Bitcoin Forum

Now might be a good time to buy more bitcoins.   Transferring money...

Interesting.

Be sure to keep us updated.

I would buy as much as you can right now, honestly.  As long as it is under $6, gotta catch it quick.

same... can't get money up there fast enough!

Here are some thoughts that I have on the intrinsic value of coins.

OK, so we went from $2 to $7 in pretty short order.  One thing that did not change over threefold in that time is the utility value of the coins.

Bitcoins are useful for several reasons - silkroad, alternative to wiring money, etc..  But the use case hasn't changed drastically.  Certainly not three or four fold.  Sure, there's organic growth as people realize there's new things that Bitcoin lets them do, but I don't think that's multiplied in the last two weeks.

If we were getting swarmed by people looking to make gambling deposits, or suddenly the word got out that Bitcoin is a great way to buy cigarettes for half price by cutting out the tax man and (again) we were swarmed by people looking to do this, then I would say yeah, new money is pouring in and there should be a reason it's going up.  If a publication that is read by thousands of hawala brokers or MSB's suddenly ran a serious article on Bitcoin as a way to move money, that would be something that would drive such instant growth.  But nothing like that has happened in the last two weeks.

In the last two weeks, CES and CBS made us look a lot more legitimate to the world.  That's big.  But I think it's a leap to think that suddenly it will make people think "I need to jump in and buy these now because someone is soon going to want to buy them from me."

And sure, maybe some gazillionaire will look and say $6 coins - how cheap - I'm going to make these go from $6 to $100 myself.  But that gazillionaire will probably be sophisticated enough to do research and discover that this market price is being set by about 1% of the bitcoins in circulation, and the other 99% remain to pop the price at any time and make a sucker out of him...  one need only look at http://ecdsa.org/stats.html to see how many non-moving coins are out there lurking.  I for one am not recommending anyone buy any $7 coins unless they are someone who plans on clearing out all the asks on the order book multiple times, or know someone is about to.

patience, we retest the long term uptrend in a couple days

So what makes you think $2 was the rational utility price?   Maybe the price based on fundamentals was always $6 and the drop to $2 an aberration and the market is simply correcting.    Thus even w/ no increase in utility (from when BTC trade as low as $2 USD) Bitcoin is fairly valued.


Note: I am not saying $6 is the value of Bitcoin based on fundamentals but I don't think $2 is either.

I actually think the present rational utility price is less than $2, it's just that there are a lot of people who are good enough at holding them that they are protecting that price point, and might succeed in doing so persistently.  I don't blame them (and me included to the extent I hold mine) - Bitcoins really have a legitimate place in society and their future usefulness is likely to explode over the long haul.  I truly believe Bitcoins are a great thing to hold long - that's speculation - while their utility value slowly but inevitably catches up.

It's just not going to explode overnight.

Let's suppose nobody had an interest in holding them other than for their utility value.  I am guessing out loud here.  Think of how you put cash in your pocket.  You know that cash in your pocket is at risk of loss, robbery, etc... so you put the cash in your pocket that you think you might need as you go about your business.  The rest of it, you keep somewhere else you consider safer.  If you happen to have $5k to your name, you probably don't carry it everywhere you go.

Silk Road, as I understand it, has a couple thousand listings on there.  And people must certainly have bitcoins in their accounts there for anticipated purchases (buyers) or completed purchases (sellers).  That makes a few tens of thousands of bitcoins intrinsically useful.

I like keeping a few bitcoins in my back pocket just so that I have an easy way to pay somebody, the same way I keep some cash.  What might I keep in my wallet?  Maybe $80 is a typical amount I might be walking around with, maybe more if I'm on vacation.  Fair to say, the number of Bitcoins I might keep at arm's length might be approximately the same.  Suppose I like pornography or imported cigarettes and want to pay with bitcoins, then having $80 worth of bitcoins on hand for those reasons might be realistic.  For me, I sell physical bitcoins, and occasionally engage in a few deals where bitcoins are handy (like the video cards I recently sold) so having a few hundred or a couple thousand bitcoins at arm's length to go about doing this is realistic.

Bitcoin's market cap is $48 million, but there aren't 600,000 people like hypothetical porn & smoker with $80 of BTC in their pocket for their usefulness, nor is there even a small fraction of $48 million worth of listings on Silk Road, or gambling activity going on with Bitcoin.

The rest is speculation and subject to behave like speculation any time!

on the other hand even with small utility if people didn't pile so much asks the price could be in triple digits

it is all relative

speculating and hoarding alone do dictate price.  remove completely utility for instance and look at it as a store of value if it is believed to be the truth people will keep demanding them

This is a good analysis, I think.

What I might add to this, is that the recent volatility yesterday should translate directly to a temporary lessening of the intrinsic value of the bitcoin.  I'm not expecting $7 soon unless someone new comes in with lots of money and balls.

Basically, volatility scares anybody who needs a stable unit of account to stay profitable.  Someone on Silk Road might be happy selling drugs and might have no interest in sitting on BTC regardless of the direction they go, so they will cash their BTC out for USD the moment it arrives.  In fact, I thought I read somewhere that Silk Road lets their sellers do this automatically... as though they still eventually have to take out BTC to stay anonymous, but that they have an online "silk road" USD wallet where they can hedge their risk while their funds are still in their account.

By doing this, they drastically reduce the demand for holding BTC to do their business.  If BTC is dropping - or even if it's just volatile and unpredictable - that would presumably lead sellers to press the "Fuck this, I'm taking USD" button... thereby bringing the need of the "silk road economy" - their demand for bitcoins - much closer to zero - just enough to get funds in and out of the system.

Seeing yesterday's swing surely must have changed the minds of a few people interested in holding them for fun.

Fewer people with a reason to hold bitcoins = fewer people just shuffling the same btc and usd around just trying to outsmart one another = same fundamentals as a poker game = the only clear winner is the house (e.g. MtGox) in this case.

The value of bitcoin is highly speculative and good points have been made.  However, I also want to point out that the number of total bitcoins ever to come into existence still has not changed (approx 21 million).  The number of coins mined will be halved by the end of the year.  Only 347 days left.

There are a ton of short term speculators here.  Some people are here for the long term so if you truly believe bitcoin will be adopted then any buy in the beginnings of bitcoin is a good buy.

There is always the risk that someone holds millions of them and might need some money.  I think we've become fairly accustomed to the idea that this isn't happening - but there's no way to know for sure.  Someone who holds a million bitcoins need only drop 20-50k of them at a time to clear out much of the orderbook (like we saw yesterday).

One thing I find incredibly interesting is: http://ecdsa.org/stats.html

Look what happens to all the coins mined in 2009 as you pass your mouse across June 2011.  I bet only 10-15% of them move.  What about the other 85-90%?  That's a serious question to ponder.  They are virgin coins that not only have never been traded, they have never been used for anything!  They still belong to whoever mined them.  Those coins are out there whether we like it or not.  Either whoever holds all those coins died and took them to their grave (unlikely), or only needed to sell a tiny percentage of their holdings to clean house.  Others have suggested that people mined those coins and forgot about them or didn't care.  Even if that's 90% true (it almost surely isn't), 10% of a million coins is quite a load to be able to dump even in this market...

I've griped about these early coins in the past, but feel comfortable that they'll come out slowly in due time if Bitcoin grows organically to the point of ubiquitous adoption.  Whoever holds them will be damn rich, and the cost of them becoming rich will slowly be spread across all of the people adopting bitcoin to the point they won't even notice.  BUt if anyone decides to drop a few million dollars today and wipe out all the asks on the orderbook, feeling like he "0wned" Bitcoin, I am sure whoever has all those sleeping coins is going to have a hard time not being tempted to cash in.  Why woudn't he - his risk is minimal - drop 5% of his coins and take 50% of the orderbook.  Someone with a million dollars to throw at Bitcoin probably is financially sophisticated enough to see that risk just by comparing the depth of the orderbook with the total number of bitcoins in circulation, which is why I am not counting on it.

Someone with a big load of dollars needs to wait for another bottom before considering a major buy, in my opinion.  Otherwise they are essentially gambling that there will be imminent news out of left field that will bring them sudden luck - which could always happen - but not predictably enough that the odds would be any better than a typical wager at a casino.

The people who set the bottom will be the ones with lots of dollars to draw a line in the sand, and the ones with lots of Bitcoins who will decide whether to take the dollars and run, or not.  Those people (presumably) don't know each other, so in effect, nobody can know where the real bottom is.

If all speculation were taken out of the picture, I might guess that the real Bitcoin economy that depends on Bitcoin to function to exchange goods and services (silk road, etc.) needs only about a million dollars to actually account for the goods and services exchanged within, which would correspond to a bitcoin price under 13 cents.  That's what I consider an absolute floor (that we'll never reach).  $2.00 is close, but there's still probably room for a lower bottom.

Yes that's true, and that's really the big question for me. Will it be adopted?

Bitcoin value is mostly in its scarcity and anti forgery capabilities. If we take any object, for example ink pen, it has some value. But if would be only three those pens in the world, its price would rise, despite the fact its still the same object.

What im trying to say, its very hard to define what is "right" price for bitcoin, cause there is no mathematical formula to calculate that. For every person value of bitcoin is different and actual price is probably average of that.  :)

the overhang of early mined coins is a real concern

some have surely been lost in the manner of most ones and zeros

some I am sure are held by deep thinking folks with other than mercenary motives, they did, after all, join the effort when it was about the farthest thing from a sure thing one could imagine

still, your point is well taken...the temptation to cash out has to be very strong

A killer bitcoin app will eventually emerge that will propel bitcoin into the massive mainstream.  The creation of "Netscape" was the eureka moment that had tons of developers evolved BBS to HTML and web browsing.

I am working on one myself...stay tuned!

It will go down before it goes up.

Especially when that person with lots of coins comes to the conclusion at some point that it's overvalued and that a price crash is imminent whether he sells his or not, realizes that only the first few people out the door have any chance of actually realizing their profit and the rest will be bagholders... and rationalizes that, despite his interests in Bitcoin's success, if someone is going to come out ahead, "it might as well be me"...

Hmmmmm.  



:)

That seemed true on January 6, and also seemed pretty true yesterday since that appears to be what happened.

I am not trying to say "sell your bitcoins", I am simply trying to say "don't buy now" (unless you are betting on someone coming and swooping them up in bulk very soon!).  This is a thread about "thinking about buying more coins", presumably that means right now, since it's a new thread.  I'm thinking about it too, but not doing it, least not today! =)  I still maintain that Bitcoins are great to hold long.  I just believe there will be better days to buy.

Relevant to that: the sleeping coins from 2009 don't worry me for my personal trading - but they ARE a legitimate reason why we should be skeptical about someone coming along and trotting off with $millions worth of BTC out of the blue.

Does it appear that I have lost a degree of confidence between January 6 and today because of observing it?  You bet.  One notable thing that happened (as I recall it) the day before yesterday was a stacking of a ton of new asks at the 7-8 mark that I don't believe were there before.  I do not know where those came from, nor do I have any way to know.  It's hard not to worry about sleeping coins when you are seeing asks come out of left field.  Left me to conclude, "OK, somebody with a lot of BTC wants to sell, or at the least, really wants to see the price go down in order to buy more".  So if what you find interesting is I've magically gone from a bull to not quite so... well ya got me.  You're right.  It's hard not to, with the smell of fresh beef permeating the air around here.

I have $100 on the slow boat to dwolla, will increase my position about 40%

I'm postulating a test of uptrend support near 5 in two days...give or take

We're on the same page. Am waiting 48 hours for support baseline to develop.

Analysis based on the MtGox orderbook is worthless. 310k coins traded in 24hr and the price is sitting at a point that looked 40k coins away 24hr ago.

MtGox order book does not represent all of the MtGox demand, MtGox demand doesn't represent all formal market demand and formal markets don't represent all fiat based demand, and fiat demand is not the only demand for coins.

There are billions of people, millions who have heard of bitcoin maybe once and thousands who have figured it out. Demand is both strong and an insanely small fraction of it's potential.

+1

Not to attack any of the posters above, but all this is bullshit.

The reason I'm commenting here on not on the other 1000 speculation threads is just because I have a lot of respect for DeathAndTaxes, casascius and others.

But

Nobody, and I mean nobody, can predict the future. Especially short term, and especially Bitcoin.

Like 99% of the people here, I think I'm smarter than the market. I think Bitcoin's ultimate value is > $100,000, while the market values them at less than $7. So I buy, and I hold.

Any utility that Bitcoin might have right now is completely irrelevant.

My analysis suggests that in thirty years (made up number), 1% of the world (another made up number) will be Bitcoin. This simple statement is enough for me wanting to grab as many coins as I can, while not risking my well being, financial safety, etc...

Short term, it's open season, and chaos is king. Any fool with lots of $ or lots of BTC can move the market. These bubbles and crashes will keep on happening, and each one will smooth things out, take some BTC out and distribute it further.

And slowly but surely, (I believe) BTC value will rise.

No point at all speculating on short term movements. At least with any degree of seriousness.
Any one of us is really not better than the average in predicting short term movements.
The only reason I think I am smarter than the market regarding the long term 30 years price of BTC, is because I am a part of a select group of people, that have the luck to:

 - Understand cryptography at a basic level
 - Understand security at a basic level
 - Understand economy at a basic level
 - Have heard about Bitcoin, and had the luck to have a good couple of weeks to study it.

So, I am more knowledgeable than the average citizen of earth, and therefore I think I am right and they are wrong.

But short term speculators aren't betting that "Joe Shmoe, who has never heard of Bitcoin" is wrong. They're betting that other Bitcoin fanatics are wrong. Well, half of these speculators are right, at any given moment ... but half is wrong (don't get technical, you know what I mean).

I really should stop visiting the speculation forum all together, but I'm weak, and I do care about short term swings even though I'm not going to participate in the game.


Again I ask, please don't take offence by my call of "bullshit" above. I'm only human, and I could be wrong.

Best of luck,

+1

You're not wrong. In the short term, the variables are too many, and too unknown, for ANYONE to predict what the Bitcoin market will do.

yeah, you are pretty much right

we beat the average, when we do, by identifying trends and trading channels

left field crap like yesterday is endemic to this market and can break any way at any time

best videogame I ever played

Indeed. I guess I'll repeat what I've said a number of times before: Bitcoin is a high risk investment.
I won't pretend to have any idea of just how high the risk is. I don't think it's knowable. The point is, the upside potential is tremendous but so is the risk of total loss. Therefore, as a long term investment, the sane thing to me seems to be to invest a small amount (whatever that means for you) and wait. If this thing works out, the gains will be huge, so a small investment is going to go a long way. If it just dies out, one way or another, I won't miss a small sum.

I'm talking about long timescales here. I Don't even know how long, I guess until Bitcoin is either over 1000 USD or just isn't used anymore, whichever the endgame turns out to be. Everything in between is just noise.

Some smart posts finally. I think casascius is a bit off base here, from an economic perspective Bitcoin is modeled like gold and when you look at gold and its value, you do not see utility as a major factor. Gold is valued at over $1000 per ounce and the utility value of gold is only a small part of this. Large majority of its value comes from its properties as a store of value, because it is a good balancing asset for investors and regular people value it for savings.

Believe me when I say this, theoretically there does not need to be any utility value for Bitcoin to reach a stable value of over $1000. It's a good question if Bitcoin can reach such trustworthiness and appreciation based only on its properties as a secure and convenient store of value, but it's theoretically possible.

Trying to estimate the real value of bitcoins based on utility alone is futile because it's very likely that the speculative value, or investment value, will always be significantly ahead of its utility value. It's not about short term gains in the end, it's about keeping money as bitcoins for years. As savings, as long term investment.

This is why I'm not shy in recommending the people I know to buy some bitcoins, even at $7+. If they are investing an amount they are comfortable with and really understand that's it's a risky investment, I can recommend it. Here I'm talking about long term investments of course, where the goal is to keep that money as bitcoins for many years. If the goal is something else, then I might not recommend it.

This.

(I really dislike the "This." meme btw, but I've grown accustomed to it. Is it unique to bitcointalk? I haven't seen it elsewhere).

i am a frequenter of messageboards... you all were using +1 and i used 'this' instead because it was what i was used to. i never post a 'this' post unless it's really emphatic anyway, so i always was like +1,000,000 or 'THIS'. sorry for diluting your meme sphere :P

That was my 500th post btw, whee. Not a bad way to cross over to the land of heroes.

Wow, I just noticed I'm at 508 (509 including this one). Sweet :)
Nice I just need to donate some to get that blue shine.
How much is that btw?

What blue shine?

America On-Line forever! Except that on AOL people would write "me too" under a block-quote of the entire previous post. The better educated AOL users would actually write "Me too."

Contrary to the rumor, no official AOL software provided the "Me too" button, that would produce an entire me-too-post using single click.

It is very interesting that seeming only the discussion forums in the English language have so many "me too"-posts with full block-quote.

Is English the preferred language of conformists? Or maybe people are who are multi-lingual are more likely to display their conformism in English, but more open to display non-conformism in the other languages?

This is not a meaningful statement in speculation. For a speculator, the difference between not buying and selling is only where he stood before he gets the opportunity to trade.

Other than that, I think your notion is right. With the chaos we just had, pushing the price back up doesn't seem the best idea. Again, it might end the opposite way, as higher earnings for fewer people increase the speed at which funds are depleted from the market. Inflow at least doesn't look large, so unless people know something I don't, I still smell overconfidence.

If you hold a million Bitcoins and want to get rich you will not crash the market time and time again that would be very unwise, like destroying your own wealth.

And the higher the price the less coins you will have to sell, so crashing the market and keeping the price down is stupid unless thats what you want.


Ofcourse I can imagine one of these early adopters need lots of money, they expected to get rich by now and took a huge loan they have to repay it.
Maybe he have been trying to postponed a sell for a year expecting price to be $50  and now really have to pay some bills no matter what.

Or someone trying to crash the market to create panic, by up as many as possible, than sell to himself to make the price rise.
But in that case, you can join that ride unless you panic to.

I would rather say, its not unwise to buy at this time if you can afford to lose your investment and if you do not panic as soon as the market crashes.

This.
(bitcointalk's ugly truth: Thising is the fastest way to herodom)

Of course not.  You would crash it only at times when you think it's inevitably going to crash outside your control anyway, so you're not really adding any risk that's not already there.


But it's smart if you think that someone else (or many other someone elses) is about to do the same thing and beat you to the punch, and you'd rather make sure you're first in line to capture the profit.


One-in-the-hand, two-in-the-bush logic also applies.  Someone who has worked at a regular job all his life is unexpectedly faced with the following decision: become a millionaire today for sure, or possibly become a multi-millionaire some time much later.  Many people will readily admit they would take the first because it is definite, especially in a high-volatility environment like this.



This is what I suspected when I saw a huge wall of asks appear.  Though I don't think it would be very feasible to sell to oneself to make the price rise - one would have to clear out all the asks on the order book in the process, something that can be accomplished simply by buying the usual way without selling to oneself.

The general assumption here seems to be that if you want to sell a lot of coins, it's best to do it slowly. I'm not sure that's true. Say you hold a few hundred thousand Btc and you want to cash out. How long will that take to do in drops. I think quite a while. Either you act very patiently and carry the risk of market fluctuation, or you sell your coins at a higher volume. In the latter case, you may find yourself setting a price ceiling, which is problematic because people are investing with an expectation of further growth. If price growth gets cut off due to your selling, you may trigger a downtrend, which you don't want since you want to cash out.

So what if you decide to spread your selling out, but not evenly, rather in clumps? Every now and then, you will trigger massive turmoil in the markets, but is that a bad thing for your profits? Maybe people will just look at your huge sales, shrug and write them off as anomalies, and growth continues. You wait a while and drop another load of coins, people treat it as an act of god and the carousel keeps spinning.

For the sake of bitcoin, I sincerely hope that people holding many tens of thousand to hundreds of thousand coins cash out over the next year or so, and that they do so in a way that distributes their coins among a large number of people.  Let's get this over with.  The project isn't going to be able to move along and gain the level of trust it needs until the risk of enormous dumps is significantly reduced.

Yes, and that will be the ability to do a Stop Loss Order on Mt Gox....

I don't think there is any hoping required. This happens naturally because hoarders are people and they have different mindsets. Some will be happy to sell some or all of their coins when the price has increased 100%, some will wait for 1000% and some for 10000% or in some cases even 100000%. Some of them simply invest for 2 years and exit. Some will never sell but will use those coins gradually once they become more usable.

One thing is for sure, only a very small minority of users will be able to resist the temptation of not selling coins at some point while we go towards the price of $1000, for example. The distribution of coins is very likely to get better and better as time goes on. But even if this issue is reduced, it's never removed. As with any other currency, there are always big players who can affect the price. Even now someone with millions of dollars could buy a lot of coins at any time and if that person happened to be one of the so called super-hoarders, his actions could have a significant effect in the long term future.

I also think that the people who actually have the patience to keep money in bitcoins for years without worrying about the short term volatility, they are smart people. It's very unlikely that these people would suddenly just sell everything in year 2020 and crash the market, they would know better. It's the speculative types we need to worry about just like we've seen with Bitcoinica recently. But their effect will undoubtedly get smaller through time once the market cap is larger and there are more large competing speculators.

I am thinking of buying more coins.

This is what it involves...

Sell some shares... Wait three working days for money to be available for withdraw from trading site

Withdraw money to bank account... Wait three working days for money to be available in bank account

Move money to Bitcoin trading account... Wait three working days for money to clear

Buy some Bitcoin... umm, depends on how good a price I want to hold out for how long this stage will take

Send Bitcoins anywhere; a different trading account or the personal wallet of any bitcoin user... one hour

As for the price stability, that will come once the financial infrastructure exists, things like widely used and traded options. Once you can make easy money from pure volatility, a lot of it will be traded away.

What I'm suggesting is that the price isn't go to go anywhere close to $1000, or even $50 for that matter, until this threat is significantly reduced and trust is much higher.

I am liquidating some of my bullion silver directly into BTC or Gox Redeem Codes.  (see my forum signature)

Love the liquidity of this stuff...