I want you to have a look at this graph

[kiwiasian]

Sigh, look at the x axis. My graph started on July 2010, yours started at the beginning of 2011.

Herp derp, setting different graph parameteres on bitcoincharts...



My argument still stands.

And not to mention that the scale of your graph is completely off.

The distance between $20 and $50 is the same as between $0.2 and $0.5.

Nice try.

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[Timo Y]

Conventional wisdom does not apply here. Bitcoin is a class of its own. It is a commodity the world has never seen before. Exponential growth so far reflects exponential growth of users. Nothing unsustainable about that - the userbase, and price, will stabilise eventually.  Once every tech savvy person on the planet has found out about bitcoin and it CONTINUES to grow exponentially, then it will definitely crash. We havent reached that point yet.

[speeder]

Sigh, look at the x axis. My graph started on July 2010, yours started at the beginning of 2011.

Herp derp, setting different graph parameteres on bitcoincharts...



My argument still stands.

And not to mention that the scale of your graph is completely off.

The distance between $20 and $50 is the same as between $0.2 and $0.5.

Nice try.

You are showing yourself to be quite dumb, or ignorant.


This IS the point of log scale, and it apply to many things (not only economics).


For example, the pitch of the center key on a Piano is 440Hz. (also known a A4).   A3 (one octave below), is 220Hz, A5 (one octave above) is 880Hz.

thus, a graph of "A" notes in a piano would be: 55, 110, 220, 440, 880, etc...


The volume also works that way, when you say something is 100 db, and sound twice as louder as 50 db, actually 100 db is MUCH more than twice, because dbs are in log scale.

Population increase, also happen in log scale.
Popularity increase (the driving force behind bitcoin price increase) is also in log scale.

1 person, informs 2.
If those 2 persons, inform more 2 each, the result is 4 persons.
If those 4, inform 2 each, now we have 8.
Then 16
32
64
128...

[kiwiasian]

Sigh, look at the x axis. My graph started on July 2010, yours started at the beginning of 2011.

Herp derp, setting different graph parameteres on bitcoincharts...



My argument still stands.

And not to mention that the scale of your graph is completely off.

The distance between $20 and $50 is the same as between $0.2 and $0.5.

Nice try.

You are showing yourself to be quite dumb, or ignorant.


This IS the point of log scale, and it apply to many things (not only economics).


For example, the pitch of the center key on a Piano is 440Hz. (also known a A4).   A3 (one octave below), is 220Hz, A5 (one octave above) is 880Hz.

thus, a graph of "A" notes in a piano would be: 55, 110, 220, 440, 880, etc...


The volume also works that way, when you say something is 100 db, and sound twice as louder as 50 db, actually 100 db is MUCH more than twice, because dbs are in log scale.

Population increase, also happen in log scale.
Popularity increase (the driving force behind bitcoin price increase) is also in log scale.

1 person, informs 2.
If those 2 persons, inform more 2 each, the result is 4 persons.
If those 4, inform 2 each, now we have 8.
Then 16
32
64
128...

Ok, that's cool. By putting the data in a logarithmic scale you've intentionally creating misleading data like the other guy said. Use a linear scale, that's what it should look like. If you had a linear line over a logarithmic scale you'd be assuming exponential growth, which is extremely misleading.

[BombaUcigasa]

Ok, that's cool. By putting the data in a logarithmic scale you've intentionally creating misleading data like the other guy said. Use a linear scale, that's what it should look like. If you had a linear line over a logarithmic scale you'd be assuming exponential growth, which is extremely misleading.

No. It's the only way to show what happens when you say: I want o you to have a look at this graph and notice anything weird with it. Because if you look at the logarithmic graph, there is nothing wrong about it, and everyone here is telling you logarithmic graphs match better than linear graphics various economical processes.

However, you think that we're trying to mislead you, when we tell you that everything looks good so far that means both the linear and logarithmic graphs.

[speeder]

Look at the graph of Brazillian stock exchange.

It is logarithm.

So, the Brazillian stock exchange is "misleading" you too?


Even regular currencies use logarithm graph... Ever saw how much a 1910 USD is worth? And a 1950 one?

[gigitrix]

My god people!

You don't need to know economics (I don't) to know why this has to be a log graph!

OMG 1USD buys 80Yen! The Yen is so weak against the dollar!

Well... no. The numbers are just our arbitrary representation of "value". What really matters is if the Dollar is worth 50% more Yen than it was before.

Therefore it's the percentages.

So going 1, 10, 100 etc (a logarithmic scale) is exactly the data that matters, rather than some nominal number with nothing backing it for comparison.

[avoid3d]

You all got trolled

More humour: http://coinwatcheralerts.blogspot.com/

[onesalt]

My god people!

You don't need to know economics (I don't) to know why this has to be a log graph!

OMG 1USD buys 80Yen! The Yen is so weak against the dollar!

Well... no. The numbers are just our arbitrary representation of "value". What really matters is if the Dollar is worth 50% more Yen than it was before.

Therefore it's the percentages.

So going 1, 10, 100 etc (a logarithmic scale) is exactly the data that matters, rather than some nominal number with nothing backing it for comparison.

Using a log graph doesn't prove anything, it merely displays the data in a different way. Regardless of how the data is displayed the point is the same, the bitcoin rose in value by close to 3000% in an *extremely* short timescale, which is incredibly fucking bad in a currency.

[BombaUcigasa]

Using a log graph doesn't prove anything, it merely displays the data in a different way. Regardless of how the data is displayed the point is the same, the bitcoin rose in value by close to 3000% in an *extremely* short timescale, which is incredibly fucking bad in a currency.

If that's bad, then what is good?

[onesalt]

Using a log graph doesn't prove anything, it merely displays the data in a different way. Regardless of how the data is displayed the point is the same, the bitcoin rose in value by close to 3000% in an *extremely* short timescale, which is incredibly fucking bad in a currency.

If that's bad, then what is good?

When its stable and not going up and down like the weight of an obese diabetic with stomach ulcers, for christs sake. No new companies are going to adopt bitcoins as a payment type if the actual value of them is going to change hour to hour in such huge amounts. I could pay someone 2 btc for a game and by the time the transaction is verified I need to pay him an extra 0.25 because of the price shift and then when that gets verified turns out he owes me 0.5 btc again.

[neptop]

It will crash like everything crashes. It's a basic economic rule and then it will reach new peaks. Why? Because sometimes there are more buyers willing to pay more and sometimes there are fewer buyers who don't want to pay good prices. That's called a market!

[hello_good_sir]

Log scales are appropriate, however a base 10 log scale isn't appropriate unless there is some underlying reason.  For most processes the natural log is more appropriate.

[onesalt]

It will crash like everything crashes. It's a basic economic rule and then it will reach new peaks. Why? Because sometimes there are more buyers willing to pay more and sometimes there are fewer buyers who don't want to pay good prices. That's called a market!

If a currency is acting like a market it means it's not working properly. Spending money to buy something shouldn't effect the value of that currency.

[BombaUcigasa]

When its stable and not going up and down like the weight of an obese diabetic with stomach ulcers, for christs sake. No new companies are going to adopt bitcoins as a payment type if the actual value of them is going to change hour to hour in such huge amounts. I could pay someone 2 btc for a game and by the time the transaction is verified I need to pay him an extra 0.25 because of the price shift and then when that gets verified turns out he owes me 0.5 btc again.

You mean when it never moves up or down and stays at the same price. Did you read the bitcoin paper by any chance? Do you understand that the increasing difficulty and thus value of each block is required so the network cannot be subverted by increasing resources from an adversary but instead relies on natural growth of participants, computing power and networking? Do you understand that the price for bitcoins will go up, and do so naturally by design? And do you understand that difficulty increases by a geometric progression (+25..+40% per round) thus creating a cost that grows exponentially? Do you now understand why a linear trend on a logarithmic chart shows that the system is growing at the predicted rate?

Think about the future. In 10 years, miners will receive less bitcoins per block. They will spend 1000 times more power to find the next block. And even with advances in computing power, the cost of a bitcoin will surely be at least 100 more than it is now. Do you suppose a bitcoin that costs 200$ to make should be sold for 20$?

About your payment issue. It's a stupid example. When you buy (lock in an order) you have to pay exactly the quote, nothing less or more. It's illegal to request a different payment than the one from the invoice, just because your local currency went up or down. It can go up or down, you should add a buffer as a seller. Completely irrelevant to the topic.

[onesalt]

When its stable and not going up and down like the weight of an obese diabetic with stomach ulcers, for christs sake. No new companies are going to adopt bitcoins as a payment type if the actual value of them is going to change hour to hour in such huge amounts. I could pay someone 2 btc for a game and by the time the transaction is verified I need to pay him an extra 0.25 because of the price shift and then when that gets verified turns out he owes me 0.5 btc again.

You mean when it never moves up or down and stays at the same price. Did you read the bitcoin paper by any chance? Do you understand that the increasing difficulty and thus value of each block is required so the network cannot be subverted by increasing resources from an adversary but instead relies on natural growth of participants, computing power and networking? Do you understand that the price for bitcoins will go up, and do so naturally by design? And do you understand that difficulty increases by a geometric progression (+25..+40% per round) thus creating a cost that grows exponentially? Do you now understand why a linear trend on a logarithmic chart shows that the system is growing at the predicted rate?

Think about the future. In 10 years, miners will receive less bitcoins per block. They will spend 1000 times more power to find the next block. And even with advances in computing power, the cost of a bitcoin will surely be at least 100 more than it is now. Do you suppose a bitcoin that costs 200$ to make should be sold for 20$?

About your payment issue. It's a stupid example. When you buy (lock in an order) you have to pay exactly the quote, nothing less or more. It's illegal to request a different payment than the one from the invoice, just because your local currency went up or down. It can go up or down, you should add a buffer as a seller. Completely irrelevant to the topic.

It's illegal to do so, correct, but companies aren't going to use bitcoin if they can't reliably turn a profit using it because of the exchange issues.

as for the difficulty rise, do I therefore assume that the correct answer is that a bitcoin mined for 1 dollar should be sold for 200? All that does is screw over late adopters and puts all of the wealth into the early adopters hands, which is an incredibly selfish ideal to have.

[BombaUcigasa]

as for the difficulty rise, do I therefore assume that the correct answer is that a bitcoin mined for 1 dollar should be sold for 200? All that does is screw over late adopters and puts all of the wealth into the early adopters hands, which is an incredibly selfish ideal to have.

No, the correct answer is: bitcoin should be sold for whatever someone is willing to pay for it. But you know that miners are not willing to sell unless it's more than 1 dollar. If hoever, many people need more bitcoins than available, then yes, the correct answer is 200.

Why would you buy bitcoins for 200$ a piece?

Maybe because this is a limited edition fortified digital cryptographically secured and rare set of tokens that can be used to instantly transfer and reward value anywhere on earth in just 10 minutes without fees or personal taxing and tracking.

I suppose higher prices will always happen when people buy more bitcoins than are currently produced. We know the network is making 10212 coins a day now, and maybe people want to buy more than 10212.

For example mtgox has a day's volume of 685.665 BTC. So even though today we only made 10212 coins, we bought and sold more than 67 times that. Do you suppose that people would ask a bit more than manufacturing price for something that is being sold 67 times more than it is being produced?

[Mashuri]

It will crash like everything crashes. It's a basic economic rule and then it will reach new peaks. Why? Because sometimes there are more buyers willing to pay more and sometimes there are fewer buyers who don't want to pay good prices. That's called a market!

If a currency is acting like a market it means it's not working properly. Spending money to buy something shouldn't effect the value of that currency.

A currency is always acting like a market because it always exists in a market, be it gold, USD or bitcoin.  Bitcoin is new and will therefore experience a lot of volatility as the market comes to terms with it.  The first crucial stage really rests on the exchanges.  We need to get to a point that any currency can be converted to/from bitcoin instantly and easily anywhere at any time.  Only when it is able to so readily relate to already established currencies can it start to stabilize.

[Bazil]

as for the difficulty rise, do I therefore assume that the correct answer is that a bitcoin mined for 1 dollar should be sold for 200? All that does is screw over late adopters and puts all of the wealth into the early adopters hands, which is an incredibly selfish ideal to have.

No, the correct answer is: bitcoin should be sold for whatever someone is willing to pay for it. But you know that miners are not willing to sell unless it's more than 1 dollar. If hoever, many people need more bitcoins than available, then yes, the correct answer is 200.

Why would you buy bitcoins for 200$ a piece?

Maybe because this is a limited edition fortified digital cryptographically secured and rare set of tokens that can be used to instantly transfer and reward value anywhere on earth in just 10 minutes without fees or personal taxing and tracking.

I suppose higher prices will always happen when people buy more bitcoins than are currently produced. We know the network is making 10212 coins a day now, and maybe people want to buy more than 10212.

For example mtgox has a day's volume of 685.665 BTC. So even though today we only made 10212 coins, we bought and sold more than 67 times that. Do you suppose that people would ask a bit more than manufacturing price for something that is being sold 67 times more than it is being produced?

If the demand is anything like most currencies then the value will be very high.  Currently there is about 830 billion dollars in circulation in the US.  That's over $2500 per person  (we know the actual number is much higher thanks to fractional reserve banking) in the US with a population of about 310 million. Considering that, lets assume we max out the bitcoins at 21 million in circulation.  Lets also assume that the number of people on the internet doesn't grow beyond the current 2 billion users.  If bitcoin becomes ubiquitous for internet transactions, that's 0.0105 bitcoins per person.  As you can see bitcoins, even at their maximum will be extremely scarce compared to just about all other currencies.  If we divide the USD per person by the bitcoins per person we get the a low estimate of the potential worth of bitcoins.  That's about 250 grand per bit coin.  Odds are, because of loss of bitcoins, a growing internet population and because we have a lot more money in the US system than circulating currency the actual value will probably be much higher.  So unless bitcoin is killed or replaced, values north of $250,000 (2011 USD) should be expected.

[onesalt]

as for the difficulty rise, do I therefore assume that the correct answer is that a bitcoin mined for 1 dollar should be sold for 200? All that does is screw over late adopters and puts all of the wealth into the early adopters hands, which is an incredibly selfish ideal to have.

No, the correct answer is: bitcoin should be sold for whatever someone is willing to pay for it. But you know that miners are not willing to sell unless it's more than 1 dollar. If hoever, many people need more bitcoins than available, then yes, the correct answer is 200.

Why would you buy bitcoins for 200$ a piece?

Maybe because this is a limited edition fortified digital cryptographically secured and rare set of tokens that can be used to instantly transfer and reward value anywhere on earth in just 10 minutes without fees or personal taxing and tracking.

I suppose higher prices will always happen when people buy more bitcoins than are currently produced. We know the network is making 10212 coins a day now, and maybe people want to buy more than 10212.

For example mtgox has a day's volume of 685.665 BTC. So even though today we only made 10212 coins, we bought and sold more than 67 times that. Do you suppose that people would ask a bit more than manufacturing price for something that is being sold 67 times more than it is being produced?

Bitcoins aren't consumed, so saying that because 67 times more of them are moved around than were produced in a day is errornous. For all that is known, that could be one bitcoin moved from person to person 670,000 times.

We need to get to a point that any currency can be converted to/from bitcoin instantly and easily anywhere at any time.  Only when it is able to so readily relate to already established currencies can it start to stabilize.

And this is an impossible pipe dream due to the constraints on the way bitcoin works.