Bitcoin Forum

The light bulb is burning bright. Maybe, a little to bright.

   There have been many analysis on the current price by people in the industry and why it shouldn't be there. There is a complex and incalculable effect as to the current price. Sure, fundamentals apply as they should but they do not include the "human factor." One key to the imminent fall in the BTC values is as price goes up overall volume goes down. What is happening is that BTC is breaking away from the mainstream and being supported by a sub-group. This sub-group will eventually be replaced by yet another sub-group, and on and on until only a relative small group of people use it.


   Not wanting to see the BTC reduced to history, we need to bring prices down to where people will want to take a chance. No realistic person is going to rely on data from one exchange (MTGOX). Whom, by the way, should be congratulated as one of the first winners in the BTC community, even though generally very little is known about him. Almost mystic in nature. Another problem for most.

  As volume decreases expect greater swings in price. There is over 6 Million BTC and around less than 1% of that is traded and setting the price for the vast majority.

  But irrespective of that, ask some basic questions. Are enough people currently using BTC? If a new person wants to get into BTC, is it easy to acquire and exchange to the BTC? Is the cost of doing so on par with their own currency or out of balance? Once converted, are their converted funds relatively stable until they use the BTC?

Links please?

The amount of goods and services being traded for Bitcoin is an unknown. Due to the nature of the currency, it is likely to always remain so. I suspect, but can't prove, of course, there's quite a lot of illegal goods being traded, drugs being a prime candidate. You'll never get a good picture of how much that drives BTC prices.

Regardless of what the current USD to BTC exchange rate is, the fact is that people can buy goods and services in BTC for prices that reflect their value is USD.  This is what give BTC its value.

The OP claimed there were analysts who claimed that bitcoin should have the value of zero, or at least less than the $7 for which you can buy it now. 

I have never seen anybody with any half-rational arguments who claimed that it should be valued at $1 or $0.01 or whatever, and if those predictions exist it would be very interesting to see them.

 

90%+ of these Ops are just bitter.

If you are excited by Bitcoin the technology and can understand the value behind it, i.e. fast, frictionless, semi-anonymous transfers of money without involving third parties, then you would probably see $7/btc as dirt cheap. If you don't see the value in it, look a little harder at the current choices of bank checks/wires, western union, paypal, snail mail, etc. See it now?

but haters gonna hate.

Oh Contraire, not bitter, nor hateful, but fearful. Fearful of a rapid and successive decline that could destroy any and all credibility. I don't subscribe to the Labor Theory, although Labor is a factor in cost, it most certainly isn't the driving factor. A simple example is all it takes to show a fallacy in the Labor Theory. It might cost you $1 Million Dollars to produce an Apple, so the people will eat Oranges instead.

One must be realistic when looking at BTC, does the value = $7 ? Should it?  I am not doubting that a BTC could equal $7, it just shouldn't be there now, for the greater good of BTC. However, if the groups keep sub-dividing into their smaller groups, then let the best man win. At the cost of the whole.

Is this a classic "bubble, it's gonna pop, run away" thread?

Nice sig, OP.

Interesting perspective and rational. Game Theory works good in groups, until you apply the Prisoner's Dilemma. Once a better deal is offered to a specific group or individual, Game Theory goes out the window with the birds. People will work in "their own" best interests and destroy the whole when it is beneficial to them, even though it is detrimental to the group. The big test in value will be the next best competing Exchange Market.

I heard "Bitcoin Bubble!"  :D

http://www.bitcoinweekly.com/articles/comic-reaction-after-dramatic-rise-of-bitcoin-s-value

you're more than welcome to go and dump a few 100k btc on the markets to depress the price to bring it to where you think it should be. go, do in now! my bids are waiting! :)

Gottach love the people who screams Bitcoin Bubble, providing me a reason to post my Bitcoin Bubble Comic. :D

This is assumed to be true, but the prisoner's dilemma was recently put to the test and the results were mixed.  Not all users will only do what is in their own best interests, even if they don't know the others and they are forever anonymous.  Game theory is just what it says, it's a theory.

Rather than argue the merits, and since we all like Open Source and Freedom of Information. I will endeavor to post information that Inquiring Minds want to know, to more appropriately add to information. I will list first, the information, and then ask whether this information should be made public, then I might post.

1. Will the Real Slim Shady Please Stand Up?  Identity of MagicalTux and location.
2. LLC information for MTGOX dealing with Bank Accounts in the U.S.
3. How many Accounts are on MTGOX?
4. Volume of New Money on MTGOX after subtracting volume from old accounts. Rate of growth.
5. The DarkPool price Points added to depth charts. Want to know where the DarkBids are? Hmm...
6. Any other questions you might want answered?

Nanotube,

  I would never dump 100K BTC onto the market to depress the price, I would slowly trickle it in between the bids and asks to reap the greatest reward. :)  

So place your bids.

Just because I think the price is overall bad for BTC, doesn't mean I don't take advantage of it.

:)

And I the titles are always in the form of a FUD (Fear, Uncertainty, and Doubt) question.

Your Cartel scenario might not be far off. Right now there is basically ONE. But lets look a little south and see what happens when multiple Cartel's deal in the same product, they will tear each other apart at the cost of the community. This is happening with miners, it will start to happen with Exchange's as soon as there isn't a basic monopoly. However, collusion usually comes into play at first but then degrades into straight up competition as users move away.

To be frank, currently the competition is for the USD BTC. Without the USD volume, BTC is not worth much. Much like drugs, hmm...

I think prices need to go up significantly or else the total amount of bitcoin in circulation won't have a high enough value for them to be used in a significant amount of trade.

If there is only $43 million worth of bitcoin, then millions of people cannot possibly have enough to use in trade. If the value increases to $2 or $3 billion, then what we consider a low value amount of bitcoin now, e.g. 0.01 BTC, will be enough for a substantial trade, and there are enough bitcoins for a large number of people to have at least that much.

Not quite, there will be about 21 Million but that is 1.00 BTC's. The base unit of BTC is 0.00000001. So comparatively, there are 21 Quadrillion base units.  Like a $1 is just a 100 pennies, or $10 a 1000 pennies, $100 is 10,000 pennies.

You must look at it from its base unit.

If there was for lack of better words a "stock split" or move the decimal place one place to the right to reduce the price to new comers, I would feel better. But that would reward early adopters by increasing their holding by a factor of 10. However, with the exchange, it might not be that big of an increase.

That's exactly what I'm saying. If smaller units are to be used, the value of a bitcoin needs to increase significantly so that units like 0.01 bitcoins, or a bitcent, have substantial value.

magicaltux's name and location are known. firm information i recall seeing as well. but you can email him for this information if you want.

how many accounts - i think he has stated some days ago a rough approximation of number of accounts.

money flows - that's proprietary information and you probably won't get it.

dark pools: they are going away with the upgrade in june.

anything else? :)


yes so... what exactly were you proposing to do, by way of solving the 'bitcoin price' problem that you perceive? or were you just talking without having any solutions in mind? :)

if the latter is the case, then i'd like to join you and also complain about the us national debt, corrupt politicians, street crime, and rainy weather.

Come on. Bitcoin used to be mainstream? This is just silly.

Yep, it's only up (or down to near nothing) from here.

Shouldn't Bitcoin's value be adjusted (split/merge factor 10 by moving decimal place) to always reflect a value between 0.5 and 5.0 to one of the dominant fiat currencies to accommodate the human psychological factor?

The total number of BTC's remain 21 million.  The divisability of BTCd as opposed to BTC just goes to 7 decimal places instead of 8 if 5 USD/BTCd becomes 0.5 USD/BTCd.  (BTCd - BTC displayed, In effect if you had 1BTCd on display, you have 0.1 BTC of the total 21 million BTC's ever to be issued).

The opposite happens when 0.4 USD/BTCd is split to 4 USD/BTCd, the divisability for BTCd goes from maybe 7 decimal places at that stage back to 8.  BTC's divisability can not be changed as it is fixed at 8.  Shouldn't BTCd divisability be dynamic for user friendliness - just like the price of shares split/merge, except maybe those of Berkshire Hattaway?

Yes, Berkshire Hawthaway has been punished in the marketplace for having such a high price. /double facepalm

Plus it is so much easier to buy fractional BTC than fractional BRK/A or BRK/B.

I'm starting to really enjoy these "Bitcoin can't succeed because (choose one: mining too hard/early adopters getting rich while I'm new to it and poor therefore it sucks/govt will shut it down/deflation can't work/the cryto sucks/if someone spends X million$ they can take over and shut it down/lost coins are gone forever/it's not backed by anything/it's anonymous and won't be accepted/it's NOT anonymous all transactions are public/it needs inflation/it needs *insert random monetary policy* theory/terrorists and child pornographers and drug dealers use it/it's just like egold, liberty dollar, flooz, or beenz/mining is cracking passwords and everyone will be arrested)" .. ad infinitum.

The more I read them the better I feel about the long-term prospects!  ;D

Here are some of the rulings on organizations for which fincen.gov in the US had an administrative ruling, as not being a money services business, amongst others:

http://www.fincen.gov/financial_institutions/msb/rulings.html

Oh, so you do think BTC is like a Stock or more appropriately a Commodity. But using your analysis of Berkshire Hathaway, how many people own shares? Is it the Masses or is it a sub-group? Can you buy 1 share of Berkshire Hathaway? So, if you can't buy 1 share of Berkshire, what other stock will you buy? However, BTC isn't a stock. Its intent is to be used as a currency. So what you end up with is a price that no one can afford, so no one will use.

Nanotube,

  You make a good point about providing solutions. I can't control the masses (thats a good thing), but there were people during the dust bowl telling 'farmers' to take it easy and be respective of the land. But they ignored them, and continued to 'farm' away with out consideration. Then finally the 'Dust Bowl' stopped them.

  What I am saying is that the problem will resolve itself, but it needn't be so harmful to the community with a little forethought.

This might be a surprise, but many do not follow MagicalTux, the IRC, or even this Forum. They goto his website, and the Lack of information puts a pause in their intent to trade or get involved. It feels, not quite right. With the lack of contact information, phone numbers, business information, dispute resolution, etc... They will not get involved with the community.

Now, if the intent is to keep it in a sub-group of a small amount of technical and semi-criminal types, then keep it as is. But if the intent is to have BTC used by your neighbors at the grocery store, gas station, etc... It needs to change. So, my solution, I can not enact because it requires an attitude change on many.

Bitcoin is divisible to a point where it can be afforded by anyone. Berkshire Hathaway is not. I believe BRK.B can't be purchased at units less than 1 share, currently, $78

You can purchase .01 or maybe even .001 BTC now for possibly less than one US cent.

the question of whether bitcoin is 'overvalued' is only going to be empirically determined by what happens in the future. seeing as how my powers of future prediction are pretty shabby, i'll refrain from fretting about this. i think your powers are probably no better :) so i can suggest the same approach to you. :)


indeed these are good points - and i think all these things will happen with the site redesign in the near future.

Nanotube,

  I don't see what is going to happen in the future, I look to what has happened in the past. Currently, BTC is priced to high, IMO. We currently can not look at it as a currency but a commodity. A commodity with out price regulation of derivatives. It is the Corn of the 70's, the Gold of the 49's, etc..., etc...  

 I see the argument of the Price is the Price, and agree, if one is willing to pay $7 it is worth $7. But look on volume as to the price, so many take the trade of 1 BTC at $7 as meaning all 6 Million BTC are worth $7. Now, you know this is a fallacy. Lets just try to lesson the hurt, when it comes.

1)

The Firm: As per USD is: Mutum Sigillum LLC  http://www.mutumsigillum.com/ (http://www.mutumsigillum.com/)

Registered in DE with the Secretary of State. And its Registered Agent is: CORPOMAX INC http://www.corpomax.com/edelaware.html (http://www.corpomax.com/edelaware.html)

Used to preserve anonymity. However, since Dwolla is being used openly(not in Delaware), anonymity has been lost. One dispute will expose the registered Bank Account and Owner. Corpomax is european(French) in nature not Asian. The law firm focuses on Trade Mark and Patent Law.

The first lawsuit, will unravel much of the anonymity. And there will be lawsuits, especially with the money involved. One disgruntled trader that looses his money will start it. Forensic Accounting Review. MTGOX is also a .com which falls under ICE's Our Sites Operation.

2&3)

MTGOX will not have to give this information, it is a statistical calculation that will fall within a predictable percentage of error. The numbers can't be hidden. Site statistics, volume, etc..., etc...

http://www.alexa.com/siteinfo/mtgox.com# (http://www.alexa.com/siteinfo/mtgox.com#)


4)

They should, at least from the main exchange. They should and can exist, outside of the main exchange. Like certain ECN transactions do between big businesses.

As far as how I figured out the DarkBids, well I will keep that secrete for now.

I want MTGOX to succede, but I want him to succeed in the Open, not the shadows.

PS. HINT: Site data can predict the future. The PRICE of BTC. hehe. Especially if site data is live, and covers specific addresses.

So lets see how a professional might try and analyze the market:

Primary Age group: 25-34  Secondary: 18-24  What are habits and spending capacities of these age groups with the following data:

Primary Education: Graduate School.. Hmm... Not looking good for the masses with a 1:4 ratio on graduate school.

Primary Gender: Male .... eliminates >50% of possible users.

Has Children: No... another curious fact. How can we use it.

Browsing Location: Home...  Time and Frequency of trades can be predicted with time zoned data per unique page views by location.

And this is just public information. Specialty services will provide yet another advantage.

Now, we can add in the Mining DATA, Client DATA, Percentage of BTC in Circulation, etc...

Now the real question: Why would someone bother researching all this information? Because the PRICE is HIGH and there is a lot of money to be made. And that money will be taken from newbies that want to try out the system and be discouraged because they will loose all their money

why its "just" silly ?
does it less "silly" than other nowadays money ?

This sounds like a good idea to me. It's much easier to convince someone that this weird computer money is worth "$0.50 each" than "$5.00 each", regardless of how big an "each" actually is compared to the supply.

Bitcoin's high price is probably slowing adoption.

The idea that Bitcoin used to be mainstream is silly because it is more mainstream now than it has ever been, unless your definition of mainstream is something other than the number of users.

As for floating the decimal point to keep the exchange in a fixed range... people buy gold at thousands of dollars an ounce, I don't see why they wouldn't eventually do so for Bitcoin.

Are you seriously claiming that bitcoin WAS mainstream and now is less used?

I think you are confused from the language.