price about to go UP - reason all the overpriced asics

[pand70]

It's BitPays venture capital money used to "not sell" the Bitcoins which were payment for the asics.

That sounds interesting.Care to explain?

[superduh]

it is starting

[Rival]

It still amazes me that most people involved in bitcoin are not cognizant of the ramifications of a deflationary currency. In a deflationary currency the best decision when deciding to purchase anything is usually to decline to make the purchase. That is because whatever you intend to purchase will cost less next week than it does today, the exact opposite of an inflationary currency. The best strategy is almost always to be a hoarder.

If one assumes adoption of bitcoins will continue to increase, then the need for coins for transactions will increase. This is a constant price pressure.

Miners are not generally idiots. They must know at an instinctive level that a coin mined today will be worth more tomorrow.  It costs nothing to sit on a wallet full of coins, in fact, it is generally profitable to do so. In most cases there is no pressure for them to sell when they see daily increases in BTC value. "Why sell at $160 today when it will probably be $200 next month?" They all ask themselves this question every single day. Rather than sell their coins for more mining gear, they are far more likely to scrape together more fiat for purchases and hoard their appreciating bitcoins. This is a rational path for a rational actor.

The cost of ASIC hardware in part will always be a component of defining the price of bitcoins. "How much must I spend on hardware today to get 1 btc over the life of the hardware?" This question has as much to do with the price of btc as the need for transaction coins does. The difficulty level increases as factories churn out ASICs by the thousands will ensure that the answer to that question is "More than yesterday".

If we continue on the current path, the days of getting any daily or weekly return, even from a pool will be numbered. ASIC miners will be more akin to a lottery ticket model. Maybe your pool finds a block this week. Maybe it doesn't. Maybe you get lucky and get a few satoshis. Probably though, you won't. People will still buy ASIC miners, each Ghs a ticket for a possible payoff. Some folks will only buy one ticket. Others will buy thousands. In this environment, a single bitcoin could be worth tens of thousands of dollars. So in the end, i think the discussion as to whether miners will hoard or spend their coins is a transitory question that in another year may not even matter. Because most miners, like most lottery players, will be receiving essentially nothing for their investments. The winners will not be the clever, but rather the lucky.

[Carlton Banks]

It still amazes me that most people involved in bitcoin are not cognizant of the ramifications of a deflationary currency. In a deflationary currency the best decision when deciding to purchase anything is usually to decline to make the purchase. That is because whatever you intend to purchase will cost less next week than it does today, the exact opposite of an inflationary currency. The best strategy is almost always to be a hoarder.

It still amazes me that people over-sell the hoarding aspect of deflationary currencies. What you guys forget is that there's a difference between minimum spending and zero spending, and you consistently present an argument that doesn't take proper account of the difference between the two. ASIC miners are never going to be a neccesary big ticket purchase, but what about a car? Or the deposit for a home loan? Life insurance? Medical procedures? Emmigration fund? The hoard will take a backseat when it costs you a more important opportunity.

[Rival]

It still amazes me that most people involved in bitcoin are not cognizant of the ramifications of a deflationary currency. In a deflationary currency the best decision when deciding to purchase anything is usually to decline to make the purchase. That is because whatever you intend to purchase will cost less next week than it does today, the exact opposite of an inflationary currency. The best strategy is almost always to be a hoarder.

It still amazes me that people over-sell the hoarding aspect of deflationary currencies. What you guys forget is that there's a difference between minimum spending and zero spending, and you consistently present an argument that doesn't take proper account of the difference between the two. ASIC miners are never going to be a neccesary big ticket purchase, but what about a car? Or the deposit for a home loan? Life insurance? Medical procedures? Emmigration fund? The hoard will take a backseat when it costs you a more important opportunity.

No one said there would be no spending. Just no spending of bitcoins. see http://en.wikipedia.org/wiki/Gresham's_law

[notme]

It still amazes me that most people involved in bitcoin are not cognizant of the ramifications of a deflationary currency. In a deflationary currency the best decision when deciding to purchase anything is usually to decline to make the purchase. That is because whatever you intend to purchase will cost less next week than it does today, the exact opposite of an inflationary currency. The best strategy is almost always to be a hoarder.

It still amazes me that people over-sell the hoarding aspect of deflationary currencies. What you guys forget is that there's a difference between minimum spending and zero spending, and you consistently present an argument that doesn't take proper account of the difference between the two. ASIC miners are never going to be a neccesary big ticket purchase, but what about a car? Or the deposit for a home loan? Life insurance? Medical procedures? Emmigration fund? The hoard will take a backseat when it costs you a more important opportunity.

No one said there would be no spending. Just no spending of bitcoins. see http://en.wikipedia.org/wiki/Gresham's_law

Gresham's law would only apply if someone were artificially undervaluing bitcoin.

[superduh]

it's starting. look at the amount of miners complaining about their gear - it's exponentially going up.

[windjc]

It still amazes me that most people involved in bitcoin are not cognizant of the ramifications of a deflationary currency. In a deflationary currency the best decision when deciding to purchase anything is usually to decline to make the purchase. That is because whatever you intend to purchase will cost less next week than it does today, the exact opposite of an inflationary currency. The best strategy is almost always to be a hoarder.

It still amazes me that people over-sell the hoarding aspect of deflationary currencies. What you guys forget is that there's a difference between minimum spending and zero spending, and you consistently present an argument that doesn't take proper account of the difference between the two. ASIC miners are never going to be a neccesary big ticket purchase, but what about a car? Or the deposit for a home loan? Life insurance? Medical procedures? Emmigration fund? The hoard will take a backseat when it costs you a more important opportunity.

You assume everyone will hoard. This is purely an assumption.

Everyone has a price. Some people sold at $1, some at $10, some at $100. Some people will sell at $200, some at $500, some at $1000. Some will sell at $2000, $5000 and up. As the price rises, the probability and perception of "expotential gains" decreases. At some point it is perceived to be better to spend bitcoin to gain the things you desire now over hoarding it for potential % increases in the future.

It is a process.

However, your deflationary argument is valid. But bitcoin as a store of value has always had more potential than as a currency.

To assume it will become a "major" currency is far more of a reach than assuming it will become  a "major" store of wealth.