GimpyPrime
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March 31, 2013, 04:02:32 AM |
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Value and price are two different things.
1. Value is the buying power of the currency
The buying power of the currency will be growing so long as there are more people investing in the currency rather than divesting. It is just basic supply and demand. Unless there are significant flaws in the protocol that are found it will likely continue increasing in value for a long time. For the most part this will be driven by speculation.
Luckily though since there are a finite number of coins that can ever exist this currency does not get affected with inflation in the same way as other currencies.
2. Price(in relation to USD) is the exchange rate.
The value of USD dollar will forever be decreasing regardless of the value of bitcoin. The USA monetary system is built on a concept called fractional reserve banking. In short it is a debt based system and more money is owed in debt than exists in the economy. The system relies on the creation of money to pay down previous debt. As new money is created it devalues what is already in circulation. The Federal Reserve creates between 2-4 billion dollars USD each day, and this rate of printing must forever increase to continue paying down debt. (Unless they default, and they probably will)
To explain this more clearly, the government goes to the Federal Reserve(Where money comes from) and asks for a 100$ loan, however with interest the government owes 106$. Unfortunately that 6$ interest does not exist anywhere, so when it needs to be paid the government goes back for another loan.
As the printing continues the government devalues all your savings. In effect they are taxing you from right under your nose... So when you put all your money into a 2% savings account, too bad the government decreased its value 5%.
Summary....
So there are two angles to look at it from. Bitcoin rises in exchange rate because it is rising in value, and it rises in exchange rate because the USD is lowering in value.
We know the USD is headed for a cliff, we have no idea what is going to happen with bitcoin. If they both live long enough eventually we are going to see 1BTC equal to 1 million dollars USD and higher. It is just basic math... Either because bitcoin will increase so much in value, or because 1 million USD will be worth about as much as loaf of bread (Or Both). It all comes down to which currency will outlive the other.
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Mike Christ
aka snapsunny
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March 31, 2013, 04:05:52 AM |
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snip
Sounds like something AnonyMint would write. |
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SkyyWalkerr
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March 31, 2013, 04:11:07 AM |
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The value of BTC is only restricted by the number of people that accept them as a viable form of currency.
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Dabs
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The Concierge of Crypto
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March 31, 2013, 02:04:16 PM |
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What country has a population of about 20 million people? Just a question to think about.
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ltcminer
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April 02, 2013, 01:14:22 AM |
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My prediction is Bitcoin should reach parity with gold soon. But people tend to just hoard bitcoin, just like gold, for risk aversion.
Litecoin should become the trading currency.
Just my 2 cents.
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pmm
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April 20, 2013, 04:09:26 PM |
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I might be missing something here, but what happens when all BTC are mined and in circulation? The main purpose of miners is to verify/validate all BTC transactions, then they are rewarded 25 BTC per block (i.e the mining part), correct??. When all BTC are mined who is going to verify the transaction?? It won't be the miners because there is no BTC in it...
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papagel
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April 20, 2013, 04:20:34 PM |
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I might be missing something here, but what happens when all BTC are mined and in circulation? The main purpose of miners is to verify/validate all BTC transactions, then they are rewarded 25 BTC per block (i.e the mining part), correct??. When all BTC are mined who is going to verify the transaction?? It won't be the miners because there is no BTC in it...
As the pool of BTC to be mined decreases the miners will be rewarded with with a fee for the transaction they verify. |
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Malawi
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One bitcoin to rule them all!
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April 20, 2013, 04:21:48 PM |
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All the wealth in the world will at some point be worth 1BTC - untill the key gets lost and we are all broke.
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BitCoin is NOT a pyramid - it's a pagoda.
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sohaib38
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April 20, 2013, 04:28:06 PM |
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Ha that is a fun calculation. I do wonder what the max price of bitcoins that we will see in our lifetimes. It should be very interesting to see how it turns out, to say the least.
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X-coin
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April 20, 2013, 06:29:48 PM |
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All the wealth in the world will at some point be worth 1BTC - untill the key gets lost and we are all broke.
rofl  We need to take extra care about backups then. |
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easycoins
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April 20, 2013, 06:32:42 PM |
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Interesting stuff!  |
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trictors
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April 20, 2013, 06:53:50 PM |
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I might be missing something here, but what happens when all BTC are mined and in circulation? The main purpose of miners is to verify/validate all BTC transactions, then they are rewarded 25 BTC per block (i.e the mining part), correct??. When all BTC are mined who is going to verify the transaction?? It won't be the miners because there is no BTC in it...
As the pool of BTC to be mined decreases the miners will be rewarded with with a fee for the transaction they verify. What will the fee be? |
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