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Author Topic: The price of BTC needs to come down  (Read 3949 times)
astonix
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June 11, 2011, 12:03:22 PM
 #1

For Bitcoins to be used as an actual currency to buy goods other than the few BTC shops online, the price needs to come down. At the moment, it's 1 BTC = $21. It would be extremely tiresome to carry around 0.1BTC or even less all the time for smaller purchases.

Once it has come down, hopefully it calms down and doesn't skyrocket again otherwise there's no hope to get it used as a currency by major corporations. Heck, not even major corporations but anyone.

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June 11, 2011, 12:06:17 PM
 #2

It would be extremely tiresome to carry around 0.1BTC or even less all the time for smaller purchases.

How would that be anymore "tiresome" than carrying more bitcoins worth less value? It's the same thing. The current transaction fee is a pain but that will drop soon.

astonix
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June 11, 2011, 12:08:04 PM
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Generally you make a lot more smaller purchases than you do large ones. So it makes more sense for BTC to be worth less, and be stable.

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June 11, 2011, 12:22:14 PM
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Generally you make a lot more smaller purchases than you do large ones. So it makes more sense for BTC to be worth less, and be stable.

Situation A:

You own 0.1 bitcoins and the price of a cup of coffe is 0.05 bitcoins.

Situation B:

You own 1 bitcoin and the price of a cup of coffe is 2 bitcoins.


Do you realize you have more money in situation A than in siutation B, right?

The nominal value of money does not matter (transitions between nominal value is another issue and do matter becuase the market has to adapt).
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June 11, 2011, 12:28:20 PM
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kind of like saying we should raise the value of the USD because its easier to pay for bread with a nickel than it is a dollar.

you know, in japan, a car can cost 2million Yen.
Man From The Future
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June 11, 2011, 12:42:50 PM
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Although the stability thing kind of does matter - currently, you see places tying payments to x dollars worth of BTC, using MTgox exchange rates!

I guess it's more of a milestone once peopel stop pricing against dollar though?
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June 11, 2011, 04:43:31 PM
 #7

The current transaction fee is a pain but that will drop soon.

I haven't found much information about fees. Care to explain in a couple of words why do you think fees will drop? Thank you.

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June 12, 2011, 12:52:48 AM
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Because there's a client release with reduced minimum transaction fee?
hello_good_sir
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June 12, 2011, 03:07:30 PM
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Generally you make a lot more smaller purchases than you do large ones. So it makes more sense for BTC to be worth less, and be stable.

Situation A:

You own 0.1 bitcoins and the price of a cup of coffe is 0.05 bitcoins.

Situation B:

You own 1 bitcoin and the price of a cup of coffe is 2 bitcoins.


Do you realize you have more money in situation A than in siutation B, right?

The nominal value of money does not matter (transitions between nominal value is another issue and do matter becuase the market has to adapt).

You are completely discounting human psychology and massively over-estimating the mathematical ability of mankind.

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June 12, 2011, 06:05:52 PM
 #10

You are completely discounting human psychology and massively over-estimating the mathematical ability of mankind.

According to the experiments of behavioural economics people is sensitive to transitions in the value but not so much to nominal value itself. For example, in inflationary environment people will prefer a rise of 2% with the CPI going up a 4% (your real wage goes down 2%) than no rise with a CPI of 1% (your real wage goes down 1%), because people can not control the CPI so they try to stay ahead by demanding the maximum they can get. But people adapt to a nominal price level quite quick. For example, 10 years ago your wage and the prices were way lower, but people have adapted to the new prices and see them as normal.
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June 12, 2011, 06:40:56 PM
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You didn't address my points at all, it seems that you are assuming changes within a bitcoin-centric economy.  In order for people to get into bitcoins they need to actually buy bitcoins with dollars (or whatever).  People are not willing to pay $100 for "$1", even if it is a super magical internet dollar that is worth $100.  People are willing to pay $10 for 100 internet dollars.  This is what I mean by human psychology.  We need for people to be able to put $20 in and get 87 bitcoins to spend, rather than getting 0.87 bitcoins.  It makes a huge difference.

As for math, people really cannot compare 0.00006 and 0.0001.  Most people would tell you that the first number is bigger.  If you did a poll you would get maybe 10% saying that he second is bigger, 20% saying that the first is bigger, and 70% telling you that they don't know and that they HATE math.

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June 12, 2011, 07:21:54 PM
 #12

You didn't address my points at all, it seems that you are assuming changes within a bitcoin-centric economy.  In order for people to get into bitcoins they need to actually buy bitcoins with dollars (or whatever).  People are not willing to pay $100 for "$1", even if it is a super magical internet dollar that is worth $100.  People are willing to pay $10 for 100 internet dollars.  This is what I mean by human psychology.  We need for people to be able to put $20 in and get 87 bitcoins to spend, rather than getting 0.87 bitcoins.  It makes a huge difference.

As for math, people really cannot compare 0.00006 and 0.0001.  Most people would tell you that the first number is bigger.  If you did a poll you would get maybe 10% saying that he second is bigger, 20% saying that the first is bigger, and 70% telling you that they don't know and that they HATE math.

I misunderstood what you were saying.

What you explain here is easily solved by talking of milibitcoins or microbitoins. So you get 50 mbtc (milibitcoins) with 1 dollar. The official client can be changed to show milibitcoins also (or make it optional, but show milibitcoins by default).
hello_good_sir
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June 12, 2011, 07:36:30 PM
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Imagine that the creators of the currency decided to call the currency "milibitcoin".  Do you think that they would have been as popular?  Right now I can mention bitcoin to people in real life.  Some percentage of these people will go on to google "bitcoin" and some percentage of them will purchase bitcoins.  If I tried to talk about milibitcoins with people they would be less interested (the name is not as pleasant sounding to the ear) and they would not have the confidence to make a google search.  People would have taken the currency less seriously.

Ok so now imagine that I still talk to people about bitcoin and then the research it a little.  They then encounter milibitcoins.  "Wait what?  Wasn't I trying to learn about bitcoin, ok so milibit coins 1000 = 1 bitcoin..  Ok I can sort of understand that EXCEPT that I am also trying to wrap my head around the idea that this thing is not controlled by a government or a corporation."  You see it is just too much for a normal person to handle.

The reality is that people are dumb.  You can blame it on nature or nature or both, but in the end it is reality.  In order for bitcoin to be successful it must be adopted by people who are essentially stuck at the 5th grade level intellectually.  Maybe 10% of people have a solid understanding of fractions, and another 10% have a little bit.  I am not talking about widespread acceptance either, then we would have to lower our standards to 4th grade.  Newspapers are written at the 4th grade level.

Branding matters.  Keeping the words and the numbers simple matters.  The value of a single bitcoin (not a milibitcoin or a microbitcoin) MUST always be reasonable.  This requires that we actually shift the decimal point one place at a time, without pretending to do so while merely adding an SI prefix.

Want to buy a 2004 Ford Taurus with bitcoin?  I live in Maryland.  Send me a private message if interested.
hugolp
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June 12, 2011, 07:44:57 PM
 #14

Im not completely opposed and I see that what you say makes sense, but the italians had a very inflationary currency and they exchanged 1000 liras for 1 dollar and the dollar went ok...

And about moving the decimal, how would you do such a thing? You would need everybody or at least a big majority to agree. It would be the same as chanign the rules. The danger is a split of the chain and having two competing bitcoins, which in my opinion would take credibility away from bitcoins at this moment. On the other hand, it its done successfully and the community shows that its capable of such transitions it would be a big boost of confidence since it would shut up a lot of complaints. Its risky.
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June 12, 2011, 07:45:53 PM
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You didn't address my points at all, it seems that you are assuming changes within a bitcoin-centric economy.  In order for people to get into bitcoins they need to actually buy bitcoins with dollars (or whatever).  People are not willing to pay $100 for "$1", even if it is a super magical internet dollar that is worth $100.  People are willing to pay $10 for 100 internet dollars.  This is what I mean by human psychology.  We need for people to be able to put $20 in and get 87 bitcoins to spend, rather than getting 0.87 bitcoins.  It makes a huge difference.

As for math, people really cannot compare 0.00006 and 0.0001.  Most people would tell you that the first number is bigger.  If you did a poll you would get maybe 10% saying that he second is bigger, 20% saying that the first is bigger, and 70% telling you that they don't know and that they HATE math.

Why are people willing to pay $40 for a $1 face value Silver Eagle? It's simply perception. BTC needs to be recognized as scarce and therein is the value. I don't percieve it as a 1:1 ratio. I see it as a 1:x value, where x=capital cost x time involved to mine, desirability, functionality, etc.
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June 12, 2011, 08:08:03 PM
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You didn't address my points at all, it seems that you are assuming changes within a bitcoin-centric economy.  In order for people to get into bitcoins they need to actually buy bitcoins with dollars (or whatever).  People are not willing to pay $100 for "$1", even if it is a super magical internet dollar that is worth $100.  People are willing to pay $10 for 100 internet dollars.  This is what I mean by human psychology.  We need for people to be able to put $20 in and get 87 bitcoins to spend, rather than getting 0.87 bitcoins.  It makes a huge difference.

As for math, people really cannot compare 0.00006 and 0.0001.  Most people would tell you that the first number is bigger.  If you did a poll you would get maybe 10% saying that he second is bigger, 20% saying that the first is bigger, and 70% telling you that they don't know and that they HATE math.

So most people are incredibly stupid - but do you expect everyone here to be so stupid that they would actually follow your 'logic' just because you're pulling numbers out of your ass?

Hey, why don't we just make every $1 bill worth $100, then no one would be poor anymore.
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June 12, 2011, 08:26:09 PM
 #17

I suspect that as more exchanges open the swings will moderate a bit. We are still in a high growth phase and MtGox's near monopoly creates greater swings. I think anyway.

As far as price... For many years I traveled very frequently. Always changing money into this or that currency. I treat BTC like those local currencies. Don't be a tourist, forget the USD. A million seems like a lot of money if you are used to USD. But in Zimbabwe it's a cup of coffee.
When I first got into bitcoin it was like $.60. And people said "that's nice". But now when I say it's $20 they think it's better somehow. That's just bad logic.

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June 12, 2011, 08:38:47 PM
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I think your evaluation of the psychology involving commodity or currency exchange is flawed at best. I can think of numerous instances where a 1:1 ratio has no impact whatsoever, so long as the perceived value of the currencies in question are solid.
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June 12, 2011, 08:53:31 PM
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And about moving the decimal, how would you do such a thing? ...The danger is a split of the chain and having two competing bitcoins

Splitting the chain would probably destroy bitcoin.  Right now everyone on this forum is on the same team.  We all want bitcoin to do well.  We need to keep that unity.  All that I am asking is for the display and terminology to change.  That would require coding to change the client and all of the other bitcoin software/sites out there, but it would not change the underlying protocol.


Why are people willing to pay $40 for a $1 face value Silver Eagle? It's simply perception. BTC needs to be recognized as scarce and therein is the value. I don't percieve it as a 1:1 ratio. I see it as a 1:x value, where x=capital cost x time involved to mine, desirability, functionality, etc.

They aren't.  Most people don't buy silver.  Perhaps 1000 years from now crytocurrencies will be in the same league as precious metals, but for now they don't have that tradition.  Of the people that do buy silver many of them only have an intuitive sense of how it works.  These people will go on about how the dollar isn't real money because it isn't backed by anything but that silver is real money, despite the fact that silver is not backed by anything either.

So most people are incredibly stupid - but do you expect everyone here to be so stupid that they would actually follow your 'logic' just because you're pulling numbers out of your ass?

Hey, why don't we just make every $1 bill worth $100, then no one would be poor anymore.

Please reread my posts and ask for clarification about anything that you do not understand.


Don't be a tourist, forget the USD.

We aren't at that stage and are not likely to be at that stage within our lifetimes.  Nearly all commerce is conducted in non-bitcoin currencies and it will be that way for a long, long time, even if bitcoin eventually becomes the global currency.  People will operate in both economies and will constantly be making the comparison.  Should I buy this with USD or BTC, which is it cheaper in?

I can think of numerous instances where a 1:1 ratio has no impact whatsoever, so long as the perceived value of the currencies in question are solid.

I agree, we don't need a 1:1 but I believe that we need something between 10:1 and 1:10

Want to buy a 2004 Ford Taurus with bitcoin?  I live in Maryland.  Send me a private message if interested.
Babylon
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June 12, 2011, 11:41:16 PM
 #20

Although the stability thing kind of does matter - currently, you see places tying payments to x dollars worth of BTC, using MTgox exchange rates!

I guess it's more of a milestone once peopel stop pricing against dollar though?

This is important, and will happen eventually but not until the price of bitcoins stabilizes. I expect that to be at roughly 1 BTC = $100 with adjustments for dollar inflation.

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