Bitcoin Forum

Here's just a fun, back-of-the-envelope, statistic:

50 new bitcoins enter the total supply every ten minutes. This is 300 per hour or 7,200 per day. The current USD price of bitcoin is around $11. That's $79,200 of new supply that is created and absorbed every day. This means that when the price of bitcion is above $11 then more than $79,200 of new money is flowing into bitcoin. When the price drops less than $11 then the amount of new money entering bitcoin is less than $79,200 per day.

Pretty impressive. Bitcoin is gaining fans at the rate of $79,200 per day or $2,376,000 per month at the current rate. So don't despair when you see the price stay flat for an extended period of time.  :)

You are implying every miner sell their BTC as soon as they mine them

This is of course false, so far i have sold 0 BTC for example.

It means there is DEMAND for Bitcoin at that rate of $79k per day. If a miner keeps his coin, it means his demand prevented him from selling it. So it's a little misleading to say $79k of new money is coming to Bitcoin every day, but it is fair to say that demand grows by that amount each day.

I wonder what the -actual- statistic is for the percent of newly mined coins that are sold?  10%? 50%? 95%? I have no idea! It'd be very interesting to know.

When you don't sell them you are signaling to the market that you value them more than the $11 - hence you are buying them.

No, buying is buying ... not selling is not selling.  If someone gives me an apple that they grew, I didn't buy it.

But if that same apple would be sold at the market for 2 dollars, and you could only get apples at the market, that person can either give you the apple or two dollars. Same same.

Well theoretically yes, but without the hassle to move euros on an exchange  :D

Yes, and the new buyers have to buy from somebody else because they cannot buy from you.

Further clarification: when you refuse to sell your newly-mined coins you have essentially bought them with your expended resources and investment in the mining process. When you refuse to sell you are valuing the product of your efforts and resources more than the current exchange rate.

Its not the same, because one affects the market price and one doesn't.

If I hypothetically mined 1,000,000 BTC today, the market cap would increase by ~$11,000,000 but that does not mean $11,000,000 was absorbed.  If I tried to sell it on MtGox I would destroy the market.

See my clarification at post #9 above. You can't "hypothetically mine" bitcoin. It takes real resources that cost time, money and effort. When you invest these resources you are buying the product when you choose not to sell it.

Should we make a poll?  I'd be interested to know as well.  Personally, I've kept 50% and sold the other 50% at more-or-less the prevailing market price.

I was using that as an example because its harder to see the effect of not selling when its 1 btc vs a much larger number.

If you had not "invested the resources" it would still have come into existence, simply for someone else.  That is different than actively buying and selling on the open market.

That "someone else" also has to invest the resources, time, money and effort in the mining process. You can't get something for nothing. If you stop mining it is because you don't value the expected return on investment. Again, when you mine and hold you are buying the bitcoin because you value it more than the prevailing exchange rate. If you didn't think the current or projected exchange rate would be profitable then you would simply stop mining.

There's a fundamental difference between holding something, buying and selling that I feel is being lost here.

If you are a miner you are not just "holding" the bitcoin you generate. You are actually purchasing them with your time, money, effort and resources.

This is the stupidest thread I read all day. Congrats.

How many coins are being mined every day is totally irrelevant, it's about how many are being bought and sold on the exchanges.

The exchanges are not the market - they are only a small part of the market.

Agreed, i'm out.

Here's another statistic:

If the total supply of bitcoin stopped today at 7,000,000 (round number used for simplification) and a net $79,200 of new money continued to flow into bitcoin every day it would bid up the price at the rate of  37.5%  ($79,200 x 365 days = $28,908,000/year divided by 7,000,000 BTC = $4.13 divided by $11)

Troll maths is fail.

Almost as funny as Troll Physics.

That's fair, but wouldn't you feel better about the system if the coins were all being traded? As it is, the markets are not very deep.

What would the fundamental difference be if Gabi's mother bought the coins and kept them instead of Gabi?

You know what they say about statistics...

This reminds me of a thread not long ago that had a virtually identical premise.

How so? Please enlighten me.

Not really. See:
Bitcoin and the Virtue of Hoarding and Deflation
http://economicsandliberty.wordpress.com/2011/06/10/bitcoin-and-the-virtue-of-hoarding-and-deflation/

Magical Tux could probably shed some light on this topic...

Whatever naysayers say in this thread I agree with Trade Steve's premise. Yes, 7,200 coins per day are coming to the market i.e. we are in inflation stage. Nevertheless the market thinks that current price of one BTC is 11$ (or whatever). Amount of coins has increased, while price is the same, therefore Bitcoin market cap has increased by 7200x11$.

Simple really.

It is basically the same as stock market and a company issuing new shares. Treat bitcoins not as currency but as shares in decentralized company called Bitcoin. It makes things much simpler than all those rave about inflation/deflation/economy/autrians/keyseanists/etc...

When is the supply of coins supposed to drop by half? Mid-2012?

Vlad's right, this is like a company with 7 million shares outstanding that issues 7,200 shares per day to company insiders (miners). Just because the company insiders are or are not trading their shares doesn't change the fact that the market cap is always going to be "Number of shares * Market price".

Right now, though, the only people buying Bitcoin are doing so believing it's the digital currency of the future when i0coin, namecoin, etc. could all just as easily take its place. Especially if the competing currencies offer better features such as encrypted wallets.

I couldn't have said it better myself. I actually look at currencies as shares in their respective national/regional economies. What else is a currency if not a piece of the productive power of the issuing entity?

Rants and raves notwithstanding, Bitcoin is effectively a corporation that is owned and operated by its participants while being managed automatically by the system itself. Take that Bernanke.

ROUNDING TO SIMPLIFY

I understand the whole 80K would increase the value 35% argument... But it doesn't sit well with me.

If the current market value is $70,000,000 the idea that $80,000 being invested into the market raising the value to over $100,000,000 just isn't realistic.  It would be a temporary phenomenon and other market factors would quickly erase the gains and rebalance the value.  Markets simply don't work that way.

Think of it this way... If there was 1 sell order at $10 and the next sell order was at $100, do you really think you could invest $110 and the market cap would jump 10 times?  I mean, sure it would, for about a second...  That's the argument you guys are having (at least in my little mind).

A holder of bitcoin is either a "seller" or "buyer" at any given price. If the holder doesn't sell at the market price he is essentially a "buyer" because he values it more than the market price being offered. The market price will be influenced to the downside if he becomes a "seller" and sells into the market but not until then.

You're wrong. Miners behavior (http://chasinggoogle.blogspot.com/2011/08/bitcoin-mining-calculate-difficulty.html) make them to sell mined Bitcoins. It's not 100% of miners but significant part of them. The only way to prevent exchange rate from falling down in this conditions is constantly rising of Bitcoin demand in the market.

In your example the $80K raising the value from $70 million to $100 million isn't until after 365 days of a net positive $80k per day coming into the market. ($80k x 365 = $29,200,000 + $70,000,000 = $99,200,000)

Ahh... I didn't realize you were speaking in terms of annual % growth.  I thought you meant that an 80K single investment would raise the market cap by 35%, which is not correct.  Speaking annually makes much more sense, but I'm too lazy to actually crunch the numbers, that's my day job (Accountant/Financial Analyst).

I am not an accountant but premise of 80k being 35% of 80 millions somehow seems wrong. I guess this is the end of the argument that.