Bitcoin Forum

Given the huge price increase in 2013 and the way 2014 started, with a sharp rise to ~1000 and long rest time in the 800s, I'm speculating that we'll see more price stabilization and less ups/downs for a looong time.

Anyway, price is too high for regular people to buy, too high to be used in small transaction like pizza and distribution of majority is in the hands of just a few people.

Check this:
http://bitcoinrichlist.com/top500

You'll see positions 33-36 (4 addresses) and 38, 40, 43, 44, 45 each one with ~30,000 coins, all wallets with last transaction in on Dec 20, 2013 9:07:23 PM. This means about 250,000 coins held by a single entity.

You'll also see positions 79-98 (20 addresses) with about 10,000 coins each, last tx in on Dec 25, 2013 11:26:40 PM. Total is about 200,000 coins.

If we sum first 500 address, that means 4,364,182 BTC. I'm assuming less than 50 people control these 4 million coins.

This mean scarcity and scarcity means high price. High price means less buyers and less buyers mean less volatility.

Welcome to 2014, year of bitcoin stagnation.

We are at day 19/365 of 2014. Patience is a virtue. 

Stagnation for a while would be a good thing.

1. It would increase the confidence of people that Bitcoin is not in a bubble and can hold the current price levels.
2. It would counter the argument that Bitcoin is to volatile to work.
3. Bitcoin Price has got far ahead of the infrastructure around it. It would give it time to catch up.
4. Currently the focus of most people in Bitcoin is only about the price and Bitcoin as an investment. Stability would slowly shift the focus to usage of Bitcoin.


All in all I would greatly welcome a longer stable period.

Of course, a multi-month stagnation would be very good for the economy. And for some people's health, they won't loose nights to watch bitcoinity anymore.

+1

Hopers...

Stagnation? Yes, this year we're probably going up only 300-400%

I'm staking my money on $7,000 to $12,000 before the end of the year.

Makes no difference to me. I buy .1 BTC every week regardless.

Place your bets ladies and gentlefolk -> http://bitbet.us/bet/635/1btc-10-000-usd/

I do agree that maybe mining will slow down ( acceleration ) compared to 2013 boom ( the only way to know precisely is asking to asic miners industry to open up their worksheets to the public.. witch is very unlikely due their own field competition) but as we reach half of bitcoin production the other side of bitcoin business as a service such as shopping, payment system, and others financial products has just began ...    

What do you mean "too high" ? Why can't I buy a pizza or a single candy with bitcoin ?
And what do you mean "the price is too high" ? Can't I buy some bitcoin to hold for my 50 $ ?

It's a psychological problem that's a result of the cognitive bias known as the unit bias. I'm constantly amazed by how many people tell me they are interested in Bitcoin but haven't bought any because they can't afford it. The fact that bitcoins are extremely divisible seems to never be mentioned by the media, thus the average person doesn't even know that's a feature.

I've said before this problem just needs some corny marketing of naming smaller units.  If bitcoin was just an American thing, you could have .01 btc = Clintons, .0001 Nixons... lol

but since btc is international, could have stuff like .01 = Plato  .0001 = Socrates, .000001 = Confucius, or whatever theme that would catch on


a lot of normal people hate numbers past two decimal places and any technical crap that reminds them of school like this chart units (https://en.bitcoin.it/wiki/Units)


so in practice you would just have three more names before getting down to Satoshis.   and it would be easier for microtransactions to say something is 85 Confucius instead of .000085 bitcoins

a hundred Socrates = 1 Plato, 1 Socrates = 100 Confucius, etc



just something that people can wrap their headaround..  

That's was cool  8)

I was reading something (white papers about hedging, future contracts, etc... ) but I got distracted lol

Space Ghost Coast to Coast "esurance" Commercial
http://www.youtube.com/watch?v=HaO5YY0gIi4

+1 i like the naming of international historical figures

Based on what? Dividing by ten for no reason?

And check the historical graphs for some pointers on what is the only thing that bitcoin price have done after a prolonged stagnation at one level.

ugh here:

http://lmgtfy.com/?q=decimal+point

i agree, price must return to equity with a pizza for people to buy again.  :P

If it ever gets to that rate, I would happily buy all your bitcoins. And I would keep mining on, since difficulty would drop.

:P

1) Scarcity is a myth with something that is divisible by 8 decimal places. If you can easily break something up into a million pieces and trade it just as easily then it is not scarce.

2) do you think Googles share price of 1,150 stops people from buying it? sure some people are deterred by the high price. however, even though one Google share cannot be divided at all, the price still rises because there are more buyers than sellers.

3) as long as things are priced in the users local currency then the price of BTC doesn't matter at all. Ever bought something on ebay from china? if it was priced in Yuan then it would drive you crazy, thankfully though it is priced in whatever your local currency is to make it easier for you to understand. As long as websites selling things for BTC do this then BTC prices as crazy as BTC 0.00000012 Aren't a problem.

4) history has already solved the problem of diminishing coin supply. When gold became scarce and there wasn't enough gold coins they started using silver, when they ran out of silver they started using other metals like iron, tin and copper until eventually all we ended up with was silver and copper coloured coins with very little silver and copper in them at all.. This is where Altcoins come in. They perform the same function as silver and copper coins etc without society having to dilute Bitcoin directly in order to increase supply.... this means in the long run that BTC can only retain its value or increase until such time as it is fundamentally broken or superseded by some new technology that hasn't yet been invented.

5) as long a demand is high then the people who determine the price are the ones who control the supply. there are only two types of people who control the bitcoin supply.. the miners and the people who bought in before... neither type of person is likely to sell their bitcoins for less than they paid for them (whether they bought them directly or invested in mining gear to get them) unless they have a fundamental crisis in confidence... inevitably when there is bad news there are always some people who lose heart and sell out, but unless the system is fundamentally compromised in some way, there will always be new people to replace them.


So for these reasons I believe BitCoin will not stagnate in 2014.

Scarcity IS NOT a myth. While the number of total mined bitcoins increased, the number of bitcoins available for sale on the exchanges
has diminished a lot, and that's artificial scarcity. It's largely due to the belief that bitcoins are going to Mars, where they will reach a stable
plateau. There is no stable plateau when the price is close to an ATH, and the flow of fiat into the exchanges slows down.

+1 scarcity is bad and it makes it not a fully efficient market with 3/4 of coins out of it :(

agreed: this will be a very slow year for bitcoin.  between 300 and 800% price increase, no more than that.  2015-2017 should all be much more exciting.

Google?  Let's be more optimistic. :)  Anyone heard of a little company called Berkshire?  Market cap $284 billion.  Current stock price $172,000.  Yet yes, people still buy it.  AND you can't break it down to buying only half of it...

Oh wait, you can.  How about Berkshire B share?  Only $115/share.  See what they did there?  Now its "cheaper" for the general public to buy!  Cool thing is, you can do the same with Bitcoin.   ;)  Let's own .001 Bitcoin, its easy. 

Although I'm open to the possibility of a slower year (perhaps ala 2012), OP's case for this seems really off base, not logical and contrary to historical data & fundamental factors. A slow year might be 1 doubling or 2 doublings and of course that's possible - anything's possible. Markets do get tired, and need rest - but I suspect 3-6 months will be plenty.

But the more powerful reality is that as we go forward, we are getting to the steeper phases of the "adoption curve". If you think that price is going to stagnate for long while number of adopters, users, investors, businesses, addresses, customers, infrastructure, tools climbs exponentially, than I think you need a much better argument than "the price is too high".

please look up the definition of scarcity before making comments like that.
Iliquidity and Scarcity are not the same thing and you would be wise to understand the difference.

even if there was only one bitcoin in the world it would be enough to satisfy the current trade volume of both bitcoin speculation and general commerce.

as I stated before the reasons the bitcoin price will continue to rise are fundamental and the only way it can collapse completely is for a fundamental flaw to be found in the system.

I would recommend watching the recent Q&A session by Andreas M. Antonopoulos

http://www.youtube.com/watch?v=bTPQKyAq-DM

he has a deeper understanding of the fundamentals and risks posed to Bitcoin and can explain it far better than I would care to...

:)

that's the advantage that Bitcoin has over B class shares.. you can divide it and its still completely fungible. with B class shares the voting power is not proportionally the same as A class.
I was trying not to get into wild speculation but as the history of Bitcoin has taught us... anything is possible.. even 50X increase in one year...  I doubt we will ever see that again but I'm sure we will do better than the 10-20% that most investments return annually.

and if your worried about Bitcoin breaking then invest in some of the altcoins too..

No, you wouldn't. I saw what happened when the price fell month by month for half a year or more. People stopped mining, and people sold. You will in fact be very afraid if BTC sank down lower than 100 USD. You would read it is failure anywhere and stay away from it. Maybe not at 100 quite yet, but at 10 or less. BTC would be over if that ever happened. Luckily, it will not happen.

Stability breeds confidence, and increased confidence will push the price up. 2014 will not be slow, boring or stable.

I bought pizza for bitcoins for lunch on Friday. I'm pretty regular. Guess the price is not too high after all.

Are you some kind of wizard?

I suspect we have in circulation have 1/4 or even 1/5 of the coins (exchanges, trading etc.)

Look at it from marketcap value, not from price per bitcoin. As the marketcap goes up which is inevitable, so will the price. Fixed amount of bitcoin will insure quick price rise. If we hit $50 Billion market cap this year we're looking at around $4000 / BTC

I disagree about the "long rest time in the 800's".... its only been like 2 weeks, and during that period it also hit 1,000 and 900+.

As others have said, divisibility defeats the "too high to be used in small transaction" argument.  Otherwise, stability is a good thing.  Hopefully, sometime soon, we'll all wake up to hear something like: "The US Dollar was down about 1% against Bitcoin in early trading this morning on rumors that the Federal Reserve will ...."

I love this.

Price is important but this is a way more important factor in the rising price of Bitcoin that so few people seem to grasp. Bitcoin from $1 to $100 was $1B is new money. From $100 to $1000 is was ~$10 billion in new money. The problem with exponential growth is ~$100B in new money for $10k for Bitcoin.

It wouldn't require 100 billion to reach $10,000 per coin. That's assuming every single one is for sale which isn't the case at all.

2014 is when Bitcoin will try to make the leap from a pool of tens or hundreds of thousands of enthusiasts to much, much bigger guns. If it can do that then slow is the very last thing this year will be.

I have programmer friends who understand everything about bitcoin but still don't buy because of this psychological block.

I agree, as I wrote here.

https://bitcointalk.org/index.php?topic=385523.0

At these high prices bitcoin is just a bad investment because it would take a huge increase in market cap for the prices to go up higher. You can forget about easy returns. Actually, for the risk you are taking in bitcoin you are better off choosing risky stocks to put your money in. You will probably get a higher return on your money for less risk.

It seems that volume is getting lower and lower, I saw on Mt Gox a few days ago 24 hour volume in the 3 or 4,000's.

It seems that if people do not sell and just sit then it does cause scarcity. However, it is like a house of cards. If anything was to happen which would cause just a small increase in bitcoin holders to want to cash out the price would collapse. This may not happen as bitcoin holders are probably financially secure and probably have above average income and intelligence to just be able to buy them in the first place.

However, you are taking risk with your money at these high bitcoin prices. Just being that you are investing in a house of cards is risky. You will also need a considerable amount of money invested to make any significant gains in bitcoins at these prices.

The other thing is as bitcoin price stagnates, more speculators will put their money in other coins that see higher growth. Bitcoin and digital currencies are for the most part just a way to gamble. Dogecoin seems to be the new coin now that people are throwing lots of money into. This almost proves its just a big gamble.

But I honestly would rather invest in a more risky coin for $1000 to make $10,000.

Then invest $20,000 in bitcoin to make that same $10,000

I can live with losing $1000, but not $20,000. This is why I don't see a lot of money flowing into bitcoins anymore. The only way the price will rise is if volume gets lower and lower, but then you are investing in even a bigger house of cards.

Name 10 more examples of stocks with a price over $10,000 per share.

Volume does gets lower and lower but I really don't see any price increase. It might at one point, but not for long.

I see stuff like this written all the time and I must say, I think both bolded points are utter nonsense. In bitcoin's history, we've seen price drops of over 90% and the analogy to this being a house of cards is an attempt to paint bitcoin in an unfairly pessimistic light. Usually when a house of cards collapses, it doesn't quickly resurrect itself.

i guess i get the point Edward was making. however, there is and will be more and more money flooding the Bitcoin economy as new business emerges, VC injecting cash, wall street joining the fun.. etc etc.. these levels of investment are not light and they surely will take bitcoin to the next level ;)

You have to understand that in the past, when bit coins were mostly in the low double digits, that was a different story. Right now at close to $1000 dollars a bitcoin, the risk is completely different.

You would need to invest so much money right now to make any significant gains. Gone are the times when a simple investment of $8.00 and a possibility of it going to $16 or even higher were possible. Even at that point you could say bitcoin had an all time high of $30, we surely will get there again.

But now at $1000 dollars, can you expect the price to $2,000 or $4,000 so easily? Even during rallies, there will be lots of money needed to push it up to those levels.

I do know you can't compare everything exactly as the volume is so much lower now, but we are talking big price swings now with huge market cap increases and decreases.

But who knows what will happen, I would never have thought people would pay anywhere near $1000 for a bitcoin.

I could name you around 100 of them, but since an investor can't buy partial shares of stocks generally, most companies to go through a stock split to make the shares for "affordable" for the general investor.  Bitcoin doesn't need to split.  One, it can't.  But two, people can already buy partial "shares" of Bitcoin.

"$1B isn't so much money really, but $10B is just insane, you'd have to be nuts to believe that could happen in less than a year." - You, about one year ago.

Exactly. It could happen. But for $100B we're going to need institutional money of some sort to get to that price. Its not just going to be individual investors. We're getting there with hedge funds holding coin, Second Market BIT trust starting last Sept, Fortress fund semi opening, and maybe soon this year the W twins ETF opening.

I think it'll happen, just maybe not as soon as most of us would like :)

The risk isn't any different - a 50% gain is a 50% gain no matter which way you cut it.

If the price is $100/BTC and I hold $100 worth of bitcoin, I have 1BTC. If I see a price increase of 50%, my 1BTC is now worth $150.

If the price is $10,000/BTC and I hold $100 worth of bitcoin, I have 0.01BTC. If I see a price increase of 50%, my 0.01BTC is now worth $150.


I flat disagree with this. A gain is quantified using a percentage and I definitely don't believe that significant gains are a thing of the past. Will we see gains of 5,000% per year? Probably not, but compared to any other asset class at the moment, you're probably not going to find one with a brighter future.


You're absolutely right that the amount of money required to move the price increases as the price increases. But institutional money is just starting to get involved here. If you're aware at just how large the scale of that is, we could see price movements of at least two orders of magnitude.

completly illogic. there is 7 billion people but only 12 (21) million bitcoins. in order to go mainstream as a payment system it needs to go down up to satoshi like levels. that means the price for a full bitcoin would be WAY higher than currently.

it is hard for me to understand that someone having the chance of getting educated by participating in this forum since june 2010 has not cought this point.

you are saying price is too high to go higher ? price should be lower to get higher ?  ???

I got what' your saying. I was actually thinking: price is too high to have small transactions because we have to use too many decimals.

Anyway, dunno if it's some kind of disorders but sometimes I'm thinking a whole book but write or say only 2 words.

sry for misunderstanding you. the decimal issue is indeed a problem.

I have sold a few bitcoins to friends and people at bitcoin meetups. I have found that using milli BTC is easily understood and very convenient. eg I recently quoted 110 millies for $100 and it sounded much nicer than zero-point-one-one. It might even have reassured the buyer about whether he was getting anything significant.

If the value goes up by another order of magnitude or 2 (ha!) using uBTC (mickeys) might be better.

+1 for milies
+1 for mickeys

edit: just quoted you in a related topic: https://bitcointalk.org/index.php?topic=427522.new#new (https://bitcointalk.org/index.php?topic=427522.new#new) :)

The decimal problem will be solved when you can choose to send BTC amounts in USD or other currencies.

Instead of pulling out your calculator and doing math you can just send $31.50 USD or $0.0045 USD and your client will convert it to BTC for you automatically. It would be easy to do and it will happen soon.

If this happens it will defeat the purpose of bitcoin. I don't want to see that feature. Why do you need it pegged to USD?

Because if I have $10,000 in USD that I want to convert to BTC it's near impossible to calculate it out right now in one shot...

It's a matter of convenience. Convenience is a major motivator for people.

Go to Coinbase and attempt to purchase exactly $10,000 worth of BTC and tell me how easy it is. You don't have to click buy but you can see my point when you try to calculate the BTC amount.

Another reason is because people don't accept rounded figures when dealing with money... USD prices are pretty much absolute in that if you are a dollar short you can't buy in most places...

I understand convenience but what about EUR, CNY and others ?nd what USD price should it use (what exchange)?

It should be convertible to the currency of the users choice and the calculations should use the current "buy" bids of any number of exchanges that should be chosen by the user.

I would guess it would default to the currency of the region the client was downloaded and the default exchange would be the exchange with the highest volume in that region.