with the cup of cocoa, his inability to meet the needs or expectations of an economy that bases worth on an exponential overvalue of a currency will inevitably lead to a redistribution of the wealth because of his inability to spend all of his money at the current valuation, thus causing a devaluation in currency. Similarly to what has happened with the USD.

The reason this situation is plausible is because of the cheaply aquired btc's and the millions of bitcoins that have been reported lost. If at somehow in time a method is found to retrack those coins and make them usable there will be a massive spike in supply of coins in relation to how much an actual coin can buy you at that time.

http://en.wikipedia.org/wiki/Supply_shock

As a store of value, it's even better.

Yes.  This is what i was getting at.  And the simple fact that there will be a literal (not just perceived) decrease in scarcity *because* its more readily available. 
Right now you have 100 geeks owning Bitcoins.
Then, you will have 100,000 people of all genres owning bitcoins.
Scarcity decreases dramatically.
So should value, at that point.

-Burger-

http://www.troll.me/images/futurama-fry/not-sure-if-trolling-or-just-stupid.jpg
Mr. BittBurger, what you've just said is one of the most insanely idiotic things I have ever read. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this thread is now dumber for having listened to it. I award you no points, and may God have mercy on your soul.

Only as long as the price goes up.

Are you actually not aware of the difference between scarcity and availability, or are you just having a bit of fun at our expense?