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

[Spaceman_Spiff]

http://satoshi.nakamotoinstitute.org/posts/bitcointalk/65/

The price of any commodity tends to gravitate toward the production cost.  If the price is below cost, then production slows down.  If the price is above cost, profit can be made by generating and selling more.  At the same time, the increased production would increase the difficulty, pushing the cost of generating towards the price.

In later years, when new coin generation is a small percentage of the existing supply, market price will dictate the cost of production more than the other way around.

At the moment, generation effort is rapidly increasing, suggesting people are estimating the present value to be higher than the current cost of production.

... does that spell it out clearly enough for you?

Doesn't the fact that supply is fixed suggest that production cost follows the price?

... therein lies the magic, difficulty ratchets up cost and price ratchets up difficulty ... it's a virtuous circle from which the counterfeiters cannot escape.

Yes, but nothing ratches up price, so it is the driving factor, no?

... utility, expectation and speculation all ratchet up price at different times.

Yes, but we were discussing the relationship between price and production costs.

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[StraightAArdvark]

Or we could mine them with turning the Moon into a gigantic ASIC (cooling is kinda cheap in space).

Radiant only, no air, much weird radiation, possibly scorching sun.
Prohibitively expensive
Edit: http://physics.stackexchange.com/questions/72179/cooling-down-a-container-in-outer-space

[AZwarel]

"How exactly the "production" of bitcoin can slow down, when the network automatically adjusts to keep the "production" exactly the same average of 10 mins/block??? That is the whole point of the dynamic adjustment, that you can NOT increase or decrease coin generation in the long time/large scale, no matter how many trillion-billion-fillion hashes you add.

We could mine the same coins with 2 laptops. Or we could mine them with turning the Moon into a gigantic ASIC (cooling is kinda cheap in space). They would generate the same amount of coins after the 1st difficulty adjustment.

Radiant only, no air, much weird radiation, possibly scorching sun.
Prohibitively expensive
Edit: http://physics.stackexchange.com/questions/72179/cooling-down-a-container-in-outer-space

That was not my point, and you know it, and do not quote out of context please...also, it gives "to the Moon" a new meaning

[StraightAArdvark]

^Respect my inner nerd!  I was around here when mining IPOs were telling people how waste heat wasn't waste heat, how it will be used to heat apartments and how Novec immersion cooling would drive power-generating turbines. It hurt. These scars never heal...

https://i.imgur.com/t6PaXVe.gif

And only hours to the (>$15) drop. Not trading advice, have been wrong before.
But not often

И нa cтapyxy бывaeт пpopyxa

[Syke]

Don't be stupid.  There is a major difference between selling at a 'small' loss (i.e., just in the red), vs. selling for nothing.  Mining costs absolutely do put a floor on what miners will be willing to sell coins on the market.  The floor was around 200 just last fall, and was tested multiple times.  Now hashrate has risen significantly since then.

And with the new higher-efficiency miners coming, the electricity cost to produce a bitcoin is about 10% of its current value. We're way above the potential price floor. This current rally is going to cause a lot of new miners to come online and drive the difficulty way up.

[soullyG]

Testing support at the low $580 mark before we can move up tonight

[Assmaster2000]

"The last year has seen this narrative arise that progress on tech is stagnant.
This narrative was partly due to price stagnation... but also encouraged largely by a huge misunderstanding regarding what Core actually does and how Core functions."



http://www.coindesk.com/zurich-bitcoin-core-scaling/

[BitUsher]

Core proves once again that they are able to scale bitcoin with cutting edge innovation -

https://bitcoincore.org/en/2016/06/07/compact-blocks-faq/

Why Compact Blocks are superior to Xthin blocks which was long ago discarded by core as being insecure and inferior-

https://www.reddit.com/r/Bitcoin/comments/4mt6ek/part_4_of_5_towards_massive_onchain_scaling_xthin/d3ye2i0

    BIP 152 is superior in several different ways.

    (1) It is not vulnerable to short id collision attacks and filter cpu waste attacks.

    (2) It can use less bandwidth (due to not having to send a filter).

    (3) It achieves a lower minimum latency (0.5 RTT vs 1.5 RTT). Xthin cannot achieve 0.5 RTT under any condition.

    (4) It has a (hopefully) complete specification (the behavior of xthin blocks has no written specification)

    (5) The implementation is very small and clean.


P.S... and yes, Compact blocks code already exists and has been tested for many months in elements alpha.
 

[Assmaster2000]

^Are they still planning on finishing SegWit sometime?

[podyx]

https://www.youtube.com/watch?v=-SdUulSxhFw

[bitebits]

Cost of production is doubling in less than a month ... that will set the new floor for bitcoin price to the $840-960 range (at the minimum without difficulty increases) in the medium term.

Cost of production for a monetary good is the economic defence against counterfeiting.  While gold is money, and sometimes attracts a monetary premium substantially above it's cost of production, for someone to produce gold "from nothing" they need to expend an equivalent amount of resources to the cost of production.  Over long terms the price of the monetary good may be attracted to its cost of production but ultimately that is as cheap as you can acquire it for, as long as it is still desirable as a monetary good.  For the same reason the lowest value of fiat paper money is the cost of the paper it is printed on and the ink, i.e. it's cost of production (about a few cents for a $100 bill).

While bitcoin is still valued as a monetary good, that can be transported in minutes across the internet as a final settlement for bearer instruments exchanged on a censorship-resistant network, it still needs to defend against counterfeiting.  The cost of production defends against counterfeiting since this is as cheap as you can produce bitcoin.  If bitcoin becomes more desirable for other reasons of its utility, such as store of value, medium of exchange (network effect increasing), etc., then it may easily attract a monetary good premium on top of the cost of production, but the cost of production has invariably set the floor for the lower bound on bitcoin prices, as long as it has remained a monetary good.

Bitcoin is still monetising.

Good read! I wonder how the following scenario plays out according to your theory:
- Cost of production: 100$
- Current bitcoin price: 100$

Then Bitcoin becomes more desirable for other reasons of it's utility:
- Cost of production: 100$
- Bitcoin price: 125$

Wouldn't the cost of production then quickly be rising to ~125$, since it is profitable again to buy and fire up more miners? Basically setting a new higher floor for the lower bound on bitcoin prices? Looks like a self-fulfilling prophecy.

[zimmah]

Cost of production is doubling in less than a month ... that will set the new floor for bitcoin price to the $840-960 range (at the minimum without difficulty increases) in the medium term.

Cost of production for a monetary good is the economic defence against counterfeiting.  While gold is money, and sometimes attracts a monetary premium substantially above it's cost of production, for someone to produce gold "from nothing" they need to expend an equivalent amount of resources to the cost of production.  Over long terms the price of the monetary good may be attracted to its cost of production but ultimately that is as cheap as you can acquire it for, as long as it is still desirable as a monetary good.  For the same reason the lowest value of fiat paper money is the cost of the paper it is printed on and the ink, i.e. it's cost of production (about a few cents for a $100 bill).

While bitcoin is still valued as a monetary good, that can be transported in minutes across the internet as a final settlement for bearer instruments exchanged on a censorship-resistant network, it still needs to defend against counterfeiting.  The cost of production defends against counterfeiting since this is as cheap as you can produce bitcoin.  If bitcoin becomes more desirable for other reasons of its utility, such as store of value, medium of exchange (network effect increasing), etc., then it may easily attract a monetary good premium on top of the cost of production, but the cost of production has invariably set the floor for the lower bound on bitcoin prices, as long as it has remained a monetary good.

Bitcoin is still monetising.

agreed, the lower boundary of the rpcie is the production cost.

It could accidentally be below this value for a short time, but never for long.

The upper boundary is pretty much unlimited (limited only by the amount of value we can exchange for it). So the absolute upper value would be everything in the world divided by the amount of bitcoin in circulation. Of course we would never quite reach that value, but that would be the absolute upper limit it could never go above.

[bitebits]

[...]
Plus bitcoin is my main currency. It is made to gain value over time as opposed to federal reserve notes which are built with the purpose of losing value over time. Losing 1% up front does not keep me up at night.

Funny how you can be so theoretically correct, but currently still be seen by the majority as irrational. Even on a bitcoin forum.
Let's check back in a couple of years!

[barbs]

its just so rude, so so rude

[Assmaster2000]

I'm so happy I didn't invest in scamcoin ETH, because if it wasn't a scam coin, I'd be pretty sad right about now.

Which I'm totally not.

[J4mie]

Hopefully we can hold $500

[DeathAngel]

Hopefully we can hold $500

Stop trolling, it's highly unlikely the price will drop below 500 USD. A correction of sorts always happens after a significant price rise, this is normal.
We won't fall below 500 though imo.

[becoin]

Hopefully we can hold $500

Some dickhead thinks if they chart double top on the charts people will panic and dump their bitcoins. Won't happen. This correction is just a buy opportunity.

[savetherainforest]

Hopefully we can hold $500

Some dickhead thinks if they chart double top on the charts people will panic and dump their bitcoins. Won't happen. This corrections is just a buy opportunity.

Exactly! ... I made 5% already .. bought back in! Good profit is good!

[StraightAArdvark]

And only hours to the (>$15) drop. Not trading advice, have been wrong before.
But not often

И нa cтapyxy бывaeт пpopyxa

$564. Feels a bit better