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Author Topic: Current Price Stability due to influx of new miners? Or...  (Read 2400 times)
niemivh
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June 07, 2011, 03:43:57 PM
 #1

Is the Current Price Stability due to influx of new miners?  Or uncertainty of government involvement?


I'll keep my politics out of your economics if you keep your economics out of my politics.

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rezin777
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June 07, 2011, 03:45:27 PM
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How do either of those result in price stability?
nuggets4all
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June 07, 2011, 04:04:09 PM
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How do either of those result in price stability?

LOL! Somebody get niemivh a copy of "Economics in One Lesson."

Incidentally, its a great primer for anyone who is cognizant of their own deficiency of basic economic understanding. It's available for free on mises.org

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chiropteran
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June 07, 2011, 04:14:40 PM
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I think the stability is simply due to $19-$20 being a good place for some of the early adopters (read: speculators) to sell.  "Well, if these ever reach $20 I can sell half of them and make a fortune!"  Upward price growth is thus halted until the surplus BTC are sold in this price range.  My guess is that when it finally does surpass $20 it'll jump up to $25~ fairly quickly, being the next round number some speculators might be waiting for.

herbertfilby
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June 07, 2011, 04:32:16 PM
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Plus, at this rate, miners are getting about the same amount as their hashrate (at the current difficulty)

600 mh/s ~= $600/month
chiropteran
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June 07, 2011, 04:34:17 PM
 #6

Plus, at this rate, miners are getting about the same amount as their hashrate (at the current difficulty)

600 mh/s ~= $600/month

That is convenient.  Please artificially manipulate the market so this is always true, it makes calculating hardware returns so much easier.

niemivh
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June 07, 2011, 04:36:24 PM
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How do either of those result in price stability?

LOL! Somebody get niemivh a copy of "Economics in One Lesson."

Incidentally, its a great primer for anyone who is cognizant of their own deficiency of basic economic understanding. It's available for free on mises.org

Another "Austrian", how quaint.  I don't need a '101 lesson' in economics, thanks.  I've read all the classics and have accurately predicted many of the past big swings in the market by knowing who to trust and where to get my information.  In lieu of assuming I have no idea what I'm talking about (not a unfair assumption, we are on a internet forum and ignoramuses abound) I'll elaborate what I mean with what I thought should be obvious:

1)  The influx of new miners DOES create a short-term inflation of the supply of bitcoins to a degree.  This infusion of new bitcoins could be equal to the inflows of new USD keeping the price stable.  Or it could be a continued sell off of 'the Big BTC holders'.  Which one?  I don't know and that's why I'm asking.  Maybe it's something else?

2)  With Gavin visiting the CIA and Chuck Schumer Senator from Wall St. taking interest in BTC this creates fear in the market as the US Government could do severe damage to the Bitcoin network.  Is this apprehension a cause of potential buyers holding off?  Or are they holding off for the 'bubble to burst'?  I don't know, that's why I'm asking.

My question is really more of a survey: what do people think is the main cause of the current, albeit not that long standing, price stability.

I'll keep my politics out of your economics if you keep your economics out of my politics.

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TraderTimm
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June 07, 2011, 04:37:41 PM
 #8

That is convenient.  Please artificially manipulate the market so this is always true, it makes calculating hardware returns so much easier.

You certainly don't let up on that grindstone, do you?

Please don't tell me you believe in that redistribution of wealth nonsense.

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rezin777
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June 07, 2011, 04:44:22 PM
 #9

1)  The influx of new miners DOES create a short-term inflation of the supply of bitcoins to a degree.  This infusion of new bitcoins could be equal to the inflows of new USD keeping the price stable.  Or it could be a continued sell off of 'the Big BTC holders'.  Which one?  I don't know and that's why I'm asking.  Maybe it's something else?

I think this would be impossible to answer, even with a thorough audit of the block chain.

2)  With Gavin visiting the CIA and Chuck Schumer Senator from Wall St. taking interest in BTC this creates fear in the market as the US Government could do severe damage to the Bitcoin network.  Is this apprehension a cause of potential buyers holding off?  Or are they holding off for the 'bubble to burst'?  I don't know, that's why I'm asking.

Again, impossible to answer.

I guess you are just asking us to speculate on why the price has remained relatively stable for the last few days? I would say that it's fairly normal behavior. I'm kind of surprised we aren't seeing a bit of a decline as we normally do after such large increases.
niemivh
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June 07, 2011, 04:48:54 PM
 #10

Plus, at this rate, miners are getting about the same amount as their hashrate (at the current difficulty)

600 mh/s ~= $600/month

I think that the number of new people exposed to BTC decided to mine instead of buy due to the fact that it is a less risky investment (you get to keep the hardware and end up with a great gaming rig) and it is still profitable even with the huge increase in miners at existing market prices.


I'll keep my politics out of your economics if you keep your economics out of my politics.

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chiropteran
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June 07, 2011, 04:53:07 PM
 #11

That is convenient.  Please artificially manipulate the market so this is always true, it makes calculating hardware returns so much easier.

You certainly don't let up on that grindstone, do you?

Please don't tell me you believe in that redistribution of wealth nonsense.

It was just a joke, although it really would be convenient Tongue

I wish I could disbelieve the mandatory redistribution of wealth nonsense, but the taxes coming out of my paycheck every month are very believable.  It comes in all forms.

nuggets4all
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June 07, 2011, 05:00:47 PM
 #12

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The influx of new miners DOES create a short-term inflation of the supply of bitcoins to a degree. This infusion of new bitcoins could be equal to the inflows of new USD keeping the price stable.

Somebody please correct me if I'm wrong, but isn't the rate of inflation predictable and ever-decreasing? Isn't that the point of raising the difficulty as more computing power is dedicated to the network? Isn't it also true that if all miners used just 1% of of their present computing power the same number of BTC would be mined? I don't think the rate of inflation is sufficient to stabilize the price given the amount of press and new adopters the market is receiving.

Some people may be choosing a holding pattern in response to Schumer's letter, but I think a good many of the sort of folks that Bitcoin appeals to enjoy giving the finger to authoritarians. One of the principle benefits of Bitcoin is that it poses a threat to currency monopolies and so we as a community are best served by not cowering in fear of a politician and continuing to put our money where our mouths are. You may have a point here, but I haven't personally heard anyone say they're gonna shy away from this revolution because some corrupt politician wrote a letter.

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nuggets4all
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June 07, 2011, 05:08:18 PM
 #13

RE: The CIA's interest.

This ought to be viewed as a boon to Bitcoin. Bitcoin would serve the CIA's interests perfectly; they can easily conduct cross border transactions, and fund their operations in a stealth manner. Bitcoin poses much less risk to them than their present system of shell companies and laundering through traditional banks. Overtly, the gov't may take a stance against Bitcoin, but on a covert level you best believe they're welcoming this useful tool.

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niemivh
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June 07, 2011, 05:20:37 PM
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RE: The CIA's interest.

This ought to be viewed as a boon to Bitcoin. Bitcoin would serve the CIA's interests perfectly; they can easily conduct cross border transactions, and fund their operations in a stealth manner. Bitcoin poses much less risk to them than their present system of shell companies and laundering through traditional banks. Overtly, the gov't may take a stance against Bitcoin, but on a covert level you best believe they're welcoming this useful tool.

I don't think the CIA needs any help laundering money.  They do it all the time.  The CIA traffics drugs, CIA rebuilds opium farming in Afghanistan, Wachovia Bank launders drugs money, the UN traffics child sex slaves.  This is all public record; yet, nobody goes to jail, nobody is held accountable. 

Don't want to start a big political conversation but the disadvantages of Bitcoin to the Establishment seem to greatly outweigh any potential benefits.  We live on something resembling total lawlessness for the elite of our country, why would they need to use Bitcoin when they can just offshore their money through a endless maze of trusts and Cayman island bank accounts and shell corporations?  They've been getting away with this for decades and nobody (or very very few) ever get in any degree of trouble for it.  Why would you think that Bitcoin is going to be something they're interested in?  The degree of power it gives the individual is too high compared to any potential use they could have for it.

At least that's my .02 BTC.

I'll keep my politics out of your economics if you keep your economics out of my politics.

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bittersweet
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June 07, 2011, 05:28:49 PM
 #15

I also think that Bitcoin would have very limited use for CIA at this moment.
Bitcoin market is still very small and it's probably easier and safer for them to pay with cash.

My Bitcoin address: 1DjTsAYP3xR4ymcTUKNuFa5aHt42q2VgSg
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June 07, 2011, 05:34:55 PM
 #16

The BUY SELL demand is in equilibrium up to 10000 BTC. After that, the caps off.



niemivh
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June 07, 2011, 06:00:13 PM
 #17

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The influx of new miners DOES create a short-term inflation of the supply of bitcoins to a degree. This infusion of new bitcoins could be equal to the inflows of new USD keeping the price stable.

Somebody please correct me if I'm wrong, but isn't the rate of inflation predictable and ever-decreasing? Isn't that the point of raising the difficulty as more computing power is dedicated to the network? Isn't it also true that if all miners used just 1% of of their present computing power the same number of BTC would be mined? I don't think the rate of inflation is sufficient to stabilize the price given the amount of press and new adopters the market is receiving.

Some people may be choosing a holding pattern in response to Schumer's letter, but I think a good many of the sort of folks that Bitcoin appeals to enjoy giving the finger to authoritarians. One of the principle benefits of Bitcoin is that it poses a threat to currency monopolies and so we as a community are best served by not cowering in fear of a politician and continuing to put our money where our mouths are. You may have a point here, but I haven't personally heard anyone say they're gonna shy away from this revolution because some corrupt politician wrote a letter.

Technically the supply of bitcoins as a whole is in a rapid level of inflation in the first 4 years but the demand for them is outpacing the fixed band of inflation that the BTC can have; to such a degree that we saw the huge increase in price from its inception.  The deflation that BTC has 'baked in' is that the growth rate is within a narrow band of growth, the 21 million BTC cap and the fact that they are dividable by 8 decimal places (making them still usable for very high potential valuations of the currency).  Those are the fixed variables where if the demand of BTC were to grow in relation to these factors (moreover the first and second) is where the deflation happens - which seems very likely at this juncture.

Political Sidenote:
This rapid increase shows that while rapidly increasing the amount of 'currency' in this case BTC doesn't directly coorollate with a devaluation of the currency but just the opposite in the specific case of bitcoin.  Why?  Because it is providing a service that people want, e.g. a currency is only as good as the things you can buy with it.  Maybe I should make a post to illustrate how the price phenomeon of BTC can provide a great (and another) real world, living history example as to why Monetarists like Milton Friedman fail so hard (among other reasons).

"Isn't it also true that if all miners used just 1% of of their present computing power the same number of BTC would be mined?"

There is a minimum amount of work that has to be performed at each level to mine the coins.  In addition, there is a diminishing returns on the number of people mining but it's not a zero sum game.  In addition to the power consumption for each coin produced trade off, blah blah blah.

"Some people may be choosing a holding pattern in response to Schumer's letter, but I think a good many of the sort of folks that Bitcoin appeals to enjoy giving the finger to authoritarians."

Unfortunately the cynical and circular sentiment I find on this forum (and in the world at large is the same): "our Government sucks so I'm not going to spend any time petitioning the government with my problems".  I hope people can see the circular reasoning here.  You get the government you deserve and the government CAN and HAS historically been much more aligned with the will of the people.  But those people had to assert their will and not just consider themselves completely out of the political process.  I know it's hard not to have this mentality as the past many decades have been a successive route after route of the middle and lower classes by the rich and powerful.  But this isn't going to change until people reconnect with each other and their government; and of course adopt the correct economic policies for their own growth, but maybe more on that in the "Economics" part of the forum later.

=]

I'll keep my politics out of your economics if you keep your economics out of my politics.

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TraderTimm
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June 07, 2011, 06:19:18 PM
 #18


Unfortunately the cynical and circular sentiment I find on this forum (and in the world at large is the same): "our Government sucks so I'm not going to spend any time petitioning the government with my problems".  I hope people can see the circular reasoning here.  You get the government you deserve and the government CAN and HAS historically been much more aligned with the will of the people.  But those people had to assert their will and not just consider themselves completely out of the political process.  I know it's hard not to have this mentality as the past many decades have been a successive route after route of the middle and lower classes by the rich and powerful.  But this isn't going to change until people reconnect with each other and their government; and of course adopt the correct economic policies for their own growth, but maybe more on that in the "Economics" part of the forum later.

=]


At risk of getting into a bit of politics, I don't agree with the statement "But those people had to assert their will and not just consider themselves completely out of the political process".

That would work if we had a system that wasn't based on monetary contributions via direct/indirect means. However, lobbyists are hired by corporations and others to influence policy to such a large degree, the individual has no hope of affecting the outcome.

In computing terms, this is like a virus-infected operating system. You can replace hardware and hope the problem goes away - but it doesn't. It is part of the system, and won't be repaired unless the problem is addressed.

Politicians aren't about to refuse contributions or cancel appointments with lobbyists, so what other alternative exists?

I leave that particular exercise up to your fertile imagination.



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niemivh
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June 07, 2011, 06:50:49 PM
 #19


Unfortunately the cynical and circular sentiment I find on this forum (and in the world at large is the same): "our Government sucks so I'm not going to spend any time petitioning the government with my problems".  I hope people can see the circular reasoning here.  You get the government you deserve and the government CAN and HAS historically been much more aligned with the will of the people.  But those people had to assert their will and not just consider themselves completely out of the political process.  I know it's hard not to have this mentality as the past many decades have been a successive route after route of the middle and lower classes by the rich and powerful.  But this isn't going to change until people reconnect with each other and their government; and of course adopt the correct economic policies for their own growth, but maybe more on that in the "Economics" part of the forum later.

=]


At risk of getting into a bit of politics, I don't agree with the statement "But those people had to assert their will and not just consider themselves completely out of the political process".

That would work if we had a system that wasn't based on monetary contributions via direct/indirect means. However, lobbyists are hired by corporations and others to influence policy to such a large degree, the individual has no hope of affecting the outcome.

In computing terms, this is like a virus-infected operating system. You can replace hardware and hope the problem goes away - but it doesn't. It is part of the system, and won't be repaired unless the problem is addressed.

Politicians aren't about to refuse contributions or cancel appointments with lobbyists, so what other alternative exists?

I leave that particular exercise up to your fertile imagination.






Can you buy a passport with Bitcoins?

I'll keep my politics out of your economics if you keep your economics out of my politics.

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nuggets4all
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June 07, 2011, 06:57:01 PM
 #20

The word "quaint" was thrown around earlier in this thread; I'd like to use that word to describe the notion that the US Federal gov't is responsive to the will of those it governs. It sure sounds nice and jives with the fifth grade version of gov't we are fed in American public schools, but the reality stands in stark contrast to such an idea. Public sentiment has been strongly against the US occupation of Afghanistan for years. The response? A surge in troop levels. Public opinion was strongly against the healthcare overhaul. The response? Pass it.

The US govt routinely engages in caging non-violent people for victimless crimes, suppression of whistleblowers, and suppression of political speech. Such an entity does not deserve the legitimacy given to it by petitioning it (looks to me like most of our petitions end up in the waste basket). Despite this, I still participate in the system on behalf of a very small number of politicians, although I do so out of support for their principles, not because I expect them to be able to carry out sweeping changes.

The mechanism I put my faith in to bring about change is the marketplace. Bitcoin is an organic market response to institutionalized corruption. My buying of Bitcoins is not only a speculative investment in a game-changing currency, but also my way of acting as one of a mass of individuals voting against this corrupt system with our modest wealth. The ballot box and petitions are two forms of political action, another, more effective method is acting through the marketplace.

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