Bitcoin Forum

Im new to bitcoin. I know the market fell last year but will the value of bitcoins start to rise again? And will bitcoins ever run out?

total bitcoin production is capped at 21 million, we are presently close to 9 million in supply and production is around 50 bitcoin every 10 minutes, but will be reduced to 25 every 10 minutes in the fall of this year. If the demand for bitcoin is greater than the supply than the price will rise, depending the scale of demand the price of a single bitcoin to rise into the thousands of dollars range or go beyond.

How is it capped. Has the inventor set a limit or something? Sorry I am new to this.

Welcome :)

Thanks!

The number of bitcoins produced is set in the code of the software. There will never be more than 21 million. And welcome fellow peer! :)

The value of Bitcoin is based on a score of variables, the market fell because of a speculation bubble. The current value is thought to be much more representative of the real worth of a Bitcoin. As more services appear and Bitcoin becomes more appealing to the public, the value should rise.

I just hope they don't start shooting up and down in value like they did..

oh it will. up and down many times...

You think so? When do you think we can start to see this?
And what a the major things that cause this to happen?

Every market does.

Example, the Dow http://finance.yahoo.com/q/bc?s=^DJI+Basic+Chart&t=my (http://finance.yahoo.com/q/bc?s=^DJI+Basic+Chart&t=my)

i think so. it will happen at "sometime"
about the next major thing, well i don't know.

but if you look at this(http://bitcoincharts.com/charts/mtgoxUSD#igDailyztgCzm1g10zm2g25zvzl), bitcoin have been stable and boring at least 3 times before this time, around SEP 10, MAR 11, JUL 11.

theoretically, the demand for BTC will increase, because of so many new services available.

also, theoretically, the offer of BTC will decrease, as there is only a limited quantity of them around.

i believe as the deadline of 21 million will come closer, the value of the BTC will increase.

But, if the market for trading in bitcoins matures, banking with balances denominated in bitcoins will likely become available. In that case, why couldn't the supply of bitcoin-denominated money expand?

I can see the difference between bitcoins and real physical currency being the cap. Had no idea about this until i read this post. Does not surprise me that there would be a cap.

total bitcoin production is capped at 21 million. How about the bitcoin that are lost forever. For example, the wallet file is gone or collapse. The portion of bitcoin will nerver shown up again.
I think bitcoins should be generated on a stable rate instead of giving it a cap.

Giving it a cap gives it value.

When re reach this cap on btc. That will help the btc finally stable in price? Another thing i don't understand is how btc isn't backed by any form of metal or anything physical. That's what i love about this wonderful revolutionary currency.

Yes, the cap is very important.

I look at bitcoin as I look at gold, there is only a LIMITED quantity of it. Some people look at it as real money, that is wrong. Also, unlike gold, where maybe someone may discover some gold made mountain on some planet, or someone will make a perfect replica of it, you can not find more bitcoins, there are 21 million in total, and thats it.
Also, real money is easy to print (see USD), or make more of them with a touch of a button (see credit cards), bitcoins you can not, you need to work with what you have.

I believe, when the cap approaches, people will become more and more desperate to get their hands on it, like they did with gold.

Of course, the bitcoin could crash under special conditions, for example, there are some people that consider it dangerous, and want it banned. Or maybe one day, everybody decides that they dont want to use bitcoin anymore, etc.

i think the bitcoin-denominated money supply will continue to expand well beyond the 21 million bitcoins, but that doesn't make the cap any less important.

How so?  It's programmed to stop at 21 million, right?

the number of bitcoins yes, not the number of bitcoin-denominated money supply.

let say the cap is 1 bitcoin, and the coin belongs to A. then A decides to lend it to B and so on until it's in the hands of E:

A->B->C->D->E

person E holds 1 bitcoin (can be used as money)
A, B, C & D each hold a note that says "IOU 1 bitcoin" which can also be used as money.[1]

total bitcoins: 1
total bitcoin economy: 5 btc

the fact that B, C, D & E also have debt is irrelevant. if i am $1 in debt and have $1 in my pocket my net worth may be $0, but i can still physically spend that $1 wherever i want. both the debt and the dollar are part of the total economy.

[1] https://bitcointalk.org/index.php?topic=74926

That is true, only if it's possible to "lend" bitcoin.  What you are describing is fractional reserve banking and is completely counter-productive to what bitcoin represents.

read this forum. it's definitely possible to lend bitcoins, and the above has nothing to do with fractional reserve banking.

fractional reserve would be if A lent his bitcoin to B and then B somehow lent a whole bitcoin to 3 different people:

A->B

B->C
B->D
B->E

Of course it's possible to lend bitcoins. It's also possible to have fractional reserve banking with bitcoins. Neither of these is any way against what bitcoin represents. Bitcoin represents a currency, nothing more.

To varying degrees "bitcoin denominated money" is not a complete substitute for real bitcoins. The amount and quality of BDM will be determined by the market. If people somehow value BDM that will obviously never be repaid "deposit 1BTC and get 10 happy coins fully redeemable for bitcoins!" then there may well be tons of it, but that crap won't affect me much.

A major difference from what we're used to is that when people get burned by bad BDM it is on them and the whole of users don't have to pay via bailouts. This will give very strong incentive for people to hold their own real coins or thoroughly vet providers of BDM.

yeah of course... even in the example linked to, ~1800 of bdm only had a market value of 100 btc.

What bothers me is that the arbitrary total of 21 million BTC is far less than the total number of human beings alive today.  This is far less then 1 BTC per person, at a certain point any transaction in BTC will be completed in fractional values so small as to make the currency completely unwieldy.  This is despite my belief that an alternate currency by choice sounds like a great idea.

Each bitcoin is divisible down to 8 decimal places. There is nothing "unwieldy" about using these fractional values, you just use different units, eg 1 mBTC = 0.001 BTC, 1 µBTC = 0.000001 BTC, etc. It's not like we have to actually mint really tiny coins or anything. :D

Every see a silver penny? It's pretty unwieldy.

You think that's unwieldy? My wallet contains the equivalent of thousands of pennies. It's a real nuisance when I'm trying to pay the grocery bill. But that's nothing compared to my savings account. It contains millions of pennies. How do you suppose the bank keeps track of them all? It boggles the mind! :o

the real awesomeness of bitcoin is that 1000BTC takes the amount of space to store, as 0,00000001BTC.

thats the real deal.

The REAL awsomnes of btc is that you don't get scammed by government printers.

So what happens if a government steps in and buys a bunch of btc. If they were to hold on to all their coins. How would that affect the value of btc for the average consumer. Would people start using smaller btc so they don't have to pay the value that said government wants for their coins? I like the idea that it's very hard for one person to control all the btc. Am i correct about this?

The value would go up, the same as if anyone else bought a lot of bitcoins.

I'm not sure what you mean. The government can't sell bitcoins for more than what people would be willing to pay on the open market (and can't buy bitcoins for less than what people are will to sell for). This is true of any currency, not just Bitcoin.

Yes, in a way, because the more you want to buy, the higher the price per bitcoin becomes, since you can only buy bitcoins if you can find people willing to sell them, and some people are not willing to sell unless an extremely high price is offered (and some people might be unwilling to sell at any price). However, the same is true of any limited commodity.