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Author Topic: Big inflation opportunity  (Read 6600 times)
S3052
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September 28, 2010, 09:21:17 PM
 #41

I agree that investing is not about rising prices. it is relative value that counts.

But if an investment does not appreciate in value vs. a reasonable benchmark, it is a stupid investment.

Examples

1. You live in the US and the dollar value falls faster vs. other currencies than the BTC/USD rate = good investment vs. USD.
2. If we have a deflation, BTC prices are flat, then you can buy more with the same amount of BTC = good investment.

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Always do your own due diligence & consult your financial advisor. Never invest unless you can afford to lose your entire investment.

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S3052
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September 28, 2010, 09:29:13 PM
 #42

Difficulty has just increased. All other things being equal, the BTC / USD rate should rise.

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Babylon
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September 28, 2010, 11:05:08 PM
 #43

He won't sell you all his coins but will sell with 10x lower rate than usual. No one then will sell their bitcoins because he will ALWAYS have the better (cheaper) rate. No one will have a chance to sell a bitcoin for MONTHS. People will start panic and sell at whatever rate and then quit bitcoin forever. That's what I'm talking about.

This would lower the rate for bitcoins dramatically.  It wouldn't ruin anything.  Bitcoins used to be that low, and they weren't ruined.

Whoever this person is with the huge quantities of bitcoins would be taking a loss on the electricity he had invested to generate the bitcoins, unless he played it smart and only sold them for slightly less than the market, in which case it would not be the dramatic crash you are concerned with.  Even if he did dramatically crash bitcoins this would allow other people to buy a lot of coins very cheap and he would then have run out (depending on how cheap he makes them) At which point the coins would have a chance to rally and start back up again.

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September 29, 2010, 07:20:55 AM
 #44

Do you mean if someone tries to buy a LOT btcs prices will rise: Clearly: YES
Do you mean if someone will sell a whole LOT btc prices will fall: YES

That's obvious. But I mean that someone can beat all bids with lower value and completely prevent everybody from exchanging BTC to USD or any other currency. He can drive the rate as he wants and others are left with two possibilities: either they sell with even less price (losing LOTS of money because they either generated that BTC spending time and power or they bought them) or leaving them as is and hoping for the rate rising. Both variants are bad. And he can press the market very long just watching how many bitcoins asked and bidding them with 10x lower price so everybody will play by his rules.
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September 29, 2010, 07:42:14 AM
 #45

Do you mean if someone tries to buy a LOT btcs prices will rise: Clearly: YES
Do you mean if someone will sell a whole LOT btc prices will fall: YES

That's obvious. But I mean that someone can beat all bids with lower value and completely prevent everybody from exchanging BTC to USD or any other currency. He can drive the rate as he wants and others are left with two possibilities: either they sell with even less price (losing LOTS of money because they either generated that BTC spending time and power or they bought them) or leaving them as is and hoping for the rate rising. Both variants are bad. And he can press the market very long just watching how many bitcoins asked and bidding them with 10x lower price so everybody will play by his rules.

This is strange language to use. No one will have to "play by his rules" if they want to pay the old price for BTC they are welcome to. If they want to get a better deal they can buy from him. If they have BTC and want to sell them and assumed they could always sell them above the price where they bought or generated them, they simply made a mistake.

If someone tries to sell BTC at .01 and you want to pay .06, just gimme a PM.

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September 29, 2010, 09:13:11 AM
 #46

Quote
taking a loss on the electricity he had invested to generate the bitcoins,

His marginal cost of generating bitcoins is probably close to zero. Maybe he owns a windmill and just pumps the electricity peaks, which would have gone to waste otherwise, into generating bitcoins. Same for the unused CPU cycles of his server farm.

This doesn't change the fact that selling bitcoins way below the market price would create opportunity costs for him. No rational person would sell a thing for less than people are people are prepared to pay it, even if they found that thing on the street.

Of course he might not be a rational person, but the majority of buyers will be.
 

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eurekafag
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September 29, 2010, 09:36:13 AM
 #47

That's all right for some material goods like food or electronics. If I see that something is sold for 10x less price than usual I'll doubt buying it. There should be a catch somewhere. But the money is always money, it's impossible to falsify bitcoins and if you bought them you own the real coins without any catches. I also doubt anybody will buy BTC for $0.06 if you can buy the same (I mean valid) coin on the same market for $0.006. There is NO reason to pay more if you get the good real bitcoin.

Again: we're not talking about the profit of that owner. Maybe he have no plans of using BTC at all, he just generated a bunch of them because he has lots of energy and processing power and wants to crush the market. He can do it and everybody will help him buying coins for that little. From him, not from others who want to sell for regular price. It's just psychology. How long will YOU hold bitcoins if their rate would go close to zero? Won't you sell it for any price just to get at least some money back? You may own 1000 BTC now and intend to buy some goods or services for them. But tomorrow they will cost like 10 BTC now and suddenly you can't buy anything. Will you wait for the rate grow? That guy have lots of BTC and can sell them many months.
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September 29, 2010, 10:04:37 AM
 #48

I totally agree with this fact mentioned by you.

Psychology (http://www.PsychologyAnswers.net)
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September 29, 2010, 10:31:14 AM
 #49

That's all right for some material goods like food or electronics. If I see that something is sold for 10x less price than usual I'll doubt buying it. There should be a catch somewhere. But the money is always money, it's impossible to falsify bitcoins and if you bought them you own the real coins without any catches. I also doubt anybody will buy BTC for $0.06 if you can buy the same (I mean valid) coin on the same market for $0.006. There is NO reason to pay more if you get the good real bitcoin.

Again: we're not talking about the profit of that owner. Maybe he have no plans of using BTC at all, he just generated a bunch of them because he has lots of energy and processing power and wants to crush the market. He can do it and everybody will help him buying coins for that little. From him, not from others who want to sell for regular price. It's just psychology. How long will YOU hold bitcoins if their rate would go close to zero? Won't you sell it for any price just to get at least some money back? You may own 1000 BTC now and intend to buy some goods or services for them. But tomorrow they will cost like 10 BTC now and suddenly you can't buy anything. Will you wait for the rate grow? That guy have lots of BTC and can sell them many months.

Do you often think about whether some idiot you don't know will buy a lot of something and sell it for less? Or make it for one a high price and sell it low?

Sure someone could do it, but it would help people who want bitcoins and hurt himself. It's just charity, to me, and others.

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eurekafag
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September 29, 2010, 10:53:36 AM
 #50

The fact is he didn't buy it. He generated it. And maybe that was in early stage when difficulty was low so it was easy to generate. His money isn't backed so he may sell it for whatever he wants. What if government pay him for market dumping? There were many concerns about governments attitude to bitcoin if (when) it become relatively widely used. So they can just pay one man to break the entire system. I mean it's bad that anybody with enough resources may pretend to be the central authority and affect the market greatly. Of course, he can't generate as much as he wants because of system restraints but he can generate much enough to have the control stock (not 51% I hope but close to it).
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September 29, 2010, 11:18:51 AM
 #51

The fact is he didn't buy it. He generated it. And maybe that was in early stage when difficulty was low so it was easy to generate. His money isn't backed so he may sell it for whatever he wants. What if government pay him for market dumping? There were many concerns about governments attitude to bitcoin if (when) it become relatively widely used. So they can just pay one man to break the entire system. I mean it's bad that anybody with enough resources may pretend to be the central authority and affect the market greatly. Of course, he can't generate as much as he wants because of system restraints but he can generate much enough to have the control stock (not 51% I hope but close to it).

At what stage will you stop being scared of something that may not happen?

Ive got some notes in my wallet that aren't backed by anything...

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September 29, 2010, 12:03:32 PM
 #52

I've just asked for opinions and possibilities. I myself bought 250 BTC today and don't plan to stop. But we must not be up in the clouds regarding bitcoin. It has its own threats and dangers which we should be aware of. All in all it's a question of trust.
Anonymous
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September 29, 2010, 12:16:19 PM
 #53

My wallet is backed up on a server...so essentially bitcoin is in the cloud for me. 

I think everyone is well aware of the threats and dangers. I just dont intend to give myself an ulcer thinking about them constantly. It probably helps that I cycle coins constantly back through the system rather than store them like a squirrel for winter Smiley   
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