Bitcoin Forum

...but you should sell your coin.

Bitcoin is inflating wildly right now, almost as much as it deflated back in May.  The hash rate will keep going down, but at the same time, the difficulty will always be decreasing so net rewards for miners will probably not diminish in the extreme.

People are pulling out, and the people left mining will be the ASICs and large scale GPU farms in locations with cheap electricity.  They won't be making much, but they will be making some and that will be enough.

The next big jump in bitcoin price will probably not occur until the currency actual deflates -- that is, when block size shrinks to 25 BTC/block some time next year.  This is also granted the currency survives this long, but as long as the infrastructure is up and trading is still profitable to the trading companies and the traders it will be.  Until then, we will be in freefall until we hit some kind of equilibrium.

This is probably obvious to most people, but if you're just hopping aboard now and haven't figured things out -- bitcoin is inflationary in the near term, deflationary in the long term.

(It should be noted that if you haven't been paying attention either, TBX mining is exploding because it effectively utilizes the CPU cycles from mining rigs, the currency is secure long as lolcust doesn't dump his 7m TBX into the market, and because of effective programming from both Artforz and lolcust.  Hop on if you want.)

The only thing holding up the bitcoin price is somebody who has bought thousands of bitcoins on the way down from $30. This moron has bought so many bitcoins trying to maintain the price that he has no choice but to keep throwing more money to protect the value of his total bitcoins. He can't sell any coins now because that will just drop the price when he is the only one really buying.

He is so desparate that he put up over a 30,000 bitcoin bid wall on mt. gox at the 4.45-4.50 range. This is his last efforts to protect a fall into the 3's.

The same forces are in play that will keep bitcoin falling, like you say inflation, or so many new coins coming into the market everyday. Why buy when you can just mine. Most people into this currency are computer geeks who will just mine for their coins not buy them.

 

its cheaper to buy than it is to mine not everybody is here for to turn a quick buck. some of us here understand the value of the bitcoin distinct form the price of btc to paper money. 

if you base the value of BTC in USD or some other centralized government regulated paper currency you are missing the point.

Don't you think that anyone possessing 30k BTC would more likely have mined them early on?
Do you really think there is someone spent half a million USD to buy them?

That sounds even more ridiculous but don't let me interrupt you circle jerking  :P

Bitcoin is effectively a fiat token with some hard money properties.  It does not meet any economic definition of a money.  It's not even a commodity.  The only thing you can do with a bitcoin is send it to another bitcoin address. It's becoming apparent to more and more people that bitcoin is merely a fad among a few geeks that just like to play with it, and that it was/is misunderstood by tens/hundreds of thousands of people (and continues to be misunderstood by most that remain in the community) to be something most people would value.  This is what caused it's large price increase into the $30s when people expected the mainstream attention to result in bitcoin catching on.  (It hasn't yet, and most likely won't, and is currently teetering on the brink of a catastrophic collapse where the price becomes too low to make mining profitable, resulting in extremely slow block generation/confirmations, which will make it even worse as a form of payment, thereby hurting it's value and price further.)  I have yet to see a single bitcoin developer (or anyone, whether inside or outside the bitcoin community, for that matter) express accurate understanding of bitcoin's economic value and how to take advantage of it.  Eventually most bitcoin users will find that, at least in it's current form, the only value of bitcoin to them is to try to acquire as much profit as they can in terms of government fiat currency and/or other goods from bitcoin before it collapses to whatever price those few bitcoin geeks will pay for them.

that's bullshit.

Oh, you're right.  My mistake.  People will continue spending money on mining so they can buy fewer bitcoins than they could if they just spent that money on bitcoins directly.  It's not like we saw such a failure happen before on some other crypto-currency like namecoin or anything...

Paragraph breaks are your friend.  As would be a coherent logical structure.  But no matter, the substance of your post is worse than the style.

What "economic definition of money" are you talking about?  Medium of exchange?  Check.  Unit of account?  Check.  Store of value?  Check.

Sending to another address is enough.  What more do you want?  Are you sad that you can't draw a mustache on George?

Apparent ≠ true.

The doomsday scenario where miners all just disappear is just as silly when you say it as it was when the other dozen folks said it.

I have a very good idea of bitcoin's economic value, and how to take advantage of it.  But my ideas aren't mine alone, so if you haven't seen them elsewhere, I suspect the problem is that you have a different view, and you are unable to imagine a different view.

Anything that I didn't address directly was baseless conjecture, unless I missed a valid point buried in that wall of text.

Oh, and namecoin isn't bitcoin.  Just FYI.

That was because people went from mining NMC to mining BTC there isn't anything they can just switch to since bitcoin is the king of the hill. Abolishing mining takes longer than just switching but lets suppose we get a fully classical symmetric bubble in that case difficulty will just lag behind a little like it did during the hyperbolic rise.
Not that big of a deal. At the most transactions would take twice as long to get confirmations.

BTW: Your post even implied that we were already at this, nearly impossible to happen point, which is again b.s.

The value of bitcoin is decided by the community that uses it in a similar fashion to other commodities its value, rate of exchange is not set by a government/central bank/private company or any other authority. in what way would you say it is a "a fiat token"?

Namecoin is not a failure and serves a greater purpose than that of a crypto-currency.

Man, you didn't even get five words in without making a factual error. Fiat, in the context of money and economics, means "by decree." It refers to something which is money because it is mandated to be such by a government entity. Bitcoin is in no way fiat.

The rest of your post was full of additional fallacies. Did you know that?

Why would it slow down block generation? It was 10 minutes per block with only Satoshi's computer, and it's still 10 mintutes per block with a million GPUs.

You're missing a key word there: Common medium of exchange.


Good luck getting the people that just heard about bitcoin when prices were at $30+ and bought to believe that...


http://wiki.mises.org/wiki/Money (http://wiki.mises.org/wiki/Money)

A money is effectively the most marketable good in the economy. Last I knew all but a tiny sliver of the economy has not heard of bitcoin, let alone offers any goods for bitcoins.  Bitcoin is not even remotely close to becoming a money.  Most in the bitcoin community like to pretend it's money, or are deluded enough into believing it really is money, but that does not make it so.


That alone is not a very marketable property.  You can give just about anything to just about anyone else.


Namecoin is almost an identical clone of bitcoin.  The same rules in namecoin that resulted in it's block generation stagnation are the same rules that are in bitcoin and will result in bitcoin's block generation stagnation if prices drop low enough.

OH, so Bitcoin is just like the Internet!

ITT: Bearish conjecture without substantiation

As it's me who is speculating and it's my opinion, QED, I can't be wrong!

Perhaps the word "effectively" doesn't make things as clear as I wanted.  You are correct that there is no government-like entity mandating it's use as money, though the lack of this decree certainly doesn't work in bitcoin's favor, since if it has no government mandated use (like fiat currencies have had), and no commodity use (like free market monies have had).  So where does bitcoin's value come from?  Why did people start mining and buying bitcoins in the first place?  Bitcoin's value is most likely founded on the delusion that it is a money, probably because it was created with the intention of being a money (the word "coin" in it's name probably adds to that perception as well).  But goods do not become money just because some people believe it is a money.

If you believe it already is a money, then sure it makes sense to value it and use it as a money.  But it does not fit the definition of a money, and therefore is not a money, so any belief that it is a money is merely a delusion.  If you believe it will become a money, then it makes sense to invest in it, but bitcoin does not have all of the features of any goods that have become free market monies, and does not have a government mandate in it's use, so there is no reason to believe it will become a money, suggesting that any belief that bitcoin in it's present form will become a money in the future is also far fetched.

Something of which the price has risen due to false beliefs about what it is almost certainly means the price is much higher than it would be if people did not have those false beliefs.

I LOLed.  Cheers!

So in summary, Bitcoin should not be adopted, because it is not adopted.


No.

Bitcoin has utility for me, since I transfer money across the globe all the time and many of my acquaintances already use BTC. It might not be of use to someone else who don't suffer from banking fees/regulations. I'm an expatriate and most of my friends are too. This is where the world is going now, and Bitcoin fits the picture perfectly.


Prices dropped hugely, and we haven't seen a problem. Namecoin solved its issue with merged mining (hopefully in effect in a few hours). Think of it this way... A distributed notary system is an extremely useful technology, even outside the scope of currency transactions. Domain names, contact information, secure certificates, contracts, stocks, and just about anything you'd need an authoritative source for. And all these systems will eventually use a single computational power source. The system is not mature enough, but at one point hashing power will not be totally tied to Bitcoin's market value. A few hours later, Namecoin's utility will have an influence on it as well, albeit very little. We need at least a few years of development before anyone can say anything conclusive.

(Sorry, I edited the above post a lot.)

memvola beat me to most of this.


Namecoin's (near) failure was because it added nothing that anyone wanted.  The people that wanted bitcoin's properties already had bitcoin.  The people that want domain registration can't get it from namecoin.  If the bulk of the DNS servers on the internet start to accept .bit as a TLD to be resolved through namecoin, it will explode.  Until then, it remains nearly useless, even to the few dozen people that really believe in it.

So, the price of flat screen tv's has crashed from over $10,000 to under $1,000.  Most people don't know how tv works, so we should just ditch the whole thing.

Good thing the geeks will buy up a few.  They might even swap one for a DVD/blueray player or a cable service - those alt-chains are so sneaky.

Bitcoins value comes from its usefulness as a ledger system. What you're failing to see is that Bitcoin is two parts:
1) a ledger system with no single point of failure, no requirement of trust in any gov, corp, or individual, no requirement to reveal personal details, and no border/national restrictions on usage. (THIS IS MASSIVE VALUE)
2) a unit of account in said ledger system

You're arguing from the perspective of the Mises Regression Theorem, which is well and good, but you're not seeing that Bitcoin's use value happens to be it's ability to be a brilliant ledger system. Just as gold has original use value because it's shiny and attractive, so too does Bitcoin have original use value in its distributed ledger ability. Grasp that, and combine it with the fact that Bitcoin units are a scarce commodity, and you'll then see why these units themselves command a market price

Put simply, Bitcoin's value - just as with gold - comes from its useful properties. If you need an anecdote, when I lived in Dubai I sent part of my salary back to my US bank account. It required a trip to the bank, filling out forms, paying a fee, and waiting 3-7 days. If Bitcoin existed then, I'd have used it EVERY single time I needed to transfer. The value to me would've been substantial - and this is just one possible use of this incredible distributed ledger system called Bitcoin.



People started mining and buying them because they saw the potential. And Bitcoin IS a money. I use it as money almost daily now, actually. It is not a universal money, or even widely used yet, but it IS money. Bitcoin units became money the first time someone traded for them with the assumption that they could retrade the coins to someone else who would also want them. That's how all real money originates. You can argue how good they are as a money, but you cannot claim they are not a money. Personally, I greatly prefer them as money to Federal Reserve Notes - but you're welcome to stick with the Fed or ECB if you'd like. 



It fits the definition of money extremely well, and in fact it is a superior money to gold in some ways (though gold is superior is certain other ways). I use Bitcoin as money all the time, and thus it is money. Again, you're welcome to tell me it's a "bad" money, just like I'll tell you Federal Reserve Notes are a bad money. Both are used as money, and thus both are money... but one is fiat garbage with value only by coercive decree, and the other has been chosen by a small niche within the free marketplace. 


Are you talking about Federal Reserve Notes?

I think the trouble with some people's understanding of BTC is that they think that a single bitcoin should have inherent value for the currency to have value, just as a gold bar has inherent value.  Therefore, they think bitcoin is essentially the same as fiat money.  However, the usefulness of bitcoin lies in the system, i.e. its decentralized publicly-monitored transaction system free from the Fed (with excellent confirmation times and very small fees).

I'm saying it currently is not a money, and there is no reason to expect that in it's current design/implementation that it will become a money.

?

So bitcoin has utility for you because you can send them to someone else, and it has utility for them because they can send them to someone else, etc., etc..

Sounds pretty circular to me.  It leaves out the original reason for anyone choosing to acquire a bitcoin in the first place.

Let's discuss what bitcoin is at a slightly lower level and then ponder why anyone would want to use it:

Bitcoin is a decentralized ledger of which people can decrease a number associated with one of their private keys by some amount and increase the number(s) associated with one or more other private keys by a total of no more than the same amount.

This makes it's uselessness for most people even more obvious.  Who cares about those numbers in the first place?  What meaning do these numbers have to people?  Since these numbers are not representing something people already value (hopefully you're wondering why someone would bother to create a ledger for something they didn't value?), they only matter initially if you falsely believe (or more strangely, pretend) they represent money (this would be the sole source of their valuation).

After a quick read of http://wiki.mises.org/wiki/Money (http://wiki.mises.org/wiki/Money) (and perhaps a more detailed read of some of it's sources), you can understand bitcoins are of course not money.  The system as a whole is obviously not money (people aren't trading the blockchain or the software/rules that make bitcoin what it is).  Bitcoins are not even a commodity, let alone a money.  Bitcoins don't even have a single use.  You don't use bitcoins to use the ledger, you use private keys to manipulate meaningless numbers (bitcoin "balances") on the ledger.  So if bitcoins don't even have a use, and you're not even trading bitcoins but are rather just manipulating the ledger, but the ledger and the system that sustains it is non-tradable, what exactly is the money part of bitcoin?  How does changing some meaningless number in a ledger even provide any value to anyone (outside of extracting goods/services from other people that believe a bigger number associated with one of their private keys on the ledger means something)?

In bitcoin's current implementation, it is at best "metaphorical money"...I personally don't recall ever hearing of a "metaphorical money" and initial results from a google search don't turn up any relevant pages about metaphorical money, which suggests to me it's probably not something that many people value...

As I said before, as long as enough people falsely believe bitcoin is money or that it has the potential of becoming a money, it will likely be traded, but only for as long as enough people continue to believe this.  That's why bitcoin was ever traded at a price to begin with and why it still has a price.  But unless some changes (to be shared at a later date if not discovered by someone else sooner) are made to the system, bitcoin's price will eventually drop to whatever price the few people (those that will just not stop believing that it's a money or has that potential) will pay for it.

If people do learn of the changes necessary to give bitcoin an actual chance at becoming a money, and those changes are not implemented in bitcoin, someone else will implement them in a competing system, which, unlike bitcoin, might actually have a chance at succeeding in the market.  This means people leaving bitcoin for the new system, and would-be bitcoin adopters adopting the new system instead...not good for future bitcoin prices.

So why would anyone care to "buy bitcoins" (the metaphor for person A giving person B a good in exchange for person B to increase a number associated with person A's private key) in the first place if it's not due to a false belief that bitcoin is, or will become, money (again, other than to extract goods/services from others that falsely believe it is or can become a money)?

Difficulty never caught up with the ~$30 prices (it was only in that range for a few days, and only above $15 long enough for a couple difficulty changes, and declining ever since), so mining is still slightly profitable for most miners in the $4-$5 range at the current difficulty (which is not much lower than the highest difficulty).  However, the price does not need to drop much more from current prices before most miners would be running at a loss.  Prices suddenly dropping to the $2s would probably cause a huge percentage of miners to stop mining...down to $1 would probably make it unprofitable for well over 90% of miners at the current difficulty.  Without a special (blockchain forking) software update to create a special case to adjust difficulty downward faster in that situation, it would take many months if not years (depending on how many stop mining) for the difficulty to adjust enough to get the block generation rate back to ~10 minutes.  Unless they want to mine as a charity for the network they're going to stop mining.  If they still want more bitcoins, most would be financially better off to just buy them from others rather than mine them at that point.

Yes, many bitcoin miners will likely help prop up or further increase namecoin difficulty (not necessarily namecoin prices) with merged mining, but if bitcoin prices drop far enough that bitcoin mining becomes unprofitable for most miners, both bitcoin and namecoin will end up in the same situation that merged mining is supposed to get namecoin out of.  Unfortunately for bitcoin, there is no larger, more popular blockchain network to piggy back onto when bitcoin becomes unprofitable to mine.

I think my previous post addresses most of your arguments already, so I'll just respond to this by pointing out that you seem to be confusing barter with using money, and/or despite your awareness of Mises' Regression Theorem, you misunderstand how a commodity (and only commodities) can become a free market money.  Your assertion that bitcoin is a commodity, outside of any metaphorical sense, is demonstrably false.

People have used crazy stuff to keep account of who owes what since the invention of money.  For instance, in ancient Ireland, the highest-denomination currency was slave girls.  This continued centuries after the church ended the slave trade (i.e., long after there weren't actually any slave girls to exchange for.)

The fact that bitcoin does not represent anything of intrinsic value is not a serious weakness.   I have other serious concerns about bitcoin, but that is not one of them.  You can actually make approximately the same argument about contemporary government fiat currencies (and gold bugs often do.)  Government and fiat currencies do have the value that you can pay fines and taxes in them, and in doing so end harassment from government agencies, but I wouldn't call that an intrinsic value, any more than I would call the current widespread preparedness to exchange bitcoins for goods, services and other currencies an intrinsic value.

The way to assess a government currency is to look at the stability and trustworthiness of the government behind it.  The way to assess something like bitcoin is to look at the stability and trustworthiness of the bitcoin community and the bitcoin infrastructure.  That is harder to assess than a government is, but not by much.

Bitcoin is inflationary right now?

A bitcoin is actually more valuable than fiat, albeit in a virtual higher-level-of-reality implemented sort of way (as opposed to valuable in a tangible, physical way like gold or silver).  A bitcoin or unit of cryptocurrency is proof that work was done to secure the network through which the currency is traded.  Without that work, no coins would be generated and the network would not be secure.

But all that is just geeky extraneous unnecessary niche hacker artifacts... it's not like securing information provides any real-world service, like building solid-gold speedboats does.

Sadly, slave girls could be used to fulfill subjective values, which is why they had a market value.

I agree, as nothing has intrinsic value.  Valuation is subjective.

I agree, as nothing has intrinsic value.  Valuation is subjective.

That is one of many metrics to base your expectations of the future price of the good in question, but is not a reason for why the item became or will become a currency in the first place.

You guys are thinking way harder than I am.

BTC just underwent a small crash, we should see a resurgence in about 4-12 hours given the past 4 weeks as an indicator.

only in btcusd.. >10% is "small"

Why the question mark? How am I supposed to give "anything" to people in arbitrary places on Earth?

And more on topic, how am I supposed to send small amounts money to people in those places? And to people who don't have, or can't have bank accounts? Or who don't want to have them? Or who don't want to share their personal details? Or whom I don't want to share my personal details with? Never mind businesses who pay obscene amounts in fees to make these transfers. Your idea about free (in every sense of the word) transactions not being a marketable property is extremely misguided, regardless of Bitcoin.


Describe to me how you call something a currency if it doesn't have this circular property.

Besides, it is the original reason, because there is nothing else without significant disadvantages to Bitcoin that I can use.


Sorry but your conjecture is not very convincing, if only because it reeks of historicism. Also, it collapses right after people care about those numbers. Bitcoin system itself is the monopoly of coin production. The coin itself is "backed" by its utility.


This is spot on. So, for instance, if "few" means 10, you won't call it money. 1000? 1000000? Where do you draw the line to define common? Why don't we focus on the parties involved rather than the ratio to total human population?

What changes are you proposing by the way? Why the secrecy?


Yeah, that's why I said several years of development is still needed.

Having said that, I don't think miners falling off that fast is not a clear and present danger. If it is, we should change re-targeting rules, which is arguably an easy thing to do.

I care.
I want to buy cheap Bitcoins.
 ;D ;D ;D

+1  :D

Government fiat became a currency because a critical mass of people accepted the government's legitimacy, and the government put its legitimacy behind the currency.  The question for bitcoin is whether it can establish a corresponding basis for legitimacy.

Namecoin isn't really an alternative to the ICANN-run DNS system.

It's a great alternative to the "MIT PGP keyserver", which is uncomfortably centralized.

It's a great alternative to some (but not all) of the functionality provided by the PGP Web Of Trust, which doesn't become useful/secure until you know lots of people who use it.

It's a great alternative to the awful "aopf8y3aw.onion" naming system used for Tor-hosted services (particularly those who fear seizure of their ICANN-name as a way of being shut down).

Because at current exchange rates, mining is only profitable if all of your equipment is payed for and you don't pay for electricity.

My meger set up when I quit mining was only getting around 2 coins per day.  My last 2 peak electric bills were 650 and 550... meaning i lost money on the electric bill.  I only came ahead all together by selling off my hardware and the generous donation some kind soul made to my bitcoin address in an amount greater than 1500 btc.

Wait, what?

OP pretty much speaks the truth

Though when was the last time you heard of a "bitcoin"? And what do you get in the initial results of a google search for Bitcoin? What does that suggest?

So, how do you know it is 1 person putting in a bid wall? If it was 1 person wouldn't they just put all them at 1 price?

How do you know it isn't a lady? Or a robot?

Maybe I'm missing something, but most of this seems rantish and unsubstantiated.

This thread is a marvelous lesson to those prophesizing the death of Bitcoin today.  This is from about 3 years 5 months ago, when price had dropped from $31.91 to $2.04.  The arguments sound very similar to those made today.

That $2.04 low would never be seen again.  Price hit $7.22 just 2.5 months later, $15.40 another 8.5 months after that, and $266 about 6 months after that.  When despair sets in, sit tight, hodl, and buy.

30k * $285 = $8,500,000 USD   

Tell that to Tim Draper

Tim Draper knows that bitcoin will be worth $10k in future. :-)

He "knows", but I'd say it's more realistic than his other dream, the balkanization of California.

EM should be rich. Instead he is still bashing away!

Like you 'knew' in 2011?

Did I post anything of the sort? But hell yea take your time and skim through my 7977 other posts. ;D