Bitcoin Forum

I wrote this early 2014 and I think it is still relevant. The more adoption we see the lower Bitcoin/Usd will go!

http://razorsforex.blogspot.com/2014/02/bitcoin-adoption-bitcoin-price-stability.html

I think that the more Bitcoin will be adopted, the bigger the price should be because Demand will increase.

I wrote this article when the exchange rate was @ 800, look where we are today. Those large retailers are not holding their BTC. They are dumping it on the market!

I would be curious to see hard data from CoinBase, BitPay,etc. supporting this theory. In all honesty I do not think effect of retailers converting to fiat has this dramatic effect so far. If you read recent Bitcoin Bowl retailers feedback (coindesk article) you will notice how underwhelming bitcoin sales were before, during and after the event. I would not blame retailers nor BitPay - they all loose money right now when it comes to Bitcoin. ASIC manufacturers and large, commercial pools most likely the biggest source of dumping cryptos on exchanges.

I am hoping this is just teething problems but I am starting to doubt it. Shame really as these low prices are putting off all the people who invested in the last year.

A year ago there was all the talk that 1 Bitcoin will be worth 100k etc which caused a temporary boom of people buying for investment but now it is slowly going back to the same normal trading.

So now we are left with corporate adoption but now waiting for some serious hardware/ software to get the sheeple/ ordinary folk to start using it more and therefore buying it more and believing it more. They wont do this without some better gadgets and ease of use etc.

Until more development happens it will slump back down to the 50 USD mark I would imagine.

That is a possible scenario, one other thing that might serve as a catalyst is a major worldwide financial system instability/conflict which I think is very likely at some point in the future. But retailers are definitely not helping the price, they would be carrying a pretty big risk if they are not hedged in some way.

It needs to be easier for people to make decent part-time income from BTC, since full-time money would (probably/mostly) get converted to fiat. If "millions" of people can make ~10% to 25% of their income from BTC, then they would be likely to save it or spend, and not convert to paper cash.

Yes, definitely...  Pretty much everything (except people who buy and hold Bitcoin) creates downward pressure on BTC value right now. Even Bitcoin debit cards have to be converted to fiat in order to be useful. This is going to be long and organic process till we no longer need to value Bitcoin in fiat, and Bitcoin will stand on it's own merit. 

There is no reason for the demand to increase unless the merchants provide discount enough for the customers to try and get Bitcoins. Usually, fiat works as well for the customer to buy their products.

At some point, businesses insta-dumping will drop the exchange rate so low that they should start hoarding it and setting the rate themselves by reselling their own BTC at a massive profit.

Also other brokerages that allow buying and selling Bitcoin on margin are not helping either. It just creates excessive volatility that is only good for speculation.

Which creates a surplus which creates the drop in price.

This is what I've been saying for quite a while now (ever since all this news about big merchants accepting bitcoin became a semi-regular thing). I would've thought that Bitpay was orchestrating their pitch to companies willing to accept bitcoin and that they'd get even more business from bitcoin users providing they allow the protocol's advantages to allow for discounts to be offered by these businesses. Then, the end result would be better for the bitcoin price as demand would be a reoccurring thing in the overall market and make bitcoin a steady and demanded payment mechanism. Even w/ ATMs popping up there's really no incentive for anyone new to want to use them unless there's a sign at the businesses' payment counter incentivizing people to pay w/ it for a ~10% discount or so.

you cannot make any assuptions on true demand or true supply. or true value...

because the indicator you all only see is the price. and this price is so fake you dont realise it.

just look at the exchanges. they are not moving 13million coins. they are not even moving 1.3 million coins. they are not even moving 130k coins...

the exchanges are moving less than 1% of the market cap. infact its less than 1 tenth of a percent. so trying to link exchange movements to proper market trends of the whole 13million coins is utterly obsurd!!

open your eyes people, the exchanges should not be the value bases of bitcoin

The fact that the daily volume is a small portion of the market cap is irrelevant.  Price does reflect what people are willing to pay. 
You are off your rocker as far I'm concerned when you say the exchange price is somehow fake.

I think what more we see altcoin scams and altcoins what anyone no need, that more bitcoin price drop. They want only fiat and dump stealed btc away instantly.

Exchange rates are currently the best indicator we have of the fiat value of BTC. During extreme bull markets people do tend to overpay (with cash) at localbitcoins.

I can't see a relation between that facts

indeed, in the early years it has been the opposite

Yeah LOL, when Bitcoin was going up everyone was quoting the exchange rate, now that it is down somehow it is less indicative. Haha. I wish Bitcoin was valued in terms of something other then USD, but so far I haven't thought of anything else.

1 BTC=1 ozt 99.9% gold

That brings it back up to the ATH.

merchants dumping is good to help prevent bubbles. You greedy bastards just whine because you don't get a bubble now.

 I agree!


I'm glad they don't move more volume of unique coins. If there were 13 million BTC on the ask side of exchanges, the real price would be $10.  ::)
finex has around $20 million in USD swaps. That's good for $1.53/BTC. Even if they had 50 million Dollars it only brings it up to $3.84 so $10 might be a little generous.

x2. Value is derived from demand. Demand for bitcoin is suggested from buy sell orders.  If the merchant adoption was on par with consumer adoption or mainstream adoption for other purposes, the price would rise.  I see a whole bunch of merchants accepting it, and a whole bunch of already bitcoin holders spending it.

Well I was part of the camp that increasing Bitcoin adoption is a good thing in the long run but the conversions to FIAT immediately on any purchase keeps driving the price down as people do not hold Bitcoin for value
Until we switch from that turning point the price is pretty much stuck in a downtrend but as for how long that will take I expect it to end in 2015 although we haven't started off that well yet.

Hence when something with real market depth appears fake Chinese exchanges will entirely cease to have any meaningful push or pull on the exchange price.

A new liquid ETF or a regulated US exchange are my bets.

If you go back and count from the beginning, you'll notice that the price has increased with adoption... how do you explain the first few years? It was worth only a fraction of a cent and now it's over $260.

Everyone seems to be using arbitrary starting points that support their ideas.

Theoretically, yes, and no.

There are two potential fundamentals for a thing like bitcoin: "store of value" (like gold) and "currency" (like fiat).  Of course, there is an overlap between both, but currency essentially serves to buy goods and services, while "store of value" is a kind of a proxy to a currency, that serves to transport value over (longer) times.  Both are the functions of a monetary asset, whose equilibrium value is given by the monetary formula P x Q = M x V.

However, the price of bitcoin at this point is determined by 3, and not 2, elements, because bitcoin is still pretty new.  The 3 elements are:
- currency (to buy stuff with) - mainly black market, but starts now to become something with merchant adoption
- store of value on the longer term (to transport current value in the future, such as saving for your retirement)
- speculation of higher fundamentals in the future: the MAIN drive of the price: the attraction of the bitcoin moon :-)

Bitcoin's price is mainly driven at this moment by speculation of "greater fool".  This is why many people compare it to a Ponzi or pyramid scheme.  However, there's nothing wrong with that: any new would-be currency has to go through that phase.  However, this is of course the most volatile part, as it is not a fundamental itself, but an expectation of a future fundamental, which goes with good and bad news, mood, emotion and everything that affects expectation of the future.

The merchant adoption has to do with the "currency" fundamental.  However, as long as merchant adoption is only part of a scheme:
fiat - bitcoin - buying with bitcoin - conversion to fiat, the VELOCITY of bitcoin is very high. That, combined with a low volume of value (Q), makes the price in bitcoin high (the value of bitcoin low).

This fundamental is still pretty low.

The store of value for the long run without speculative "moon" expectation is probably very low too at this moment.  Bitcoin it, compared to other stores of value such as gold or real estate, much too risky and volatile.  It is much more volatile than the stock market !

So the current fundamentals of bitcoin point to a very low price.  The actual price is essentially speculation of higher fundamentals in the future, which can erode quickly.

However, the real road in my opinion is merchant adoption.  Of course, as long as it is only RETAILER adoption, this will result in immediate conversion into fiat, high velocity, and hence very low bitcoin value.  But from the moment that other merchants also accept bitcoin, retailers will probably accept bitcoin and PAY with bitcoin themselves : there's no point in converting to fiat, and converting back to bitcoin.

When retailers will start KEEPING coins to pay THEIR providers in coin, then velocity will diminish, Q will rise (the intermediate goods will also be paid in bitcoin and add to Q), and bitcoin's currency fundamental will start rising.

But the phase of retailer adoption and conversion into fiat, with low bitcoin fundamental value, is part of the adoption road.

I think for 2015 it will be the same thing, retailers selling their stashes unless Bitcoiners stop spending their bitcoins. If that happens we may start to see a turn around. The lower the BTC/USD exchange rate goes the less appealing it is to spend your Bitcoin. So it is also possible we see a reversal!

Yes, but that means that there is a feedback mechanism that establishes a stable, low, price.  Indeed, that's what's called a fundamental !  If the price rises somewhat, people will sell out coins to cash in on the rise.  If the price falls somewhat, people will not buy stuff with cheap coins, but will acquire some coins which are cheap now (from a fiat point of view).

The price will then be determined by the equilibrium of offer and demand to buy stuff with, which is exactly what the monetary formula gives you.   Point is, we are probably in the single or double digit area.  It would mean that the speculation for higher future fundamentals essentially stopped.  Nobody would think anymore that bitcoin would go to the moon, but would think that bitcoin reached maturity and a more or less stable price, with no advantage to hold bitcoin any longer than the time needed to acquire them and to spend them.  With some incentive to buy when price is low, and some incentive to spend them when price is high, which is a stabilizing feedback mechanism.

The way for the bitcoin price to rise then again is two-fold:
1) more adoption (meaning: more stuff is bought with bitcoin, which implies a proportional rise in its price)
2) THE big thing in my mind: when suppliers (and maybe even people receiving a salary) start accepting bitcoin.  It would mean that after an acquisition, the vendor will not convert systematically anymore to fiat but can hold a part of his coins to pay HIS bills.

There will be a bubble.... eventually.

Nothing to do with adoption.  I've invested in Bitcoin because I was betting that someone (such as yourself) will buy my coin from me @ a higher price.  So did everyone else who has made money on Bitcoin.

I think once the boys on wallstreet get those Bitcoin ETFs up then we can look forward to bubble world. Till then, we will slowly drift lower. The one other thing that might spark a Bitcoin rally is financial system instability in Europe/USA or any other developed country. Once people get spooked they will run towards something, and I bet Bitcoin will be one such safe haven.

The point is that the "greater fool" basis is not a fundamental.   It has been the main driving force for the bitcoin price in recent times.
However, merchant adoption IS a fundamental.  I'm not sure that before the 2013 peaks, merchant (black market) adoption wasn't really the fundamental that drove at least partly the price.

Point is that the "greater fool" speculation has driven the price so much up that it left the current fundamentals far behind.  And I'm not even sure that the black market fundamental didn't decrease a lot (bitcoin has become too visible to law enforcement).

The 'greater fool' drive always crashes in the end.  But true fundamentals can exist.  My guess is that the current fundamentals of bitcoin are in the single or double digit range.  This can only seriously increase by massive adoption.  But that will take time.

In the mean time, nothing stops people from playing the "greater fool" game :-)

There you go with your assumptions again... I can't help that you got into bitcoin for the wrong reasons, that is not the reason I got into bitcoin and that's probably why I'm doing so well  ;)

The only way you could have made money with Bitcoin is by selling it.  If you have, my apologies and congratulations for getting out in time.

Adoption is sign of BTC's earned legitimacy and it is calculated into the price in 2013. That's why we are talking about low sub-300, and not low sub-10 prices.

What I did was realise the potential of bitcoin after doing some real investigation into the technology (whitepaper etc.) and when the price went up I bought mining equipment to support the network because I believe in the technology; I'm not just after profits. 2 weeks ago I also bought 3 trezor wallets in order to support those supporting the community and technology and I will continue to do so.

My aim is not to use bitcoin to trade for cash (that shouldn't be necessary), I will only use it to buy things or as a long-term store of value because that's what it's meant for. I learned a long time ago that if you do things for the right reasons they have a funny way of working out for you.

I am in full agreement. Bitcoin's value should not be based on fiat, Bitcoin was meant to replace it. Honest money!

Aha.  I think our disagreement is rooted in semantics:  Your definition of "making money" differs from the conventional.  By "making money," mundanes such as myself mean "ending up with more money than one started with."
You, OTOH, have spent money on Bitcoin gadgetry, ending up with less of it.  Or, as us bland normals say, you've lost money.

Now that we've defined our terms, we can continue our chat on much firmer footing :)

Really? I don't know if you can speak for everyone else.  I adopted it for seamless online poker transactions, purchase it when I need it, and have never really heald longer then a few weeks, but have been lucky buying at the right times. Not sure where you have found the encouragement to speak on behalf of everyone who made money off bitcoin, but I can imagine some people were holding bitcoin for it's utility, while the price went up, which was probably awesome and enjoyed, but a generalization would be to say everyone who made money on it originally bought it as an investment, doubtful, there is lots of people here who have other uses, although they probably don't mind making a few bucks while holding it either.

I'm not speaking for everyone, certainly not for the gamblers such as yourself.  I'm sure adoption exists, just like I'm sure people watch pr0nz for their engaging story arc.  What I am saying is this:  Adoption is not what's driving BTC price, just like captivating plotlines are not the reason why pr0nz are popular.
I hope this makes shit clearer.

Yep, I think semantics is not our only problem... you seem to think that when I buy something that I find useful; I've somehow lost money. Just because I bought something that you (and some others) might think is useless, doesn't mean I've lost money. Spending money is not losing it. Losing money means you have nothing to show for it.

Let's see, I originally bought X coins, and used some to buy bitcoin gadgetry and now I have X+5 coins and if I sold them today I'd still be up over 100% on my original investment... I just don't see where I'm losing all this money.

^
Lol, spending money may not be losing it (though, let me assure you, in your case it is), but, you must agree, it's certainly not "making money" :D
If you sold your coins today, you would recoup some of your investment (forgive me for not taking the word of an admitted gambler at face value, I somehow doubt you're in the black even if we're talking unrealized profits), but you won't, will you?  So yeah, you're losing money hand over fist :-\

Why do I bother... it's clear that you have no other motive but to troll... whenever I say something that makes sense, you suggest I'm lying... your age shows in your posts. I will leave you to it. Have fun  ;)

^You clearly do not always tell the truth--you've claimed to have made money on Bitcoin, turns out you've only lost money thus far.  I feel my caution is justified :-\

My apologies, when i read "So did everyone else who has made money on Bitcoin." I assumed you meant everyone else, I will do my best to read between the lines next time.   ::)

^It's not reading between the lines but reading without discarding the context.  Freebit13 asked how BTC price has moved from 0 to a few bucks.  I've explained how it happened :)

Perhaps my language was not clear: what I meant was that if I cashed out today I'd make 10x my original investment.

Edit: oh and I've taken out my original fiat investment also, but that's just lost value in my cupboard since then...

No.  It's your understanding that's suspect.  I neither believe that you're up x10, nor that you will sell today.  Just one of the above is sufficient to say that thus far, you've only lost money :)

Sorry, you must have missed my edit... if bitcoin went to $0 tomorrow, I'd still break even.

Now you are not only lying, but lying badly.  Get good, brah :D

I can't help it if you won't believe me... I bought coins at $27... you do the math!

There you go... if you can't handle the truth, call them a liar.

You want me to do math the way you Bitcoiners do.  It goes like this:

1.  You bought coin @27.
2.  You also bought coin @600, 540, 480, 380, etc., etc.
3.  You got pwnt by your friend, the other Bitcoiner, who sold you shit he didn't deliver.
4.  Ignore (2) and (3), use (1) only to calculate mad profits.

Did I do good?

You've been caught in one lie, my scepticism is only reasonable :-\

Nope, once again your assumptions are way off, it goes like this if you can believe/handle it:

1.  I bought coin @27.
2. I sold some coins for cash on localbitcoins to buy mining gear on Alibaba with my credit card, but that didn't come through so I got a refund (savvy huh) and put that away in my cupboard as it was the same as my original fiat investment.
3. I then bought mining gear when btc was @ $1000.
4. I bought more mining gear when it was @ $800.
5. I bought 3 Trezor wallets when it was at $300.
6. Now I'm still sitting with all my original coins in paper wallets and still have 3.5 extra to spend on whatever new bitcoin gadgetry catches my eye.

I avoided your number 2 because I bought all I needed when I first heard about bitcoin and held on to them.
I also avoided your number 3 because I did my research diligently before buying anything. BFL almost got me, but it was obvious that what they were offering was a pipe dream.

I'm not exactly a whale, very far from it, but I've definitely not lost any money in bitcoin.

Which lie is that exactly... please quote it for me.

The lie that you've made money.  Even if I take your story at face value, you've only spent money.  You have made a few digital tokens, which you are not planning to sell.

If you read #2 in my post above, you'll see that I have already taken my original fiat investment out, so I am currently even, with a few digital tokens to boot!

This thread is getting way off course. LOL

Only Bitcoiners think that breaking even = making money.  Breaking even is not making money.  So now you know.

I think you should go back a re-read the previous posts because nowhere did I say that I was "making money", that was you putting words in my mouth with a silly reference to semantics.

My point after that was that I have not lost any money, as you were trying to assert, I am even at the moment.

You seem to love building strawman arguments to distract from the real truths...

Sorry about that, but I'm not going to have some ignorant troll twist my words and then try to call me a liar  ???

I suppose "doing so well" can be interpreted "I've spent shitloads of time and money on Bitcoin & got to pay huge electricity bills (which I'm not even bothering to include in my backstory) in return.  My apologies :)

https://yourlogicalfallacyis.com/

I think if Bitcoin can be valued against something other than fiat we can start making progress. Anyone got any ideas?

Fiat is just a handy yardstick.
If we assume that USD buys 1.3% more now than it will a year from now, and BTC/USD price stays the same, it means that BTC will also buy 1.3% less a year from now.

Even (in fiat value) in a down market is effectively making money as your purchasing power goes up. Depends on the angle you take.

Coffee or vape pens.
bad idea coffee holds its value well. Grapes. Grapes and vape pens.  8)

A Big Mac.

Logarithmic: http://pricedingold.com/charts/BTC-2010.pdf
Linear: http://pricedingold.com/charts/BTC-2010-lin.pdf

How about cold

Cold?? what do you mean?

He probably meant Gold... However, I would not be surprised if Gold and other precious metals were pegged against Bitcoin at the end, and not the way around.

concur.

well it wemnt up but now going down again

its because new users havent come abord as fast as new retailers have.  word is getting out, just verrry slowly

I don't know how you can arrive at this conclusion? It flies in the face of basic math and the history anyone can see. I began using bitcoin when they were $0.70 or so. Since then they have gone up thousands and thousands of % points and have been adopted by millions. Clearly and mathematically provably..., greater demand leads to higher prices. 

Greater demand?? so why aren't we at $1000 per coin? Or even $10,000 if there is such great demand? All the major retailers are converting their bitcoin to usd immediately through BitPay and the likes. Even governments are considering only accepting Bitcoin through third party payment processors.

Assuming that you mean Gold, I don't consider this as a great idea. The way FIAT is handled allows some certain flexibility. Can you imagine how long it would take for orders to clear if bitcoin was valued according to a XBT/GOLD rate?

Why are we at $250.00?
Because that is about the logical price based on adoption. The $1000 bitcoin was based on speculators guess about future prices. It is quite normal for speculation to shoot the price up to silly heights then fall back to reality. So the reason why it's not higher is because that higher price is not justified. $250 is what the market says is the right balance between supply and demand. It's not an opinion, the market is the result of actual action.

As far as retailers not holding their coins. Well, that would be irresponsible, stupid, and possibly illegal for some publicly traded businesses. They have a fiduciary responsibility to not act foolishly with investor money. The way to mitigate this is by using a payment processor. It may keep the price suppressed a bit, but they are not interested in our ideas about price.
I have owned several companies and the best advice I ever received is that, no matter what your business is your job is to make money. Everything else is noise. If your main focus is something other than making money you will not be in business long.

I don't know, I just thought we should be more positive trying to look at things. If we decided to bar and prevent everybody from using bitcoin and tell retailers, merchants or whoever that is going to use bitcoin to stop accepting it, I don't think that wouldn't help as well. For it to grow as a currency, we will need transactions to be constantly moving. that would be much better rather than just having it as an investment tool

@OP, your comments are extremely result oriented. Just because the result is as predicted, doesn#t make the assumption right.

correlation=/= causation.

As RodeoX said, MTgox and other factors led to a price that was substantially inflated, we now saw the retraction to the price that was more inline with the supply/demand.

Merchant acceptance is the first step, it paves the way so that bitcoin users can convert all their fiat money spending into bitcoin spending, that will generate huge demand on market and raise bitcoin's value.

People have not really understand the real potential behind merchant adoption

An easy way to make bitcoin worth millions of dollars (https://bitcointalk.org/index.php?topic=987110.0[u)

That's not adoption.

which would make lives of millions much easier