The price of a shovel during a gold rush

[jhansen858]

I found this interesting and somewhat relevant. 

http://www.michaellamarr.com/grprices.html

Prices are extremely high during the first part of the gold rush.  IE 10,000btc pizza..  now prices are .5btc for that same pizza. The gold rush is still happening but we have mined 50% of the available btc.  The remaining btc becoming increasingly harder to get with only the big mining companies sticking with it.  Prices will continue to fall, that same pizza will cost 0.05 btc, 0.005 btc and so on.  until it reaches equilibrium with the dollar. 

If everything goes right, the entire bitcoin economy being equal to the world cash economy some day.

https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_cd&tdim=true&dl=en&hl=en&q=world%20gdp

Currently the world GDP is 70T with a possible 21M btc gives a maximum of $3.3M / 1 BTC

That means that a pizza should cost about: 0.000009 BTC when the dust settles...

I'm calling it !

[benjamindees]

GDP is an annualized metric.  It doesn't have much to do with the value of the global economy.

[DarkBet]

I found this interesting and somewhat relevant. 

http://www.michaellamarr.com/grprices.html

Prices are extremely high during the first part of the gold rush.  IE 10,000btc pizza..  now prices are .5btc for that same pizza. The gold rush is still happening but we have mined 50% of the available btc.  The remaining btc becoming increasingly harder to get with only the big mining companies sticking with it.  Prices will continue to fall, that same pizza will cost 0.05 btc, 0.005 btc and so on.  until it reaches equilibrium with the dollar. 

If everything goes right, the entire bitcoin economy being equal to the world cash economy some day.

https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_cd&tdim=true&dl=en&hl=en&q=world%20gdp

Currently the world GDP is 70T with a possible 21M btc gives a maximum of $3.3M / 1 BTC

That means that a pizza should cost about: 0.000009 BTC when the dust settles...

I'm calling it !

Interesting chart.

Yeah hopefully this is what happens, but many things can go wrong. Usually for something to work on a grand scale a lot of things have to be in place at the same time, if one element is missing, it fails.

Take the Ipad for example, originally microsft made a similar product a few years back already, market wasn't ready and it didn't get any traction. The idea was genius and I bet all those involved knew that it was the future of personal computing.

[johnyj]

Interesting link, and together with this chart,



In 1850, one ounce gold worth $19, and until 1970, it still worth as little as $35, but in the next 30 years, it shoot up almost 50 times to reach a high of $1900, since the gold standard is abandonded. Is it means that everyone become 50x richer in the latest 30 years? Or something else happened

Another fact is that the gold price do not change at all after discovery of the gold in California, this is against the economy theory that sudden increase of gold/silver supply will cause inflation. Actually, since the USD exchange rate is fixed, discovery of new gold simply means new money, and that created a huge prosperity of the west coast area. Maybe it is from here FED learned that increase money supply can simply create growth without causing inflation, but they missed that new money must be debt free

[bullioner]

Currently the world GDP is 70T with a possible 21M btc gives a maximum of $3.3M / 1 BTC

Units fail.  Units of GDP are $ / year.  Units of dividing GDP by the number of Bitcoins is $ / (BTC * year), not $ / BTC.

Also known as dimensional analysis.  Good sanity check: if the dimensional analysis doesn't work out, your result makes no sense.  Always.

A more detailed and specific way of putting this is to say that value added per unit time is a completely different thing from the size of a monetary base.

[johnyj]

And after checking the inflation adjusted data, the price increase of gold is not that dramatic, from 1970 low to today, less than 10 times



And in 2000, gold price almost fell back to 1975 level, means it really get sold a lot due to plenty of economic activities out there

[jhansen858]

That is very interesting chart.  So the bigger the blue line the less the dollar is worth?  Is that how this should be interpreted?

[Snowfire]

It's not as simple as that. Gold is not just an abstract benchmark; it is a commodity, with markets and fluctuations in supply and demand just like any other commodity. The uncorrected graph is essentially gold value divided by dollar value. The corrected graph is an approximation at isolating gold value. The dollar value graph implicit in the calculations is not shown.