what is the underlying analysis? (seriously)

admittedly, you can just as well draw another conclusion from the same numbers. you can agree with them, but still think that BTC will be even more successful than outlined here. then it isnt too high for you.

I was surprised what an extremely optimistic scenario 20$/BTC (mid-term) implies.

how do you make sure that node doesnt leave out some transaction to misrepresent an  address' balance?

besides, I think with time you have to assume that most clients are lightweight, if lightweight means not downloading gigabytes of blocks, so the node itself doesnt necessarily have an answer.

I asked you to ignore this thread, Mr. I-sell-bitcoin-shirts-for-euros, didn't I?

yes my mistake by saying "end of". the numbers are still correct.
I calculated with 1,5 years of 50*6*24*365 coins and 3,5 years of 25*6*24*365 coins.


I used the (conservative) ratio of money supply vs. GDP (0,3 : 1) to estimate what size the bitcoin economy would have to be to sustain this price.
the US economy has a ratio of (0,28 : 1) if you use M1 (which is questionable because it is a wider definition of money supply. but it's also in favor of BTC

if I'm not mistaken, that's factored into my numbers. that's at the end of 2013, right?

actually, from speed-reading alone, I think we are on the same side.
they postulate that a substantial part of international trade will move their "demand from money circulation" to bitcoin and that causes prices to rise.

no argument there. if you are reasonably sure that happens, buy buy buy.
I doubt the majority of bitcoin "investors" have that view.

I've addressed that. if that's correct it makes it an even worse bubble.


ok, if you think 170 million $ will come in (or a lot more in case you're speculating on a rising price), you are set.
I don't think very many people realize though what kind of numbers are required to sustain this price.


I don't understand this comparison. people spend money on games.
they expect returns on investments.


fun fact: the bitcoin economy will be as big as antigua and barbuda in 5 years ;-)

http://forum.bitcoin.org/index.php?topic=21702.0

summarized my point there...so I don't (have to) spam different threads with the same stuff

I think current prices are highly speculative, and even if bitcoins will be a huge success story cannot be sustained for the next few years.

Here's why, counter-arguments welcome. If you think I'm just trolling or trying to buy cheap, simply ignore this thread please.

I'll assume a price of 20$/BTC from here on, even though the top was at 30.

1.

2.6 million coins a year are mined until 2013, 1.3 million coins a year after that.
at 20$/BTC, that's equivalent to more than 50 million dollars in one year, or approx. 170 million dollars within 5 years, that have to flow into the system to sustain this price.

i.e. people have to buy BTCs for 170 million dollars!
what are the circumstances to make that happen?

(that's of course only if miners sell all of their gains, but if miners keep some of their coins it only means they expect to sell it for even more in the future!)

2.

bitcoin can draw its value only from demand from circulation, and temporarily from speculation.

money supply definitions are very diverse and incomparable, but just to give you an idea: M1 money supply of the eurozone is about 28% of annual GDP, M1 money supply of the US about 14% of GDP.

a bitcoin economy with a money supply of even 30% annual GDP would be valued at 21 million BTC, or 430 million $ a year.
what do you think the bitcoin economy amounts to a year? 5 figures? 6 figures?
what demand for bitcoins do you think that creates?

3.

in addition to that, by the above numbers and 6.5 million BTC supply now, the BTC money supply grows by 40% within a year, or by 18% a year over the next 5 years.

that's huge inflation, unless there is ADDITIONAL demand from circulation and/or speculation.

a bitcoin economy valued at 430 million dollars a year now at 20$/BTC is at 600 million $ in a year, or 1 BILLION $ a year in 5 years.

==>

20$/BTC is HIGHLY speculative.
maybe the bitcoin economy explodes and these prices are sustained, but to think that the price even rises substantially would mean the scenario above would have to be outperformed, or demand from speculation increase even more so, for years to come.


edit: corrections. I miscalculated the GDP numbers.

80 million dollar a year added, not traded.

I'd consider 30$ the more ridiculous number out of the two.

there is no economy to speak of already, and the money supply grows by another 40% within the year alone.
the 2,6 million coins that are mined in a year equal 80 million dollars at 30$.

that means 80 million dollars have to come in to SUSTAIN this price!
(or miners don't sell as many, but that only means they expect to sell it for even more in the future).

I like the bitcoin concept and all this specuation doesn't make it worse, but I'm sorry, this is insanity.

I'd consider that not a risk for bitcoins, but the ultimate goal.
competing currencies.

you can agree or disagree with that, it doesn't say anything about bitcoin.
specifically, whether bitcoin is the facebook of e-currencies, or the myspace of e-currencies.

you don't have to trust anyone, all you really need is a liquid market, and quick automatic liquidation of positions.
one exchange already announced to implement it. at high rates though...and they dont have liquidity yet so you probably have to expect very high margin rates.

the certitude on this board that bitcoin will be adopted as a form of payment, let alone replace gold, or even replace ANYTHING, is bubble-esque.

I see. but I don't think this is unsolveable.

a) I'm not entirely sure how this works, but if you can verify blocks back from block nr 5->4->3->2->1->genesis, it would be possible to verify 50000 -> 40000 -> 30000 -> 20000 -> 10000 -> genesis by adding another hash, wouldn't it? downloading 5 blocks vs. 50000.

b) if I'm missing something under a), the client could at least hardcode the hash of the latest "balance of accounts" block at the time the client was published.
that way, a new user doesn't have to download gigabytes of data on first use in the future but still have a confirmed balance.
the client has to be trusted anyway.


I've been downloading the block chain for 2 hours now  and I'm halfway through. I guess my network somehow throttles p2p.

it is confirmed by other nodes the same way transaction blocks are. aka a miner would have to generate 6 (or more) blocks in a row to insert his own balance block, which is highly unlikely.

hi everyone,

I'm probably wrong and/or somebody already thought of this since I'm rather new here, but let me ask you a question:

downloading the blockchain already takes a while and is a couple of 100 MB.
why is there no "balance of accounts" block every X blocks?

let's say one in 10000 blocks has to be a large block that contains the balance of each address.
a balance block is confirmed by other nodes the same way transaction blocks are, so I don't see a way this can be cheated. clients only have to download all blocks since the last balance block instead of the entire block chain in order to be "fully operational". of course the client couldn't display the entire transaction history, but since blocks have a a date/time I don't see a problem here.
"Opening Balance as of xx/yy/zzzz (x Confirmations)".

what am I missing?

MtGox could store their coins there for additional security

whatever use this serves....I don't think so. addresses are hashes of public keys.
noone knows whether a private key to that public key exists.