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

[Hunyadi]

bulls still don't get it! the bubble has not been "pushed back". it's not going to happen!

people aren't going to magically start investing billions of dollars into bitcoin in November or whenever you'd like to believe just because of some bullshit numerology.

Yet another newbie knows it better! 

[oda.krell]

I couldn't explain it better than a member of the Slovenian Bitcoin Association, so I am quoting his post.

The conclusion is that price will stay unstable due to increasing adoption? I'm not so sure. At least it need not rise proportionally to adoption... One quite simple way to look at this is Fisher's formula for velocity of money: M * V = P * T.

M is money supply (fixed in case of bitcoin), T is num of transactions (rising in orders of magnitude). So to keep the equation balanced, the price (P) can rise but so can V (velocity of money, "frequency at which one unit of currency is used to purchase domestically-produced goods and services within a given time period"). Velocity has so far in history been rather stable, but given the usefulness of bitcoin for transactions (not very disputed even among critics), I wouldn't dare say V for bitcoin is going to be stable or at the same approximate level as for regular fiat money.

That's why I'm uneasy about projections like "the use of bitcoin will increase 1000x, therefore the price will rise 1000x". I believe the first part, but I don't think the second part follows necessarily.

Not a completely bad point, but in order to compensate for growing adoption, V would need to keep on rising. Exponentially, to compensate for exponentially rising adoption/usage. Not likely. Probably impossible in fact, considering the technical limitations and tradeoffs of the network.

In a thread a while ago, I made a (relatively simplistic) argument that, if Bitcoin is used as a method for Internet payments (and only for that) on the order of yearly Paypal volume today - a comparably modest goal, I'm sure you'll agree - and making a few extremely conservative estimates for the necessary parameters involved (including V), we arrive at a valuation of around $2000 per unit. The single biggest not-so-conservative assumption I am making is that those transactions are actually taking place on chain, not off chain, which could be an (unfortunate, because trust requiring) development.

(Link to my post, the calculation is under Addendum #2)

Back to the topic: I set V_year = 10, which is a conservative value considering that actual velocity of Bitcoin is probably a lot lower currently.  M1's V_year seems to be able to reach into the range of 10 (WP link), but usually is lower, so if the Bitcoin network would be stable anywhere 10 it'd be a) pretty efficient, and b) the argument you mention, that increased adoption and usage doesn't lead to proportionally higher valuation, doesn't hold.

[mmitech]

I couldn't explain it better than a member of the Slovenian Bitcoin Association, so I am quoting his post.

The conclusion is that price will stay unstable due to increasing adoption? I'm not so sure. At least it need not rise proportionally to adoption... One quite simple way to look at this is Fisher's formula for velocity of money: M * V = P * T.

M is money supply (fixed in case of bitcoin), T is num of transactions (rising in orders of magnitude). So to keep the equation balanced, the price (P) can rise but so can V (velocity of money, "frequency at which one unit of currency is used to purchase domestically-produced goods and services within a given time period"). Velocity has so far in history been rather stable, but given the usefulness of bitcoin for transactions (not very disputed even among critics), I wouldn't dare say V for bitcoin is going to be stable or at the same approximate level as for regular fiat money.

That's why I'm uneasy about projections like "the use of bitcoin will increase 1000x, therefore the price will rise 1000x". I believe the first part, but I don't think the second part follows necessarily.

pretty sure he means price will rise more then use, which is true, it will probably go twice as high as it should.

  being a perma-bull made you blind, what he is saying is crystal clear let me repeat it:

That's why I'm uneasy about projections like "the use of bitcoin will increase 1000x, therefore the price will rise 1000x". I believe the first part, but I don't think the second part follows necessarily.

[ChartBuddy]

Explanation

[Chuckee]

bulls still don't get it! the bubble has not been "pushed back". it's not going to happen!

people aren't going to magically start investing billions of dollars into bitcoin in November or whenever you'd like to believe just because of some bullshit numerology.

Yet another newbie knows it better! 

http://www.firstpeople.us/pictures/bear/1600x1200/High_Five-1600x1200.jpg

I clearly do since I've been warning you all for weeks about the impending downtrend and nobody listen!

[adamstgBit]

I couldn't explain it better than a member of the Slovenian Bitcoin Association, so I am quoting his post.

The conclusion is that price will stay unstable due to increasing adoption? I'm not so sure. At least it need not rise proportionally to adoption... One quite simple way to look at this is Fisher's formula for velocity of money: M * V = P * T.

M is money supply (fixed in case of bitcoin), T is num of transactions (rising in orders of magnitude). So to keep the equation balanced, the price (P) can rise but so can V (velocity of money, "frequency at which one unit of currency is used to purchase domestically-produced goods and services within a given time period"). Velocity has so far in history been rather stable, but given the usefulness of bitcoin for transactions (not very disputed even among critics), I wouldn't dare say V for bitcoin is going to be stable or at the same approximate level as for regular fiat money.

That's why I'm uneasy about projections like "the use of bitcoin will increase 1000x, therefore the price will rise 1000x". I believe the first part, but I don't think the second part follows necessarily.

pretty sure he means price will rise more then use, which is true, it will probably go twice as high as it should.

  being a perma-bull made you blind, what he is saying is crystal clear let me repeat it:

That's why I'm uneasy about projections like "the use of bitcoin will increase 1000x, therefore the price will rise 1000x". I believe the first part, but I don't think the second part follows necessarily.

thats only true if poeple use bitcoin purely as way to transact.... this is FAR from relaitly

and because of this

1000x increased users = 10,000X price incress

i think he gets that

I wouldn't dare say V for bitcoin is going to be stable or at the same approximate level as for regular fiat money.

he can't be suggesting that people will want to spend BTC b4 fiat....

[mmitech]

I couldn't explain it better than a member of the Slovenian Bitcoin Association, so I am quoting his post.

The conclusion is that price will stay unstable due to increasing adoption? I'm not so sure. At least it need not rise proportionally to adoption... One quite simple way to look at this is Fisher's formula for velocity of money: M * V = P * T.

M is money supply (fixed in case of bitcoin), T is num of transactions (rising in orders of magnitude). So to keep the equation balanced, the price (P) can rise but so can V (velocity of money, "frequency at which one unit of currency is used to purchase domestically-produced goods and services within a given time period"). Velocity has so far in history been rather stable, but given the usefulness of bitcoin for transactions (not very disputed even among critics), I wouldn't dare say V for bitcoin is going to be stable or at the same approximate level as for regular fiat money.

That's why I'm uneasy about projections like "the use of bitcoin will increase 1000x, therefore the price will rise 1000x". I believe the first part, but I don't think the second part follows necessarily.

Not a completely bad point, but in order to compensate for growing adoption, V would need to keep on rising. Exponentially, to compensate for exponentially rising adoption/usage. Not likely. Probably impossible in fact, considering the technical limitations and tradeoffs of the network.

In a thread a while ago, I made a (relatively simplistic) argument that, if Bitcoin is used as a method for Internet payments (and only for that) on the order of yearly Paypal volume today - a comparably modest goal, I'm sure you'll agree - and making a few extremely conservative estimates for the necessary parameters involved (including V), we arrive at a valuation of around $2000 per unit. The single biggest not-so-conservative assumption I am making is that those transactions are actually taking place on chain, not off chain, which could be an (unfortunate, because trust requiring) development.

(Link to my post, the calculation is under Addendum #2)

Back to the topic: I set V_year = 10, which is a conservative value considering that actual velocity of Bitcoin is probably a lot lower currently.  M1's V_year seems to be able to reach into the range of 10 (WP link), but usually is lower, so if the Bitcoin network would be stable anywhere 10 it'd be a) pretty efficient, and b) the argument you mention, that increased adoption and usage doesn't lead to proportionally higher valuation, doesn't hold.

the only way to know how this theory will work in reality is to sit-back and watch how things will develop, although it would be really hard to get "real" numbers, but estimates could do as well.

[Hunyadi]

bulls still don't get it! the bubble has not been "pushed back". it's not going to happen!

people aren't going to magically start investing billions of dollars into bitcoin in November or whenever you'd like to believe just because of some bullshit numerology.

Yet another newbie knows it better!  

http://www.firstpeople.us/pictures/bear/1600x1200/High_Five-1600x1200.jpg

I clearly do since I've been warning you all for weeks about the impending downtrend and nobody listen!

Date Registered:    Today at 01:56:52 AM

Oh, those telepathic messages 

[fonsie]

bulls still don't get it! the bubble has not been "pushed back". it's not going to happen!

people aren't going to magically start investing billions of dollars into bitcoin in November or whenever you'd like to believe just because of some bullshit numerology.

Yet another newbie knows it better! 

http://www.firstpeople.us/pictures/bear/1600x1200/High_Five-1600x1200.jpg

I clearly do since I've been warning you all for weeks about the impending downtrend and nobody listen!

So this is another scam account from fallling?

[justusranvier]

I couldn't explain it better than a member of the Slovenian Bitcoin Association, so I am quoting his post.

The conclusion is that price will stay unstable due to increasing adoption? I'm not so sure. At least it need not rise proportionally to adoption... One quite simple way to look at this is Fisher's formula for velocity of money: M * V = P * T.

M is money supply (fixed in case of bitcoin), T is num of transactions (rising in orders of magnitude). So to keep the equation balanced, the price (P) can rise but so can V (velocity of money, "frequency at which one unit of currency is used to purchase domestically-produced goods and services within a given time period"). Velocity has so far in history been rather stable, but given the usefulness of bitcoin for transactions (not very disputed even among critics), I wouldn't dare say V for bitcoin is going to be stable or at the same approximate level as for regular fiat money.

That's why I'm uneasy about projections like "the use of bitcoin will increase 1000x, therefore the price will rise 1000x". I believe the first part, but I don't think the second part follows necessarily.

V will be lower in a Bitcoin world than in a fiat world.

Right now inflation artificially increases V by encouraging currency holders to spend today rather than lose purchasing power tomorrow.

[dropt]

So this is another scam account from fallling?

i would say so.

[oda.krell]

I couldn't explain it better than a member of the Slovenian Bitcoin Association, so I am quoting his post.

The conclusion is that price will stay unstable due to increasing adoption? I'm not so sure. At least it need not rise proportionally to adoption... One quite simple way to look at this is Fisher's formula for velocity of money: M * V = P * T.

M is money supply (fixed in case of bitcoin), T is num of transactions (rising in orders of magnitude). So to keep the equation balanced, the price (P) can rise but so can V (velocity of money, "frequency at which one unit of currency is used to purchase domestically-produced goods and services within a given time period"). Velocity has so far in history been rather stable, but given the usefulness of bitcoin for transactions (not very disputed even among critics), I wouldn't dare say V for bitcoin is going to be stable or at the same approximate level as for regular fiat money.

That's why I'm uneasy about projections like "the use of bitcoin will increase 1000x, therefore the price will rise 1000x". I believe the first part, but I don't think the second part follows necessarily.

Not a completely bad point, but in order to compensate for growing adoption, V would need to keep on rising. Exponentially, to compensate for exponentially rising adoption/usage. Not likely. Probably impossible in fact, considering the technical limitations and tradeoffs of the network.

In a thread a while ago, I made a (relatively simplistic) argument that, if Bitcoin is used as a method for Internet payments (and only for that) on the order of yearly Paypal volume today - a comparably modest goal, I'm sure you'll agree - and making a few extremely conservative estimates for the necessary parameters involved (including V), we arrive at a valuation of around $2000 per unit. The single biggest not-so-conservative assumption I am making is that those transactions are actually taking place on chain, not off chain, which could be an (unfortunate, because trust requiring) development.

(Link to my post, the calculation is under Addendum #2)

Back to the topic: I set V_year = 10, which is a conservative value considering that actual velocity of Bitcoin is probably a lot lower currently.  M1's V_year seems to be able to reach into the range of 10 (WP link), but usually is lower, so if the Bitcoin network would be stable anywhere 10 it'd be a) pretty efficient, and b) the argument you mention, that increased adoption and usage doesn't lead to proportionally higher valuation, doesn't hold.

the only way to know how this theory will work in reality is to sit-back and watch how things will develop, although it would be really hard to get "real" numbers, but estimates could do as well.

Agreed. But to highlight the main point of my argument (like you did in yours :D) - we don't know yet exactly what V_year for the network will be, in the long run. If it's very low, theoretically per unit price would go up - only, it wouldn't because it would mean the network is too inefficient (at least a payment method). If it's very high, that'd depress unit price, but it'd be an incentive to use, because it would be efficient. The only thing that is unlikely enough to call it impossible is that V could somehow "outgrow" even moderate adoption - considering that right now, we are actually seeing the opposite problem, that is: the unsolved question how to make Bitcoin scale to size as a global transaction network (block size limit being the main point here, to my knowledge).

[adamstgBit]

last chance to buy below 500?

[Phillis]

last chance to buy below 500?

likely, i'd like to see a nice short squeeze and i am anticipating one.

[Threebits]

That's why I'm uneasy about projections like "the use of bitcoin will increase 1000x, therefore the price will rise 1000x". I believe the first part, but I don't think the second part follows necessarily.

-----------
That's quite advisory. Increasing user was not the only element for price, velocity is as well. If user increases and circulation quickens, price will not necessarily increase! Anyone comment on this?

[abercrombie]

óÔÔò ʕ·͡ᴥ·ʔ óÔÔò

[mmitech]

I couldn't explain it better than a member of the Slovenian Bitcoin Association, so I am quoting his post.

The conclusion is that price will stay unstable due to increasing adoption? I'm not so sure. At least it need not rise proportionally to adoption... One quite simple way to look at this is Fisher's formula for velocity of money: M * V = P * T.

M is money supply (fixed in case of bitcoin), T is num of transactions (rising in orders of magnitude). So to keep the equation balanced, the price (P) can rise but so can V (velocity of money, "frequency at which one unit of currency is used to purchase domestically-produced goods and services within a given time period"). Velocity has so far in history been rather stable, but given the usefulness of bitcoin for transactions (not very disputed even among critics), I wouldn't dare say V for bitcoin is going to be stable or at the same approximate level as for regular fiat money.

That's why I'm uneasy about projections like "the use of bitcoin will increase 1000x, therefore the price will rise 1000x". I believe the first part, but I don't think the second part follows necessarily.

V will be lower in a Bitcoin world than in a fiat world.

Right now inflation artificially increases V by encouraging currency holders to spend today rather than lose purchasing power tomorrow.

what does that mean  P= (M * V)/T assuming that the velocity will be much lower and transactions much higher then the price will:

a) stay somehow stable if transactions and adoption are almost equal.
b) rise slowly, with no bubbles whatsoever if the adoption is slightly more than the transactions.
c) can even drop a bit if adoption slow down and current holders start using it as a currency


which confirm the theory above "the use of bitcoin will increase 1000x, therefore the price will rise 1000x, I believe the first part, but I don't think the second part follows necessarily", dont you think ?

[Painful Truth]

last chance to buy below 500?

That´s the spirit!

It is still weekend though.

[Wandererfromthenorth]

Whatever happens to BTC and cryptocurrencies, whether you're rich or broke, it's interesting and exciting to be a part of this whole thing.

[mmitech]

I couldn't explain it better than a member of the Slovenian Bitcoin Association, so I am quoting his post.

The conclusion is that price will stay unstable due to increasing adoption? I'm not so sure. At least it need not rise proportionally to adoption... One quite simple way to look at this is Fisher's formula for velocity of money: M * V = P * T.

M is money supply (fixed in case of bitcoin), T is num of transactions (rising in orders of magnitude). So to keep the equation balanced, the price (P) can rise but so can V (velocity of money, "frequency at which one unit of currency is used to purchase domestically-produced goods and services within a given time period"). Velocity has so far in history been rather stable, but given the usefulness of bitcoin for transactions (not very disputed even among critics), I wouldn't dare say V for bitcoin is going to be stable or at the same approximate level as for regular fiat money.

That's why I'm uneasy about projections like "the use of bitcoin will increase 1000x, therefore the price will rise 1000x". I believe the first part, but I don't think the second part follows necessarily.

Not a completely bad point, but in order to compensate for growing adoption, V would need to keep on rising. Exponentially, to compensate for exponentially rising adoption/usage. Not likely. Probably impossible in fact, considering the technical limitations and tradeoffs of the network.

In a thread a while ago, I made a (relatively simplistic) argument that, if Bitcoin is used as a method for Internet payments (and only for that) on the order of yearly Paypal volume today - a comparably modest goal, I'm sure you'll agree - and making a few extremely conservative estimates for the necessary parameters involved (including V), we arrive at a valuation of around $2000 per unit. The single biggest not-so-conservative assumption I am making is that those transactions are actually taking place on chain, not off chain, which could be an (unfortunate, because trust requiring) development.

(Link to my post, the calculation is under Addendum #2)

Back to the topic: I set V_year = 10, which is a conservative value considering that actual velocity of Bitcoin is probably a lot lower currently.  M1's V_year seems to be able to reach into the range of 10 (WP link), but usually is lower, so if the Bitcoin network would be stable anywhere 10 it'd be a) pretty efficient, and b) the argument you mention, that increased adoption and usage doesn't lead to proportionally higher valuation, doesn't hold.

the only way to know how this theory will work in reality is to sit-back and watch how things will develop, although it would be really hard to get "real" numbers, but estimates could do as well.

Agreed. But to highlight the main point of my argument (like you did in yours ) - we don't know yet exactly what V_year for the network will be, in the long run. If it's very low, theoretically per unit price would go up - only, it wouldn't because it would mean the network is too inefficient (at least a payment method). If it's very high, that'd depress unit price, but it'd be an incentive to use, because it would be efficient. The only thing that is unlikely enough to call it impossible is that V could somehow "outgrow" even moderate adoption - considering that right now, we are actually seeing the opposite problem, that is: the unsolved question how to make Bitcoin scale to size as a global transaction network (block size limit being the main point here, to my knowledge).

I still dont get how the price will rise if V is low, P= (M * V)/T means the greater V is the greater the price is, isn't it ? the case when the price will be high: if Transactions are low and both or one M or V rise greater than T.