Maybe we shouldn't be pricing Bitcoins purely against paper money?

[Lethn]

Honestly, I keep looking at the crazed traders who are running around and screaming about the end of Bitcoin and one thing I've noticed is, even with the small amount, my Bitcoin is still in my wallet, I can still trade goods for it and I can still make transactions far easier than a bank. Maybe we need to stop looking at Bitcoin as a 'store' of value, like a commodity and look at it as an actual currency, this is another situation where I'm really grateful that Bitcoin is completely unregulated.

Shouldn't we be looking at for example how to price goods based on the gains made by miners or some other method? Or are we really going to be relying on this hyper-inflated piece of shit paper for the rest of our lives? I'm beginning to wonder if I should be using the USD or GBP at all to price my goods and just go with what people are willing to pay.

[tutkarz]

Honestly, I keep looking at the crazed traders who are running around and screaming about the end of Bitcoin and one thing I've noticed is, even with the small amount, my Bitcoin is still in my wallet, I can still trade goods for it and I can still make transactions far easier than a bank. Maybe we need to stop looking at Bitcoin as a 'store' of value, like a commodity and look at it as an actual currency, this is another situation where I'm really grateful that Bitcoin is completely unregulated.

Shouldn't we be looking at for example how to price goods based on the gains made by miners or some other method? Or are we really going to be relying on this hyper-inflated piece of shit paper for the rest of our lives? I'm beginning to wonder if I should be using the USD or GBP at all to price my goods and just go with what people are willing to pay.

I will repeat it last time because it seems nobody is listening to me
Bitcoin cant have $0 value. It need value to transfer value. And since it is something new and revolutionary it have to by priced equally. And it have to have high price so anybody can use it (eg. big companies that would like to send large amounts of money). As long as bitcoin price is low its useless and prone to attacks and volatility.
If we wont set price right, then we may forget about it as tool. It is more like a toy now.

[Kluge]

Was thinking about this while cooking eggs today. Yes, we "should," but no, we won't. "Bitcoins" have no tangible value, so we have to compare it to something we can use. I used to use "McDoubles," but that's really more related to valuing USD, not BTC (at least not independently). If McDonald's accepted BTC and didn't just rely on exchange prices, then they could effectively set the value of BTC for me, but for now, I rely on speculators, like with all currencies. 

For virtually everything you can buy with BTC, you can buy with USD, so it makes sense to check which one "costs less." If they don't match and it isn't a big deal, you may's well buy using the "overpriced" currency.

Or, in a way I'm more able to relate to.... If McDonald's sold McDoubles for $1 or .5BTC, and I could sell .5BTC for $50 on Gox, I'd obviously want to pay for my enabled suicide using dollars, and I really don't give a shit about the stability of Bitcoin to the point of effectively paying 50x more for a cheeseburger!

Hashpower is effectively determined by price, so determining price by hashpower (more competition = less BTC per hash) would be ridiculous. All we have are each others' emotions and gambles, and that's true with all currencies (except the cost barrier to changing most fiat currencies like USD is much, much higher -- tut makes a good point).

[||bit]

Honestly, I keep looking at the crazed traders who are running around and screaming about the end of Bitcoin and one thing I've noticed is, even with the small amount, my Bitcoin is still in my wallet, I can still trade goods for it and I can still make transactions far easier than a bank. Maybe we need to stop looking at Bitcoin as a 'store' of value, like a commodity and look at it as an actual currency, this is another situation where I'm really grateful that Bitcoin is completely unregulated.

Shouldn't we be looking at for example how to price goods based on the gains made by miners or some other method? Or are we really going to be relying on this hyper-inflated piece of shit paper for the rest of our lives? I'm beginning to wonder if I should be using the USD or GBP at all to price my goods and just go with what people are willing to pay.

Let's measure it's value in popcorn then at BTC.01/kernel?

In fact. I'll organize a promo for this great idea.... and make a....

***Special offer (today only)***

I'll send you a one cob for BTC1. But if you act now and buy two for BTC2, I'll send you a third cob for free.

[Luno]

Exactly, good post. Complaining about Fiat valuation of Bitcoin discloses their motivation for joining in.

Non of the heavy hitters that bought in last year have made a single twitch during this crash. Institutional investors in this business are not in it for the quick buck the are idealists to some degree. The fact that they helped price go up short term is only a success measure if youre looking for a quick turnover. Value of Bitcoin is in transaction volume not price!

[tutkarz]

Exactly, good post. Complaining about Fiat valuation of Bitcoin discloses their motivation for joining in.

Non of the heavy hitters that bought in last year have made a single twitch during this crash. Institutional investors in this business are not in it for the quick buck the are idealists to some degree. The fact that they helped price go up short term is only a success measure if youre looking for a quick turnover. Value of Bitcoin is in transaction volume not price!

Sorry but how you want to transact alot of money if bitcoin price is low and its amount very limited? Do you know how many fiat money is around the globe currently that could be moved around? I guess not.

[zoolander]

I'm sure this has been debated a lot in the past, but as n00b, I've been asking the same thing. Seems that Bitcoin might always have a dependency on FIAT.

I think it is a very long road till we start to think of prices of Gold, Shares or a coffee in terms of Bitcoin.

[TimJBenham]

I will repeat it last time because it seems nobody is listening to me
Bitcoin cant have $0 value. It need value to transfer value. And since it is something new and revolutionary it have to by priced equally. And it have to have high price so anybody can use it (eg. big companies that would like to send large amounts of money).

That's a good point. People keep saying here that the price is irrelevant to the btc economy, but this is false. If each btc is worth $1 how do I pay for a $100M city office tower? Not with 100 million bitcoins.

As long as bitcoin price is low its useless and prone to attacks and volatility.
If we wont set price right, then we may forget about it as tool. It is more like a toy now.

That's going too far. Even with a low value it is quite suitable for the online retail drugs business.

[Twerka]

You people are so much brainwashed that think that a dolar is a parameter of value. It is not.

How to give value to BTC? Simply as buying something. If somebody accept a bitcoin for a cellphone, then the BTC for that person worth a cellphone. Then there is a guy who say: "if that guy exchange his cellphone for a BTC, I will exchange my computer for 3 BTC".

No dolars involved.
But a few people has enough mental power to NOT ASK the next question: "but, how much the cellphone and how much the computer?"

[Rygon]

I've thought about this also. The dollar and oil are closely linked in price. Why not track bitcoins value in purchasing something commonly traded over the interwebs that makes sense to buy with bitcoins (instead of fiat). How about the average monthly rate for a domain name that a company would be willing to accept in a year-long contract in BTC?

In order to add stability, we need someone to draw a line in the sand of longer term contracts. Perhaps the hourly rate for a month-long contract for programming work by someone with 3-5 years of experience? Certainly people are already paying employees in other countries to do contracted programming work, is there enough data of BTC-only contracts to do this kind of analysis?

[drhobomanxxiii]

The answer to divorcing BTC value from that of fiat (at least in terms of directly causal relationships,) is to price goods in BTC without working out the exchange value of BTC.

This is first going to require a much larger number of merchants accepting it, a much larger share of people owning it, and a massively larger financial infrastructure stabilizing the price of it against the dollar.

Without stability against the dollar, businesses that want to switch to BTC can't use BTC as a unit of account, but that's exactly what is required in order to enable pricing in BTC. What I see happening first is that more businesses accept BTC through something like BitPay that directly converts into dollars, until the employees of that company start demanding at least partial pay in Bitcoins. As time goes on, more and more "circular" patterns of exchange will emerge, allowing for further and further stability of prices, then allowing for accounting to be done in BTC.

Once prices can be set in BTC, people will begin engaging in arbitrage by working between dollars and bitcoins to find the better deal in purchasing goods. This process will further stabilize the values, and further enable the use of BTC as a unit of accounting. Eventually, this process will bring BTC to the forefront as its own value rather than its value in dollars, much like how the Euro isn't calculated in dollar terms.

Of course, this whole process assumes that adoption will occur in the first place, that governments won't reject it in some way, that the financial infrastructure allows people to quickly move between liquid dollars (as opposed to mtgoxUSD) and liquid BTC... And I'm sure there are many other dependencies I can't think of off the top of my head.

In any case, right now it's on the "right" path.