Bitcoin Forum

People are apparently staying away because they don't understand the value of BTC, and for some reason they think the value could reach 0 again! 

Of course, we know that's not likely, but some people believe just that...

http://www.bitcoin-board.com/index.php/Common-opinion-Bitcoin-mining-too-good-to-be-true

They will be back in once they realize what we are going through are merely growing pains. It makes sense that bitcoin face these things early on, because surviving varied vectors of attack - even on the most vulnerable parts, will make the entire enterprise stronger.

You have to go through these 'tempering' events to make it in the real world. That applies to code, ideas, and people.

The reason why it won't happen is because the difficulty level keeps going up, so every day it becomes more and more expensive to mine, thus giving the coins value through their creators. If you ask a miner how much their bitcoins are worth, they will all tell you around $30-$40 a piece. That is a fair price considering the mining difficultys/electricity/time it is taking to make these things. That is with the current difficulty level, and awareness of the coins. If you were to ask someone who knows nothing about bitcoins, what they are worth, they would simply say "worthless". It's all about perception in life, one mans trash is the next mans treasure, one mans pain is the next mans pleasure.

Problem is, it doesn't matter how hard it is to mine them. There are just as many coins being created, whether 100 miners made them or 150. Why should people pay more for bitcoin just because more miners were necessary to create them?

Now the bitcoins themselves are more secure, the higher the difficulty level. So perhaps there IS some rationale to BTC price going up with difficulty...

This whole episode will be forgotten within 2 weeks.

I don't think you understand angelus, eventually it will take massive amounts of computing power to generate bitcoins. That IS the value you're looking for right there. Try telling someone who just invested 20thousand dollars on mining equipment,hundreds in electrical costs, and months of his time, that his coins are worthless.

gentlemen, no need to worry about the price eventually going up or down, the bitcoin ecosystem will find it's equilibrium.
and even the owner of one (1) btc will be greatly rewarded over time

That's why I'm having my place of employment do direct deposit with BTC from now on.

You got them to do that for you? WOW NICE !  ;D

Excellent idea -- if your employer will do it :)

Of course, you'd have to convince your electric company, grocery store, etc...

you say this many times, but it's simply incorrect except as a complex psychological matter that, as applied to any specific context, requires empirical validation.

http://en.wikipedia.org/wiki/Sunk_costs

you've also claimed that difficulty cannot go down; this is incorrect too. it can and has.

i predict bitcoin values will drop below zero, and you will have to pay me to dispose your stinky coins for you. so hand over them coins now while i can still take them in for free. this is a limited offer.

So basically every broke person that just found out about bitcoin on this forum is trying to make the coin crash, so the difficulty can drop, and so they can buy in at pennys? IT'S not dropping ANY TIME SOON.. Neither is the RATE.

They are trading at $25 a coin on ebay FFS

http://shop.ebay.com/i.html?_from=R40&_trksid=m570.l1313&_nkw=bitcoin&_sacat=See-All-Categories

This is after the whole mtgox thing, they were almost at $40 before this whole bullshit apocalypto crash happened.

I want people to buy-in and participate, but the way that so many have gone about this has been so childish it's made me sick to my stomach.

Not Believing in something does not make it any less real, The Camels Nose is in the Tent, bitcoin is happening !

please don't impugn my motives. i've likely been with bitcoin longer than you have, and i have a very large collection of coins. i have no plans to buy (or sell) any anytime soon, and i don't have an account on any of the exchanges.

it's silly that i have to say that to make a factual point. i was not making a prediction about bitcoin prices or difficulty. i was simply correcting factual errors in your post, and i wouldn't have bothered except that you've been spreading misinformation in many discussions. i'm concerned that novices and potential bitcoin users might actually believe you.

bitcoin has many strengths (though i'm no particular fan of the presently prominent block chain, given its particular, path-dependent history, the economic context it occupies, and the false promotion it has received). let it succeed without vigorously promoting it with either errors or lies. otherwise, you come across fairly transparently as the kind of pump-and-dumper who spams yahoo finance about penny stocks.

"the better proof that the al coran is arab, is that not a single camel is mentioned inside it" Jorge Luis Borges

No, we don't "know it's not likely"... and that might be part of the reason people approach it with some skepticism. Their loss, if it turns out they're wrong, "fortune favors the bold".

Having said that, it's doing far better than I thought it would. We come out on the other side of Tradehill resuming trading with a crash barely down $5, and it's rebounded well and in my extremely uneducated opinion the market depth is looking quite healthy at the moment. We'll have to wait and see what happens when all the people burned by Mt Gox get access to their BTC - if a lot of them cut and run as fast as they can we're in for another wild ride... but if even those who do want to cash out do so in an unemotional, logical way I think the BTC can weather that storm too.

People have been saying "it's going to die any day now" for over a month now, and we're still back up above the long term weighted exponential averages. I'm not a Bitcoin investor (at the time of writing I have absolutely no holdings besides what's in my mining pool account), but I think it's looking pretty good right now.

The Bitcoin "economy" is looking pretty healthy right now for the rape it's just been through, probably due in large part to die hards who still believe. Hopefully it doesn't turn out they're all delusional, and we grow an actual economy.

something only has value if someone is willing to pay for it.
.....and there does seem to be a market, although today BTC is trading below their creation costs.
Looks like a buy.

It's hard to see anyone's true colors on this site. The guy who made this post did it to promote his crap forum, and here we are debating your motives. I never attacked you personally, but me and you both know that that's whats going on here. People are taking advantage of the open source nature of this community, to slant the odds to their favor through forceful methods. I was technically wrong about the difficulty level never going down, and I'm sorry if I misinformed anyone, but what I meant was that if the projects hold up, and everything keeps exploding the way it has, I don't see difficulty ever going down.. But that really isn't a bad thing for you, that harder it is to mine them, the more your currency is worth.

Here's the chart, while there have been a few downswings in difficulty, the line is predictable, and in steady upward motion.
https://i.imgur.com/rMrdY.png

But overall you were right, Bitcoin difficulty can drop, but it's highly unlikely to ever drop to the point it was even 2 months ago. There is simply to many people signing on to  the system now (myself included)

Your graph hasn't done anything to demonstrate that your assertion that price follows difficulty is correct.

Majority of buyers don't give a shit about mining difficulty/costs, and so it doesn't factor in to what they're willing to pay. Higher mining costs might cause more miners to hold on to what they mine, marginally affecting supply (the coins mined each day are a tiny fraction of the coins that change hands every day), but at the end of the day a Bitcoin is only worth whatever you can sell it to someone for.

And there's always gonna be some punk kid at college in a dorm with 3 5970s who doesn't care about his costs and just wants a dimebag. Unk, Angelus and others are therefore correct - the price doesn't follow difficulty.

Are we looking at the same chart sir? Have you not seen the trend? As the difficulty goes up SO HAS THE PRICE. Do I have to EXPLAIN the graph to you?

EDIT:Miners are only going to sell their coins for whatever THEY think they're worth.. If people don't like their prices, then they can't participate in the new bitcoin market, simple as that.. And whats wrong with college students running 5970's? Anyone should be able to mine, it shouldn't be restricted to the super nerdy, or the elite. Are you serious?

well, this has all already been debated ad nauseam, so let me try to make a somewhat different claim that might be novel:

there's little evidence that any advice to buy or sell ever posted in this forum has influenced the short-term price of bitcoins.

maybe that should suggest that people stop wasting their time trying ineffectively to manipulate the market - on both sides, of course!

When I predicted the price would go to 0, even making a whole thread about it, it actually did 2 days later. So you are completely wrong.

Correlation != causation. Difficulty jumped what, 60% last time, yet we're at lower prices than we were last period. Why aren't miners holding onto their coins until prices increase?

I'll answer you: because miners don't get to set the fuckin' price.


Relax. I'm not being elitist, I'm merely pointing out that most kids in dorm rooms don't typically pay directly for utility bills - in their mind the electricity is "free". If they already put together the box with part of their student loan money or grant money, then in their mind they have no "costs" involved and therefore they will always mine cheaper than you or I will.

So you aren't going to have any collusion between miners to not sell their BTC below a certain threshold, and even if you did - as I said, newly minted Bitcoins make up a tiny fraction of the BTC that change hands each day, so the effect on the market would be negligible.

You can point out the trend all you like, but betting the farm on the fact that the price is going to follow difficulty to the sky is a fool's bet.

The only reason the market is in the dumps is because of recent hackings, scrutiny by the media, and bitcoins sudden thrust into the main stream. In the future when more people sign on to bitcoin, and the technology is truly understood. People will only have a few things to go by when looking into bitcoins value.

Which are:
1. How many coins are currently in existence. (Supply)
2. How interchangeable is the currency itself. (Businesses and Exchanges, and overall DEMAND)
3. How hard is it to make new currency (MINING).

Other than that everything else is hog wash.

Keep telling yourself that your simple supply/demand calculations are going to prove that price will follow difficulty, and that people who are newly investing in Bitcoin will pay whatever the miners demand.

You'd do well to note that the first price slump of the last month or so was simply caused by an early adopter cashing out (no hacking, no sudden media attention or scrutiny, and no misunderstandings of the tech) - again, someone will always mine cheaper than you or I.

Miners don't get to set the price - the price is what people are willing to buy them for.

Er... difficulty follows price, right? Isn't this obvious.

Value increase -> mining becomes more profitable -> more miners -> higher difficulty

This is so trivial, I can't believe there is so much debate about it. Miners may have some small influence on the market when they sell their bitcoins, but surely real demand + speculation is driving the price, which, in turn, drives difficulty by the mechanism I described.

There are a lot of factors in play, yes, but we need to keep in mind that there's no direct pull on a BTC buyer to pay more because Joe Miner only makes 2 BTC/day today, whereas he made 4 BTC/day last week.

The SAME NUMBER OF BITCOINS are produced every week, regardless of how many miners participate in the bounty.

Print that out, put it on your wall. It cuts to the essence of this "difficulty" controversy.

Here me out I'm going to use your logic here.

If the same amount of bitcoins are made every week, but the number of miners increases then what happens? We form  DEMAND for a finite resource, thus making the coins even more valuable.  If people want it, it doesn't matter what me or anyone else says, the price is going up. Maybe the demand will very well be sparked by the miners themselves, but demand is demand nonetheless.

Move miners from the supply side to the demand side to suit your hypothesis... brilliant!

This type of shit is the reason certain people laugh when you mention Bitcoins.

Actually people laugh when they see a completely unbacked thing being called currency(plus talks of a BTC "economy" that exists only in forum threads) and expecting something to be worth 30$ (that's the number kicked around here, some have ofc already mentioned 100$ and whatnot) that cost between 0.5-2$ to "make"/hash.


To make dimensions clear: MtGox had 90+% of total trade volume. They had 60k users. That's about as much as 2-3 tribes on a small island that decide to use seashells as money.

That's your current "internet revolution".

Regardless of the other arguments going on, I just have contention with you saying that bitcoins are a finite resource when you really mean that production is finite and predictable. Well, mostly so, at least, as rapid growth can make the 1 block/10 minutes target quite a bit shorter.

In other words, staying with the bounds of your argument, there would need to be an increase in miners equivalent to the creation of new bitcoins just to maintain the same level of demand.

Of course then we can argue that more miners means more network power, which means higher difficulty, which might or might not cause or be caused by increasing exchange value, which brings in new non-mining investors, which kills the duck that ate the bug that stung the man which built the home which houses the family that murdered each other in cold blood after one too many nursery rhymes.

The evidence is to the contrary. For Bitcoin to have got thru the last 2 weeks and hold its value at 15 is ample proof of its resilience.

Fixed it for you ;)

http://bitcoindifficulty.com/images/pricevsdifficulty.png

This image represents why it's funny to see people arguing about it.

hahaha, If Bitcoins dropped to zero, I would just buy them all up, and it would cost me ZERO!

you're simply assuming your conclusion. the very proposition in dispute is that the step from 'higher difficulty' to 'value increases' reflects a causal process.

there is very little reason to think that a causal process exists for that particular step. of course, it is impossible to rule it out in practice, because it could reflect a complex psychological or economic phenomenon. that is why i say it requires empirical support. but it has no theoretical support.

without any empirical grounding, all people are doing is offering entirely unjustified conjecture for that step in your 'cycle'. by contrast, more than base conjecture is available for the other steps of the cycle, for it makes perfect sense that more resources will be devoted to mining if it is more profitable for people to do so.

this is, as asdf has said, extremely obvious. it is a trivial analysis. that the confusion persists is baffling.

Economics is a complex psychological matter.

Sunk costs slowly drives price, that's my belief. But the effect of difficulty on prices is overshadowed by the more rapid effect of price on difficulty. It's like how stars work, a contest between gravity and heat, gravity as the weaker force but still has its effect.

Let them sell. Right now we are rounding up all the sheep and sending them to slaughter.

Their loss is my gain.

- There are those of us who are holding on the the BTC we mine until the cows come home.  Those people do not affect the price.
- There are other miners who do sell BTC from time to time.  Chances are, they're out to make a certain profit on the equipment they purchased.  Those people do affect the price.  Their desire to sell at a certain price is based in part on the difficulty of mining those BTC, and the expectation of being able to recoup the sale through mining, given the current difficulty.

So in short, current difficulty is not THE factor for pricing, but it is A factor.

You say chicken, I say egg.

The reason I generally don't take sides in the argument "Does difficulty drive price, or does price drive difficulty?" is because I think it's both.

That's why I find it funny to see people so adamant that their view is 'correct' and the opposition's 'incorrect'.

There's nothing wrong with an unbacked currency if everyone understands the rules going in to it - instead of being backed by the bullets of a government (which is the only thing the USD is backed by anymore), Bitcoin is simply backed by the voluntary acceptance of it by others. The fact that there's a huge chunk of those "others" who are accepting it at what could be vastly inflated prices, based on the speculation that if it takes off "it's going to be huge" doesn't really say anything about an unbacked currency, it merely says something about those others' "investment" decision making process.

There is a tiny "economy" going on... a handful of businesses are accepting Bitcoins (at huge risk at the moment, due to the above-mentioned price factors), and there are several trading sites where people have actually sold shit to each other using Bitcoins. I've sold stuff using Bitcoins - it's nice to know that once I pass the finish line (USD in my bank account for me, I can't pay my bills in BTC), I don't have to worry about some shithead doing a chargeback on something I can't recover. To scoff and not call that an economy is just being stubborn and silly.

I think I know the other place you're discussing Bitcoin, and I'd just like to point out that it's detractors are for the most part, just as big tools as Bitcoin's biggest cheerleaders. 95% of that gargantuan thread is people making idiotic assertions that are patently false, that anyone who spent 5 minutes looking over the wiki would already understand are already addressed. But no, I enjoy reading 80 times a day "what's stopping satoshi from making more coins at random?" as much as you probably enjoy reading asshats talking about how Bitcoin will change the world if only someone else does the hard work of bootstrapping a real economy to match it's speculative worth (and don't even get me started on the - now thankfully thinning - libertarded approach to tax dodging using BTC as a selling point).

There are real, intelligent concerns to be had about Bitcoin's legitimacy as a real currency in the next decade or two (though hopefully not insurmountable, time will tell) - but if you guys think you're hitting the nail on the head with "hurr, not backed by anything", as I said, just as much tools as the BTC cheerleaders.

Miners may DEMAND coins, but if they are not BUYING them then they do not affect the price. Your logic is broken. If I fire up my GPU miner and the difficulty increases accordingly, explain the causal chain that leads from this to a increased price.

Doug Casey of Casey Research is a highly intelligent, well-respected, level-headed, Libertarian wealthy investor.  He loathes government and loves free enterprise.  Here is what he had to say about Bitcoin

http://www.caseyresearch.com/cwc/doug-casey-bitcoin-and-currencies

TL;DR: "Don't use Bitcoin, use GoldMoney (of which I'm an investor)".

GoldMoney completely rocks, but they are subject to all of the typical Know Your Customer laws, which make privacy impossible.

Yeah sure, but holy fuck once you get about a third of the way through that "article" you realize pretty quickly it's a thinly veiled press release.

Thats fine. But as a miner, if my hardware is paid off, I DO ... NOT ... HAVE to sell my coins.... EVER!

Miners don't control the price.....lol....you watch us if the price gets too low.

In a short to medium-term bear market: The 7,000+(?) coins mined each day are a huge burden for the Bulls to overcome. The "great wall @$25 soon gave birth to a great wall @$20."
Dropping as low as $2 or $5 is completely realistic, IMO.
Long-term optimism is fun, short-term realism is profitable if you "play your coins right."

You can demand whatever price you like, doesn't mean there are a never ending line of people marching into the market to pay it. So you clutch those coins close to your chest, shrieking "I will make a profit, dammit", while the market marches ever farther south... how long until you give in and sell some off, or quit mining?

Don't get me wrong, I'm not trying to say the market will go down - but you should at least entertain the possibility if you're investing in Bitcoins. If you're mining and holding, you are investing in Bitcoins - you're exactly the same as the people who bought in except you buy in through a bigger power bill... hoping to christ the price comes back up so you can turn a profit just like everyone else.

Yeah you've sure got this market by the balls!