Price Manipulation

[Jason]

OTOH why assume malice?

Historical precedent -- at least here in the U.S.  Look at what happened to other e-currencies that were based in whole or in part in the U.S. in the recent past.  E-gold is a good example.  The government mislead the owners into believing they were operating lawfully, then arrested the founders, seized a good portion of the assets by claiming they were involved in illegal activities, and forced customers to prove their identities before allowing them to recover any assets.  E-gold at it's peak had about US$120 million on deposits -- about 36% of the current Bitcoin market cap.  Fortunately Bitcoin is a harder target, but I don't doubt that they will act against it sooner or later.

this is where it should be, where the price relates to actual mining costs and not speculation.

So you're saying that Bitcoin's value should only be related to actual mining costs and not the value it brings to the market as a medium of exchange unlike anything else currently available?

[franky1]

this is where it should be, where the price relates to actual mining costs and not speculation.

So you're saying that Bitcoin's value should only be related to actual mining costs and not the value it brings to the market as a medium of exchange unlike anything else currently available?

all im saying is that the spot price should be based on mining costs plus a fair value ontop for profit based on value(supply and demand)
value is different then speculation/manipulation. i agree that everyone should make profit in different ways. but a sudden 300% spike in price (out of the blue) where there's no correlation to why it increased. is a bubble that always bursts.
that is not a valued price, that is pure manipulation/speculation.

so if you see a spike in price on the charts and there is no reason you can think of to explain it rationally. from the mindset of someone that is not the profiteer. then you know its a speculated spike for short term profit.

[blablahblah]

...

C) this is where people started to shift their perceptions away from what they could spend it on, but more to do with how much it cost to make. and so the remaining miners held the price at a certain level and slowly the price began to rise again

D) even through the next media blitz of bad press (the pirate saga) miners still held strong and helped the price to not collapse but to be just a little blip.

...

Price causes difficulty, not the other way around.
Regardless of whether miners sell or hang on to their coins, it's equivalent to them simply buying the coins into existence "at cost". The feedback loop is such that basically:
P causes C + W
where:
P = whatever the price happens to be, because of Demand which has nothing to do with miners.
C = mining cost.
W = minimum wage they're willing to tolerate in order to keep mining.

double face palm.
...

...at you (and about a thousand other miners) not understanding supply and demand?

[Jason]

all im saying is that the spot price should be based on mining costs plus a fair value ontop for profit based on value(supply and demand)
value is different then speculation/manipulation. i agree that everyone should make profit in different ways. but a sudden 300% spike in price (out of the blue) where there's no correlation to why it increased. is a bubble that always bursts.
that is not a valued price, that is pure manipulation/speculation.

so if you see a spike in price on the charts and there is no reason you can think of to explain it rationally. from the mindset of someone that is not the profiteer. then you know its a speculated spike for short term profit.

Can you extend this argument to cover the value of bitcoin after the last block has been mined?  Should Bitcoin's value at that time be based solely on transaction fees?

I think there will be a strong correlation between mining costs and bitcoin value in the early years, but I expect this to decrease over time -- with mining profitability eventually falling to the point where it is unprofitable for all but a few.  This is speculation on my part, but it is based on modeling Bitcoin's value with several unrelated components and then extrapolating and comparing them with one another.

[Driice]

Or maybe people are finally realizing a double in price over a month is insane...

Who am I kidding, not like Bitcoin will every have a bubble, right?

[franky1]

all im saying is that the spot price should be based on mining costs plus a fair value ontop for profit based on value(supply and demand)
value is different then speculation/manipulation. i agree that everyone should make profit in different ways. but a sudden 300% spike in price (out of the blue) where there's no correlation to why it increased. is a bubble that always bursts.
that is not a valued price, that is pure manipulation/speculation.

so if you see a spike in price on the charts and there is no reason you can think of to explain it rationally. from the mindset of someone that is not the profiteer. then you know its a speculated spike for short term profit.

Can you extend this argument to cover the value of bitcoin after the last block has been mined?  Should Bitcoin's value at that time be based solely on transaction fees?

I think there will be a strong correlation between mining costs and bitcoin value in the early years, but I expect this to decrease over time -- with mining profitability eventually falling to the point where it is unprofitable for all but a few.  This is speculation on my part, but it is based on modeling Bitcoin's value with several unrelated components and then extrapolating and comparing them with one another.

its good to see that some people like yourself rely on indicators to base the price. so keep it up. unlike others that use high school level terms such as 'supply and demand' (only 2 indicators) and have never put anything into a chart. to understand what causes supply and what causes demand to have more then just 2 indicators. they don't look below the surface. i have several indicators. the graph on the first page of this thread was a very very simplified version to point out one point.

looking at the result of reaching the 21 millionth coin...
i was going to write a long reply to your answer. but to answer your question ill just leave you with this question
imagine a country that stopped printing money.. what would happen eventually.

[Phinnaeus Gage]

imagine a country that stopped printing money.. what would happen eventually.

Not sure how that would have been answered only a couple short years ago, but today, forward, there's Bitcoin to rely upon.

@OP, in re. the $100K pump and dump example. At approximately today's exchange rate, $100K USD is what's being mined daily. And what I've recently read, it seems CoinBase is having a difficult time gettin' their hands on more bitcoins to satisfy their client base.

[Jason]

its good to see that some people like yourself rely on indicators to base the price. so keep it up. unlike others that use high school level terms such as 'supply and demand' (only 2 indicators) and have never put anything into a chart. to understand what causes supply and what causes demand. they don't look below the surface.

i was going to write a long reply to your answer. but to answer your question ill just leave you with this question
imagine a country that stopped printing money.. what would happen eventually.

I think charts are a very useful tool insofar as they facilitate data analysis.  But as far as candlesticks, fibonacci retracements and other pseudo-scientific charting methods, I'm not a fan.

My intent in asking upon what the value of Bitcoin would be based after the last block was mined was simply to point out that it is inevitable that the price of Bitcoin become detached from the cost of mining sooner or later.  The scarcity of Bitcoins, as you allude to in your question above, will certainly be a factor.  So long as the Bitcoin economy continues to grow, so shall the price of Bitcoin.

Whereas you may see the price of Bitcoin being based on the cost of mining, I actually see it the other way around.  I see the price of Bitcoin generating demand for mining.  The greater the value placed on Bitcoin by the markets (through the process of supply and demand), the more profitable mining becomes, and thus we see the difficulty level rise.  According to this model, after the last Bitcoin is mined, we should see the value fluctuate primarily in response to the demand.

If I am correct, then the network hash power will actually lag the price of Bitcoin somewhat, rather than lead it (since it takes miners time to respond to the changing value).  It would be an interesting exercise to see if this hypothesis is supported by the data.