Wall Observer BTC/USD - Bitcoin price movement tracking & discussion

[Asrael999]

I have two keys to a locker that may or may not contain 24 billion dollars - how much are they worth? Scarcity does not equate to value.

Scarcity on something that is useless in every sense, probably not. But bitcoin is not in that category.

Gold's annual production is around 2500 tons. There are a few metals which have a production that is counted in just a few tons per year, typically in the PGE (Platinum Group of Elements). These metals fluctuate wildly in their prices as their scarcity alone allows their marketcap and price to be squeezed high through a single buy, or dumped quite lower with a few not-so-dramatic moves in terms of $$$. But noone says "ohh Iridium is a pump and dump because it was $400 in 2010, $1100 in 2012 and fell to $400 in 2013". You know it's a small market and that fluctuations are to be expected.

Bitcoin is similar in a sense. Yet, beside being scarce, it also has something to offer. It can do online payments, it can preserve wealth in the long run - especially for multiple countries that run double digit inflation, it can be a diversification asset, it can bypass capital controls, it can offer banking services even to kids who are gaming and want to sell or buy a fictional item or a game account in an MMORPG - which would otherwise be impossible without using their parents bank/CC/paypal etc, it can even be considered a collectible as the first decentralized digital currency (which is a historic event analogous to the first coins or first paper notes). People are paying hundreds or thousands of dollars for a good condition uncirculated coin of 100 years ago, just because this type of coin is harder harder to find than a coin in average circulated or worn condition. In any case, as far as BTC is concerned, the scarcity factor means that not many people can hold 1 BTC - but we all know that. Which, by necessity, will make the prices go much higher.

Many people that are trading bitcoin do so from the U.S. or Europe and they have a fundametal problem in appreciating it. We do not really understand or appreciate the benefits of what bitcoin can do for countries that do not have numismatic stability or easy international transactions through banks/paypal/credit cards etc due to quotas, controls, government approvals to buy even 10 dollars worth of stuff, etc.

For an American or a European, bitcoin is a very misunderstood asset because most of its benefits are not readily visible. The same is true for gold btw - most people will prefer money in the bank rather than gold. Having numismatic stability for a few decades makes you forget that your currency is just faith-backed money that can fall over the cliff overnight just because there was an international shock, a war, some political mess, etc etc. But countries that are immersed in that kind of shit do not value their fiat - they only value land, gold, tangible assets, hard currency (if they can get their hands on it) and Bitcoin (because through bitcoin they can actually have the equivalent of hard currency - despite their government blocking access to hard currency). So, in a sense, hard currencies like the dollar are not directly competitive with Bitcoin, but weaker ones are, because Bitcoin is the medium to have access to dollars despite a government's effort to prevent the population from stacking foreign exchange or using it to store wealth, or using it to conducting international trade.

Traders are in awe when they see a nice 10-15% spread to a Chinese exchange, but they have no idea that some people are arbing 50 or 100% for selling BTCs (in local currency equivalent of $$$) in countries that have numismatic instability.

That's more like it, many of those are good reasons for bitcoin to have value - and all better then "Bitcoin is scarce" which is easy and fundamentally lazy. Yes if Bitcoin can be used to do things that add value then it has value, and the finite number of bitcoins increases its value if more than that many are in demand, but first it must be used to do things - and the more those things are developed the better.
Owning 1 bitcoin equates to owning access to 100,000,000 entries on the blockchain (or lockers) - the more each entry can be used for (the more types of stuff I can put in a locker) and the more people want to access the lockers the more each bitcoin is worth.

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[DieJohnny]

Current US dollar strength is due to deleveraging. If net outstanding debt is being payed back, then the fractional reserve money multiplier runs in reverse.  Debts that default also reduce the money supply.  

Why was the Euro EVER worth so much....?

What magic is going on that allows the Reserve to deposit trillions into bank accounts but there is no inflation?

A rising dollar imports deflation into the U.S. obviously. Unfortunately for the U.S. it also exports inflation (making exports less competitive) but that´s not really a big deal since the most important products are weapons, porn, hollywood crap and of course dollars.

that's correct. A big factor is all the neomercantilist emerging economies are blowing up, doing more or less the same thing Japan did 20 years ago. This puts a downward pressure on commodity prices everywhere and that ripples through the economy. For example, I'm an oilfield trucker getting paid almost nothing but there is no upward pressure on wages because there are more drivers than loads with WTI crude at $42/bbl.

There´s one pretty major drawback in this dollar rise which the stock market doesn´t seem to be concerned about for some reason. A rising dollar means that U.S. multinationals (those big international dogs that lead the market) get to book fewer dollars as revenue and profits back home in the U.S. It´s lagging but has to hit stock prices sooner or later.

That's true but it may take a while. When it's looking bad everywhere, capital flows to the lepers with the most toes.  If you a're fund manager were a hedge had a billion or so to invest right now, where would you park it?  Bonds? interest rates are too low and default risks make them almost as risky as stocks. As JM Keynes said, "markets can stay irrational longer than you can stay solvent".

So, not sure what you are implying... dollars are simply the best of the worst place to preserve your net worth?

If the dollar stays as it is, it seems there is no end to this ponzi. A ponzi never dies, ever, as long as you have a never ending line of people to join and you can print money for free. Ponzi schemes collapse when nobody joins.

[billyjoeallen]

I have two keys to a locker that may or may not contain 24 billion dollars - how much are they worth? Scarcity does not equate to value.

No, but scarcity is required for something to be a commodity. For example air is valuable but it is not scarce so it's not a tradable asset.

scarcity: a neccesary but not sufficient property

[makeacake]

^
Scarcity also doesn't have to be artificial: Pork bellies are a commodity, and, AFAIK, there's no limit to how many piglets a pig family can birth.

[billyjoeallen]

If the dollar stays as it is, it seems there is no end to this ponzi. A ponzi never dies, ever, as long as you have a never ending line of people to join and you can print money for free. Ponzi schemes collapse when nobody joins.

Ponzi schemes collapse when FEWER join than is needed to pay existing participants.
There's an end because there's a finite pool of potential suckers.  The ponzi has to grow FASTER than the pool.
There's an end just like there's an end to cancer cell reproduction-either when the cancer is removed or when the patient dies.

You need to understand: it's not just a dollar ponzi. it's a fiat ponzi. The dollar will be among the last to fail.

[billyjoeallen]

^
Scarcity also doesn't have to be artificial: Pork bellies are a commodity, and, AFAIK, there's no limit to how many piglets a pig family can birth.

There is a limit based on gestation time.

Which is why I argue so passionately that we don't need a blocksize limit.  We already have the propagation factor. The risk of orphaned blocks puts a natural limit to blockspace scarcity.

It will also be necessary to have more xactions/block when the block reward is near zero. More xactions=more xaction fees.  Miners need to be compensated or the network becomes less secure.

[makeacake]

If the dollar stays as it is, it seems there is no end to this ponzi. A ponzi never dies, ever, as long as you have a never ending line of people to join and you can print money for free. Ponzi schemes collapse when nobody joins.

Ponzi schemes collapse when FEWER join than is needed to pay existing participants.

That binary view holds only if payout is predetermined, not managed/variable (as is the case with fiat currencies/economies). A 'ponzi' like that stays in a state of constant flux, so it's not even clear what's meant by 'collapse.' People get poorer? Die? World implodes?

[ssmc2]

All you fools waiting for sub-300 should probably buy back in NOW.

[peonminer]

All you fools waiting for sub-300 should probably buy back in NOW.

[billyjoeallen]

That's more like it, many of those are good reasons for bitcoin to have value - and all better then "Bitcoin is scarce" which is easy and fundamentally lazy. Yes if Bitcoin can be used to do things that add value then it has value, and the finite number of bitcoins increases its value if more than that many are in demand, but first it must be used to do things - and the more those things are developed the better.
Owning 1 bitcoin equates to owning access to 100,000,000 entries on the blockchain (or lockers) - the more each entry can be used for (the more types of stuff I can put in a locker) and the more people want to access the lockers the more each bitcoin is worth.

The ~7TPS limit means that it may take a longer time to open each locker and if excessive xaction fees are required, then you have much less than 100,000,000 entries.

So it may mean that the stuff (colored coins, timestamps, etc) that you can put in the locker won't matter because there are other lockers on other chains that could be more useful. All smallblockers are doing is giving bitcoin's competitors time to catch up.

[makeacake]

^
Scarcity also doesn't have to be artificial: Pork bellies are a commodity, and, AFAIK, there's no limit to how many piglets a pig family can birth.

There is a limit based on gestation time.

Which is why I argue so passionately that we don't need a blocksize limit.  We already have the propagation factor. The risk of orphaned blocks puts a natural limit to blockspace scarcity.

It will also be necessary to have more xactions/block when the block reward is near zero. More xactions=more xaction fees.  Miners need to be compensated or the network becomes less secure.

You're clearly not a pig farmer
'Gestation time' is a meaningless limit, x1000 production is trivial if there's demand for pigs.
http://www.swinecast.com/files/swinecast.com/120916_Leman_BreedingHerd_Hostetler-thumb-300w.jpg
In other words, scarcity of certain commodities is simply a function of demand.

[AlexGR]

...
No because they can't go to an exchange, sell BTC, get USD to their bank account and then go to their bank and withdraw USD. They can't do that. They will get national currency instead - in most cases.

So they use BTC as a hard currency / USD-equivalent currency. The BTC payment processors do the rest: If a payment processor can accept BTC as currency and send you a shipment of tangible assets like gold, silver, technology stuff (iphones, laptops, etc etc), it's like you have actually paid with USD and paypal. But it's not necessary to spend your BTC - you can also hold them as a safer alternative (compared to local currency that is devaluating), as some do with their hard currency holdings.

Can you point me to a country where that's actually happening, on non-trivial scale?
Or are you talking about China, wher that's simply not the case?

Bitcoin is still "trivial". If this was happening on a large scale, we wouldn't still be at 4bn marketcap.

[billyjoeallen]

All you fools waiting for sub-300 should probably buy back in NOW.

You should be happy we're not buying back in now. There would be nobody with fiat left to halt the plunge in the event of a major dump.

[ChartBuddy]

Coin

Explanation

[peonminer]

Go home Chart Buddy, you're drunk.

[MatTheCat]

John the Dumper is dumping again.

Good traders buy in opportunity.

I amn't going to do it though, cos all that would happen would be my position going $5 against me, and then me freaking out and going short, and getting wiped out on the rise to $370.

I think thats what bots are programmed to do - buy and sell soon on every steep drop no matter what. Probably works.

You would have to assume that most trading is bot trading, and those Bitcoin bots seem to really love sequential Fib retracements.

[Elwar]

BITCOIN SALE:

Buy 2 bitcoins (at $500 each) get the third FREE!!!

[makeacake]

... Bitcoin is still "trivial". If this was happening on a large scale, we wouldn't still be at 4bn marketcap.

Ah, so no evidence of this actually happening?
Gotcha.

[AlexGR]

That's more like it, many of those are good reasons for bitcoin to have value - and all better then "Bitcoin is scarce" which is easy and fundamentally lazy.

Usefulness + scarcity go hand in hand in this case, so both are essential elements.

Regarding the 12kg / 1 BTC scarcity ratio, there is one key parameter that is lagging for BTC in order to start catching up in price (and I'm not speaking of catching the price of 1oz of gold, but rather 400 oz of gold).

This parameter is the mining cost.

The cost of mining 12kg gold / 386oz of gold is from 200.000 USD to 400.000 USD - with a mining cost estimated at ~500 to ~1000 USD per ounce, depending the field.

The cost of mining 1 bitcoin is currently nowhere near 200k or 400k USD needed for extracting 12kg of gold and this affects its perceived value.

When bitcoin generation starts to become much slower, and mining competition makes mining quite harder, this will have to change.

Those who are in for the longer term and co-factor the mining curve situation, have a very different price estimate from those who are trading day to day.

... Bitcoin is still "trivial". If this was happening on a large scale, we wouldn't still be at 4bn marketcap.

Ah, so no evidence of this actually happening?
Gotcha.

You asked me for large scale. There is no large scale use of BTC right now, whether we are talking about the "west" or developing nations. If it was happening widely we wouldn't be at 330$. But that's precisely why the situation is bullish, because what is now happening on the fringes of society, by a few tech-savy people who happen to know and use BTC, has the potential to spread to a far bigger % of the population. One of the safest assumptions is that adoption and use will increase - unless something catastrophic happens.

[peonminer]

BITCOIN SALE:

Buy 2 bitcoins (at $500 each) get the third FREE!!!

pwnd