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June 19, 2011, 07:04:04 PM |
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Hi,
I guess this question should be Economics section but as a newbie (a really fresh one) I can't post there. Possibly the moderator could put it there ...
I'm watching this bitcoin story for about 2 weeks now after reading a reference to it in the NewScientist. I'd like to set up my mining rig but can't help being worried by the BTC exchange rates (I could cope with the statistics of generating bitcoins ... that aspect seems somehow more tangible / acceptable).
What is a bit worrying is the way the value is determined : I understand (I think) that the places where bitcoins are traded for (say for sake of a better choice of words) a hard currency use an offer demand strategy and match requests for BTC with offers.
But there is hardly any synchronization between various countries so that so that one could by bitcoins real cheap in one place and sell them with appreciable profit in another place. The difference between countries being mostly driven by the size of the bitcoin economy in each country (i.e. local offer and demand) which develop at different rates.
As such, it seems to me that this can drive strong fluctuations on the bitcoin value (but I'm not an economist or anything the like), driven by opportunity and speculation, which undermine one's trust in the BTC.
I wonder if there should be an effort of quoting the BTC against a weighted average basket of "hard currencies" (say WAC for Weighted Averaged Currency) so that such speculation would be much more visible / traceable to bitcoin-community and hence would discourage speculators. In doing so one would obtain a more steady value and this would encourage its use as a way of payment worldwide. It would also allow miners to plan investments in their mining operations a bit more accurately.
Of course it would still be left up to the "market" to find the BTC's true value compared to this WAC. Whereas the value of the local hard currency wrt. the WAC is public information not (yet) driven by the bitcoin economy.
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