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

[brg444]

This is why I think that that cannot be the support for the bitcoin price for a long, long time.  I think that the main steady state drive will be "buying stuff", with my formula.

Speculation will be the driving force for Bitcoin until mass adoption.

It was designed by Satoshi to be so. Speculation is the bootstrapping method for Bitcoin to gain mass acceptance and only then will it realize its promises as a mean-of-exchange

Of course.  But speculation is always based upon an expectation in the future, and if that expectation is wrong, the speculator looses.  So rational speculation is based upon a long term estimate of the fundamentals.

And my aim here is to find out what those fundamentals are.  As you say, it can be mass adoption as "means-of-exchange", and then the "quantity theory of money" jumps in to indicate what will be the price of things in bitcoin, which will inversely indicate what will be the market price of bitcoin (as compared to other monetary assets such as $ that can buy the same stuff).

The market value of bitcoin "as a means of exchange" will then be the fundamental, and it is determined by how much stuff one can buy with it, and what is the average holding time between such buys, as that will determine the aggregate demand for bitcoin, and hence determine its market value.

The *other* fundamental is "store of value for the long term".  In my opinion, that can only come in once bitcoin is established as a means-of-exchange for some time.  Maybe I'm wrong here.

But speculation by itself, cannot be a fundamental.  It has to AIM for a fundamental.  And I'd like, in this discussion, to find out what it is.

Read this here : https://bitcointalk.org/index.php?topic=68655.msg9247581#msg9247581

These are the fundamentals we are dealing with.

[nioc]

going up and down too much per day. manipulators feeding on peoples longs and shorts.

BitcoinWisdom: 30 Day Change%:  +1.14   

[ChartBuddy]

Explanation

[YogoH]

cup and handle inc

[dnaleor]

looking good! Retest of 370 happened, now Bitcoin is back in CHOO CHOO mode:D
trend reversal... I happened!

edit: I want to post on the epic page 10000  

[bitebits]

you bitches ready for this?

set a course, for the moon.

Finally some common sense into this topic, good to have you back Adam.
Now lets hunt down that 10k bitcoin/page!

[dinofelis]

Steady? As in... fixed? You do know that Bitcoin is a deflationary currency correct? Which means yes, the growth CAN and WILL last indefinitely.  

Yes, but not "to the moon".   Bitcoin will become deflationary when its inflation will drop below the economic growth rate, under the assumption of constant adoption.

Steady is not as in "fixed" but as in any other mature collectable.  It can fluctuate, and it can grow at the rate of economic growth (minus inflation rate, as long as we are not 140 years from now).  It will fluctuate as a function of the fluctuations of aggregate demand for "store of value" in general, and as a function of its market share in that demand.

So I propose to make the mental exercise to put yourself in the hypothetical situation where you eliminate mentally that speculative purpose, and try to find out your own drive to put value into bitcoin *for store of value* reasons, and not for "to the moon" speculative reasons.  I very well know that the actual situation is the speculative "to the moon" drive.  But in order to find out what is going to be the steady state situation, you have to be able to find out what would be the drive to hold bitcoin *without* speculative "to the moon" drive.

Well the list is pretty long, but if you insist here's a few : 1. Deflationary 2. Ideal property as money 3. Distributed and outside the reach of any singular entity (read: government) 4. Programmable 5. Highly secure 6. Unseizable

Yes, but that doesn't give you any idea of its market share in 'steady state', nor as specific parameters such as hold time, and as such cannot be used to estimate a price.  Of course bitcoin has good potential.  But the price is not determined by that.

Government can kill bitcoin very simply, by rendering it illegal: openly, or by putting regulations on it that make it too difficult to handle.  Then bitcoin is reduced to the black market as it was for a good part recently.  I think, btw, that government is the biggest threat to bitcoin.

So in order to make that exercise, suppose that six months from now, for one or another reason, the bitcoin price has gone up to $ 500 000,- (and not because the dollar collapsed) and it stays there for 6 other months with fluctuations of 10% or so.  Obviously, at that price, the "to the moon" expectation afterwards is gone.  You do not expect it to rise to 10 million, do you.  You might still hope for a small factor of 2 or 3, but that's it.

I can certainly envision it reaching 10 million per BTC in my lifetime. But lemme play along to your "scenario"....

Are you going to put your savings at that moment in $ 500 000,- coins ?  Seriously ?
(or are you going to sell part of what you have to cash in ? :-) ).

 

At this point it is clear you have no understanding of the dynamics at stake. At 500,000$ per coin I have no interest for your worthless fiat. No I am NEVER going to cash out because at that point it is clear and beyond evident that BTC has won. So yes, I am going to make sure every single penny I have is used to buy BTC. In fact, disregarding your speculative scenario, I can confirm to you that I am going to make this move MUCH earlier

I'm trying to make you make a gedanken experiment.  That doesn't seem to work.  I'm asking you how much you honestly would put bitcoin at work as a store of value without huge expectations in gain (eventually just fluctuations and economic growth, which is the normal value evolution of any collectable) ; and in how much you think majority of people are going to act like that.  Because *that* is what is going to determine its market share of the "store of value" aggregate demand, and hence part of its price.

The $500 000,- was just a mental exercise to make you think of a situation where "to the moon" growth is not to be considered anymore.  My opinion on that is that most people holding bitcoin are mostly into it for the "to the moon" scenario, and NOT as a store of value without much hope of spectacular rise in the next 10 years or so.  

There are of course people who think that fiat will collapse and so on, but that is certainly not such a big majority that they can carry a market cap worth of hundreds of billions of dollars.  People able to carry such a market cap are probably still into fiat and other stores of value.

My point is not to argue what people *should* do, but what they are *going* to do.  And my claim is, that today, and in the coming few years, there's not enough aggregate demand for store of value in bitcoin (without the speculative 'to the moon' aspect) that could sustain a high bitcoin price.  That can only come much, much later in my opinion, in at least a decade or a few decades, and on the condition that bitcoin has had *another* support, namely as a means-to-buy-stuff.

But that is just my opinion, and to find out for real, you should try to find out for real what is the market cap right now that could be sustained by JUST "store of value" and NOT "speculation to the moon".

This, to find out if you *really* consider bitcoin a good store of value for your savings without any "to the moon" speculation anymore, just a reasonable potential to rise somewhat, like other stores of value like gold, real estate and the like.

Bitcoin is a GREAT store of value, the best there is in fact. The reason for this is it is simply the best form of money that has ever been created. Gold pales in comparison to Bitcoin. Real estate can be seized through coercion or devalued by speculative market.

Yes, all this is true in theory.  The question is how much people RIGHT NOW and in the few coming years are going to take that argument and are going to put their value according to that statement.

I don't see many people selling their real estate to buy bitcoin because they are afraid it might get seized.  Because the opposite side of the medal is that government renders bitcoin illegal.  Then they cannot seize it, but what are you going to do with your coins ?  Flee to a country where you can still exchange it against something ?  Against what ? Fiat ?  Real estate ?

You see, I also agree with all those potential aspects.  But the price is made in the market, and is a matter of offer and demand.  The part of demand that is speculative "to the moon" is not sustainable.  So one has to have other steady state demands that are the ultimate drive to base speculation on.

My claim is that right now, these fundamentals are:
- the stuff you can buy with bitcoin (growing, but still small, except maybe black markets)
- store of value in the long term, of which I think that for the moment, without speculative "to the moon" drive, there is not much, and there won't be as long as "the stuff you can buy with bitcoin" is not the main carrier of the aggregate demand.

You are obviously missing the point, right.  *Of course* the speculative drive is the strongest one.  But it cannot last, of course.  Once it is over, I'm trying to find out what would be the drive.  Because ultimately, *that* drive is what is going to give bitcoin any value as store of value.  Otherwise, it is indeed, just Ponzi, if nothing holds it up once it cannot grow anymore.  Just to be clear, I don't think it is Ponzi.  But in order for it not to be, one has a clear view on its fundamentals.  Fundamentals are never "growth to infinity", but are "steady state" arguments that are sustainable.

In the long term, fundamentals always win.  That is why a real Ponzi, which has no fundamentals, always collapses.

So I'm trying to find out what are the fundamentals of bitcoin.  As I said, my opinion is that it is "money to buy stuff".  Some think it is "store of value".  My *opinion* which can be wrong, is that that can only come much later.  But "expectations to the moon" are never fundamentals by themselves.

The fundamentals are that Bitcoin is the best form of money that exists. Point blank. Period.
https://www.youtube.com/watch?v=gKkfhi8Eaiw

So your claim is essentially, that bitcoin will take over all of the money market, and the store of value market.
That the 50 trillion dollar equivalent worldwide of M2 fiat money will completely turn into bitcoin.  And you think that governments will let that happen any time soon.  And that most of the rest of store of value will be in bitcoin (gold, ...).
When do you think that will happen ?  A century from now ?  50 years from now ?

How many people do you think will think that way, say, 20 years from now ?  Because that is what will determine their speculative attitude at that moment.

Because it is an extreme claim.  It will give you the upper limit of the potential price of bitcoin.  

It is a way to look at things, but I would give it a rather low probability.  It is probably much more realistic that bitcoin will take a small share of the market, and try to estimate that.  That will happen much sooner, a few decades from now at most.

[ChartBuddy]

Explanation

[marcus_of_augustus]

The market invariably chooses to use the best money available. There can only be one.

[brg444]

Yes, but that doesn't give you any idea of its market share in 'steady state', nor as specific parameters such as hold time, and as such cannot be used to estimate a price.  Of course bitcoin has good potential.  But the price is not determined by that.

Government can kill bitcoin very simply, by rendering it illegal: openly, or by putting regulations on it that make it too difficult to handle.  Then bitcoin is reduced to the black market as it was for a good part recently.  I think, btw, that government is the biggest threat to bitcoin.

Some government making Bitcoin illegal will only serve to legitimize it and accelerate its growth. Remember also that Bitcoin is GLOBAL, I don't believe you suggest all of the worlds' governement would ban BTC do you?

The market share, in the proposed "steady state" can only be 100%. Only when it has attained 100% of its potential market adoption does it then become "steady". The universe wants ONE money. Good money drives out bad money.

I'm trying to make you make a gedanken experiment.  That doesn't seem to work.  I'm asking you how much you honestly would put bitcoin at work as a store of value without huge expectations in gain (eventually just fluctuations and economic growth, which is the normal value evolution of any collectable) ; and in how much you think majority of people are going to act like that.  Because *that* is what is going to determine its market share of the "store of value" aggregate demand, and hence part of its price.

The $500 000,- was just a mental exercise to make you think of a situation where "to the moon" growth is not to be considered anymore.  My opinion on that is that most people holding bitcoin are mostly into it for the "to the moon" scenario, and NOT as a store of value without much hope of spectacular rise in the next 10 years or so.

I do not have to argue against your misrepresentation of Bitcoin holders. So without any huge expectations in gain, and given a scenario where BTC's value is "stable" I would put 100% of my wealth into it for the reasons stated previously :

1. Deflationary 2. Ideal property as money 3. Distributed and outside the reach of any singular entity (read: government) 4. Programmable 5. Highly secure 6. Unseizable

There are of course people who think that fiat will collapse and so on, but that is certainly not such a big majority that they can carry a market cap worth of hundreds of billions of dollars.  People able to carry such a market cap are probably still into fiat and other stores of value.

Again, good money drives out bad money. Given a choice to transfer their stake 1:1 into Bitcoin and have it remain "stable" then it is obvious that given proper education and some time to realize the benefits of Bitcoin money vs. Fiat the choice would be a no brainer.

My point is not to argue what people *should* do, but what they are *going* to do.  And my claim is, that today, and in the coming few years, there's not enough aggregate demand for store of value in bitcoin (without the speculative 'to the moon' aspect) that could sustain a high bitcoin price.  That can only come much, much later in my opinion, in at least a decade or a few decades, and on the condition that bitcoin has had *another* support, namely as a means-to-buy-stuff.

Your point is useless if you choose to ignore the speculative aspect. This is simply a dishonest way to argue against reality.

http://nakamotoinstitute.org/mempool/speculative-attack/

Bitcoin will not be eagerly adopted by the mainstream, it will be forced upon them. Forced, as in "compelled by economic reality". People will be forced to pay with bitcoins, not because of 'the technology', but because no one will accept their worthless fiat for payments. Contrary to popular belief, good money drives out bad. This "driving out" has started as a small fiat bleed. It will rapidly escalate into Class IV hemorrhaging due to speculative attacks on weak fiat currencies. The end result will be hyperbitcoinization, i.e. "your money is no good here".

Yes, all this is true in theory.  The question is how much people RIGHT NOW and in the few coming years are going to take that argument and are going to put their value according to that statement.

I don't see many people selling their real estate to buy bitcoin because they are afraid it might get seized.  Because the opposite side of the medal is that government renders bitcoin illegal.  Then they cannot seize it, but what are you going to do with your coins ?  Flee to a country where you can still exchange it against something ?  Against what ? Fiat ?  Real estate ?

You see, I also agree with all those potential aspects.  But the price is made in the market, and is a matter of offer and demand.  The part of demand that is speculative "to the moon" is not sustainable.  So one has to have other steady state demands that are the ultimate drive to base speculation on.

This is where we disagree again and where I have to insist that your argument is disingenuous and brings no value to the discussion. The speculative "to the moon" aspect is absolutely substainable. In fact it is only getting started.

My claim is that right now, these fundamentals are:
- the stuff you can buy with bitcoin (growing, but still small, except maybe black markets)
- store of value in the long term, of which I think that for the moment, without speculative "to the moon" drive, there is not much, and there won't be as long as "the stuff you can buy with bitcoin" is not the main carrier of the aggregate demand.

Step aside from your dream for a moment because right now, the speculative "to the moon" drive is alive and well.

So your claim is essentially, that bitcoin will take over all of the money market, and the store of value market.
That the 50 trillion dollar equivalent worldwide of M2 fiat money will completely turn into bitcoin.  And you think that governments will let that happen any time soon.  And that most of the rest of store of value will be in bitcoin (gold, ...).
When do you think that will happen ?  A century from now ?  50 years from now ?

Yes I believe this could happen. I don't want to guarantee it but it is likely and becoming more inevitable every day.

Governments will be powerless unless they turn into full on tyranical totalitarian states which I can tell you that as much power as you can bestow to governments history has shown that they are effectively no match against a full on revolution.

If it does happen. Then it will be MUCH quicker than you would tend to believe. And IMO, yes gold will be relegated to a useless relic used only for certain industrial purposes. It is no match for Bitcoin.

It is a way to look at things, but I would give it a rather low probability.  It is probably much more realistic that bitcoin will take a small share of the market, and try to estimate that.  That will happen much sooner, a few decades from now at most.

Either Bitcoin is relegated to insignificance or its network effects gobbles up all of the financial world. Assuming that Bitcoin will satisfy itself with a "small" share of the market and stagnate is even less probable and IMO very naive.

[Bagatell]

Good money drives out bad money.

Gresham's law? It is commonly stated as: "Bad money drives out good".

Your arguments would be a whole lot more palatable without the ad hominems.

[Deadstock]

This thread is no fun when everyone is SRS  

[JorgeStolfi]

This thread is no fun when everyone is SRS  

This?

[brg444]

Good money drives out bad money.

Gresham's law? It is commonly stated as: "Bad money drives out good".

Your arguments would be a whole lot more palatable without the ad hominems.

Thiers law

http://en.wikipedia.org/wiki/Gresham's_law#Reverse_of_Gresham.27s_Law_.28Thiers.27_Law.29

Gresham's does not apply to BTC.

[ChartBuddy]

Explanation

[ChartBuddy]

Explanation

[dinofelis]

Some government making Bitcoin illegal will only serve to legitimize it and accelerate its growth. Remember also that Bitcoin is GLOBAL, I don't believe you suggest all of the worlds' governement would ban BTC do you?

The market share, in the proposed "steady state" can only be 100%. Only when it has attained 100% of its potential market adoption does it then become "steady". The universe wants ONE money. Good money drives out bad money.

The universe doesn't want any one money.  Even with gold, there was also silver.  And there are many, many other stores of value, such as famous paintings and other artwork, real estate and so on.
I wouldn't be so sure that a few big governments wouldn't agree on banning bitcoin.  For the moment bitcoin has legal problems in Russia and in China to a certain extend.  The day the US government also jumps in, I don't see how bitcoin can become a universal currency rapidly.
Because, after all, as long as there is no general *merchant* adoption, the only gateway to "buying stuff" with bitcoin are exchanges between fiat and bitcoin.  This is why I think that the first adoption has to be merchant adoption.
But it has to be more than that: merchant adoption has to be such that the price is quoted in bitcoin, and is not just the "latest conversion of the price in fiat according to the rate at a given exchange".

I do not have to argue against your misrepresentation of Bitcoin holders. So without any huge expectations in gain, and given a scenario where BTC's value is "stable" I would put 100% of my wealth into it for the reasons stated previously :

1. Deflationary 2. Ideal property as money 3. Distributed and outside the reach of any singular entity (read: government) 4. Programmable 5. Highly secure 6. Unseizable

I don't think many people would, at the moment.  I wouldn't.  I might change my mind if I could buy most of the stuff directly quoted in bitcoin.  If I could buy a car in bitcoin (and not as "a conversion from $ into bitcoin").  At that point, I would start to trust bitcoin as a store of value.  I think many people would.  Maybe I'm wrong here, but I wouldn't think right now, or in the coming years, that many people with a lot of money would put it into bitcoin as a store of value.

Again, good money drives out bad money. Given a choice to transfer their stake 1:1 into Bitcoin and have it remain "stable" then it is obvious that given proper education and some time to realize the benefits of Bitcoin money vs. Fiat the choice would be a no brainer.

The devil is in the details: it is in the assumption of "stable".  Stable in the sense of buying power.  That can only be taken seriously if a lot of important stuff can be bought directly quoted in bitcoin, I would think.
In several developing countries, you're probably right, and I think that developing countries are probably the potentially biggest attraction pool of bitcoin usage, because their fiat is not very reliable.  But the main currencies, like Euro or $$, I don't think people would bet on bitcoin in the coming years as "safer".

Your point is useless if you choose to ignore the speculative aspect. This is simply a dishonest way to argue against reality.

I do consider the speculative aspect, but the speculative big growth expectation has to be based upon something else than "more growth", because that is exactly what drives a Ponzi.  There needs to be something else.

Now, I was given a clear answer: bitcoin is going to be the unique and universal money and value store.

Ok, but I do buy that only at very low probability in the foreseeable future, and I would think, most people with money, too.

http://nakamotoinstitute.org/mempool/speculative-attack/

Bitcoin will not be eagerly adopted by the mainstream, it will be forced upon them. Forced, as in "compelled by economic reality". People will be forced to pay with bitcoins, not because of 'the technology', but because no one will accept their worthless fiat for payments. Contrary to popular belief, good money drives out bad. This "driving out" has started as a small fiat bleed. It will rapidly escalate into Class IV hemorrhaging due to speculative attacks on weak fiat currencies. The end result will be hyperbitcoinization, i.e. "your money is no good here".

That makes me smile a bit.  *Fiat* is forced upon you because you have to pay your taxes in fiat.  As long as a government decides that you have to pay your taxes in fiat, and as long as taxes make up a serious fraction of the economy, bitcoin *can't* take over the whole of payments.  Because fiat will be in high demand to be able to pay taxes with !

Of course, the day that you are allowed to pay your taxes in bitcoin, your hypothesis has come true.  I don't see that happening for a long, long time.  I would think that most people would think that too.

This is where we disagree again and where I have to insist that your argument is disingenuous and brings no value to the discussion. The speculative "to the moon" aspect is absolutely substainable. In fact it is only getting started.

Once you are on the moon, the "to the moon" argument won't work anymore, right.  
Now, I understand your stance here: you say that "to the moon" is a justified expectation as long as not everything monetary isn't done in bitcoin, and once everything is done in bitcoin, the discussion is over.

My point is that that scenario is highly unrealistic in the coming several decades, and if no "moon" is realised earlier, I think many will LEAVE bitcoin if there is no widespread merchant adoption.  

If your scenario is realized 100 years from now, I'm honestly not interested, and I don't think many people would be interested.  I'll be dead, my children will probably be dead, and I don't care further along the road.  I don't think many people would buy into bitcoin if they had to wait for 100 years for "full moon".  

And if your scenario is realized much earlier, I would be surprised.  I don't think that 10 or 20 years from now, this will be the case.  I wonder how many people would want to hold serious money into bitcoin waiting for more than 20 years "for full moon".

So we have to consider something less ambitious, but more realistic as a "fundamental".  This is what I'm after.  What will be the expected market share of bitcoin, say, in 20 or 30 years ?  Because that gives a *realistic* idea of the price of bitcoin to expect.

Step aside from your dream for a moment because right now, the speculative "to the moon" drive is alive and well.

I have to disappoint you, but the current price doesn't indicate that.  In order to have an idea what price expectations to hold realistically, you need also to have a realistic view on fundamentals in a few decades.  And that's what I wanted to discuss.  Now, you made your point, you think "full moon" is realistic.  In that case, indeed, the real price should be tens of millions of $ per coin.  Fact is, it isn't for the moment, which means that most market players don't think so.  Now, of course, the main reason to be in a market is that one thinks one is smarter than the market - me too.  

In order for a high price, say, $100 000, - to be sustainable, this would mean that enough people need to believe "full moon" with enough money.  I don't think that moment is there yet.  

So your claim is essentially, that bitcoin will take over all of the money market, and the store of value market.
That the 50 trillion dollar equivalent worldwide of M2 fiat money will completely turn into bitcoin.  And you think that governments will let that happen any time soon.  And that most of the rest of store of value will be in bitcoin (gold, ...).
When do you think that will happen ?  A century from now ?  50 years from now ?

Yes I believe this could happen. I don't want to guarantee it but it is likely and becoming more inevitable every day.

Governments will be powerless unless they turn into full on tyranical totalitarian states which I can tell you that as much power as you can bestow to governments history has shown that they are effectively no match against a full on revolution.

If it does happen. Then it will be MUCH quicker than you would tend to believe. And IMO, yes gold will be relegated to a useless relic used only for certain industrial purposes. It is no match for Bitcoin.

Ok, at least your views are clear.

I would like to believe them, but unfortunately, I don't.   I do think there is a place for bitcoin, but a much more modest one than you describe here (even though deep inside I wish you were right).  In my opinion, the scenario you describe is at least a century away.  It would be great if not, but I can't believe it.

[Erdogan]

You are saying a lot of sensible things, except that horrible formula, which is irrelevant for everything and specially for the value of bitcoins. I believe I have supported that view in my earlier comments.

That horrible formula is just plain bookkeeping, there's no discussion about whether it is correct or not (it applies always, trivially), the discussion is whether it is useful (that is, whether the quantities that appear in it, can be sensibly estimated in an independent way).

We both agree that what sets the price of bitcoin, is the aggregate demand for "holding value in bitcoin" as compared to the offer.  But that doesn't help us much !  We have to know *what drives that demand*.

In other words, what makes "people fight for bitcoins".  What is their *drive*.

For the moment, the drive is of course "to the moon" type of speculation, but that can only last a finite time, and should normally be rooted in an expectation of a high bitcoin price *for another reason*.

Now, I see two drives to "make people fight to have a bitcoin".  One is indeed, "long term store of value", that is, in competition with gold and so on.  Then my formula is still valid, but doesn't mean much, what counts is what fraction of the universal aggregate demand for "long term store of value" will be taken by bitcoin, as compared to gold, stock market, real estate, and all other "stores of value".

The other is that bitcoin is used as money to buy things with.  That *also* implies holding bitcoin, between the time you get it, and the time you spend it.  And *there* my formula is mightily useful.  Because the amount of stuff bought with bitcoin, together with the average holding times between two of such buyings, determines the value of bitcoin.

And now my point is that bitcoin will, if it succeeds, essentially first have to do the *second* thing.  Nobody is going to trust bitcoin as a long term store of value in my opinion before it has settled as "money that buys stuff".  

Of course, in the real market, there will be competition for bitcoin for both uses (to "buy stuff with" and to "store value for much later"), so the effect will compound the prices.  But I would guess that the first part is going to take a long long long time.  
Gold was for a long time a means of payment ; that is why people also considered it as a store of value.  There was trust that gold would still buy stuff 20 years later.  Now, the buying function of gold has essentially disappeared and it has only kept his "store of value" function.  But there is still this century-long trust in gold as store of value which was build up over many many centuries.   It takes a lot of trust to put value in a long-term store.  I don't think that bitcoin will get that trust immediately.  
However, bitcoin as a means of payment, yes, I hope so.  The idea that you have "international money" that is valid everywhere in the world, yes.  And then, if that is the main usage of bitcoin, my formula applies.

The store of value means that what value you put in, you can get out, either when you turn around and do another trade directly, or you hold the value in money for months, years or even generations. I talk about value, not a number of dollars. And you are never guaranteed the value to be constant over time, that is impossible. Bitcoins are designed to not lose value, and the main aspect is the max number of coins in the system.

Yes, that's what "store of value" means.  I agree, except with your last statement.  Nothing can be designed to "not lose value", after all, it is speculative, it depends on the trust people put in it.  Especially in the long term.  What you mean is that bitcoin is a collectable: there's a finite, known amount of it.  Similar to gold (if you include mining reserves under the ground), or to land, or to Rembrandt paintings.  They don't make any anymore.

The speculative aspect is real, but that is only temporary, until the balance between demand to hold and the demand to not hold stabilizes. What we see currently, is that even while the liquidity of bitcoin is far below the liquidity of the respective local fiat currencies, bitcoin is still winning terrain, and since that means higher liquidity for bitcoin, there is no reason for that to stop, until that crucial balance is achieved. So in the end, it will be the best store of value, now you have the possibility to earn something, if you have knowledge and take action.

Yes and no.  That is what we are all hoping for, and that is why I think it is a good bet to buy some bitcoin now.  But actually, we don't really *know* and the real indicator is the price.  We really don't know whether we didn't already reach equilibrium between offer and demand.  Most people holding bitcoin (like me) do this NOT as a store of value, but for purely speculative reasons because they hope "to the moon".  
I'm not even sure that if you were in some sense to know that it is NOT going to the moon, you would still hold bitcoin "as a store of value".  I would think bitcoin too volatile and too risky as compared even to fiat.  I'm only in it because it would be silly to MISS the rocket too the moon.  But for the moment I still consider fiat a surer store of value than bitcoin if there was not the "to the moon" incentive.  
I wouldn't place all of my savings into bitcoin for the moment as a "store of value".

So if this "to the moon" incentive would be gone, I'm not even sure that the demand for store of value would be as large as the people holding coins now.  Most of them are in it for the ticket to the moon, not as a store of value in my opinion.  

So if you want to have an idea of the steady state aggregate demand for "store of value" you should leave out the speculative drive, which is probably the main drive right now to hold coins.  And then, I don't know if many people are in it.

This is why I think that that cannot be the support for the bitcoin price for a long, long time.  I think that the main steady state drive will be "buying stuff", with my formula.

Fiat is designed to lose value, 2 percent in some countries, 2 1/2 in others. Bitcoin not.

The store of value aspect and the transaction medium aspect of money hangs together, you can not have only the one or only the other. So when you hold, you need to be sure that you can transact. But the volume of transactions that occurs is irrelevant.

Holding today means speculation that a large number of people will discover the same thing. I think they will, and one of the reasons it goes slowly is the vast amount of nonunderstanding of the value of money problem among people who have understanding money as their job.

[Erdogan]

Honestly, would *you* store value in bitcoin right now, if you didn't have any expectation of growth of its value ("to the moon") ?

I wouldn't but the reality is the expectation of growth in its value exist and you cannot simply pretend to remove it from your equation because it fits your argument.

You seem to miss the point.  Growth ('to the moon') can obviously not last indefinitely.  At a certain point, steady state will have to set in.  Every form of speculation is essentially based upon a bet on that steady state value which is expected to be higher than right now, so that kind of speculation (which is now the main drive) will have to stop one day.  

So I propose to make the mental exercise to put yourself in the hypothetical situation where you eliminate mentally that speculative purpose, and try to find out your own drive to put value into bitcoin *for store of value* reasons, and not for "to the moon" speculative reasons.  I very well know that the actual situation is the speculative "to the moon" drive.  But in order to find out what is going to be the steady state situation, you have to be able to find out what would be the drive to hold bitcoin *without* speculative "to the moon" drive.

So in order to make that exercise, suppose that six months from now, for one or another reason, the bitcoin price has gone up to $ 500 000,- (and not because the dollar collapsed) and it stays there for 6 other months with fluctuations of 10% or so.  Obviously, at that price, the "to the moon" expectation afterwards is gone.  You do not expect it to rise to 10 million, do you.  You might still hope for a small factor of 2 or 3, but that's it.

Are you going to put your savings at that moment in $ 500 000,- coins ?  Seriously ?
(or are you going to sell part of what you have to cash in ? :-) ).


This, to find out if you *really* consider bitcoin a good store of value for your savings without any "to the moon" speculation anymore, just a reasonable potential to rise somewhat, like other stores of value like gold, real estate and the like.

Bitcoin is absolutely a secure store of value. More secure than any alternatives on the market. Stable? Obviously not but is stability a requisite to qualify as a store of value? I do not think so. Especially when considering this growth expectation it makes even more sense to store the value of your wealth in such an asset.

You are obviously missing the point, right.  *Of course* the speculative drive is the strongest one.  But it cannot last, of course.  Once it is over, I'm trying to find out what would be the drive.  Because ultimately, *that* drive is what is going to give bitcoin any value as store of value.  Otherwise, it is indeed, just Ponzi, if nothing holds it up once it cannot grow anymore.  Just to be clear, I don't think it is Ponzi.  But in order for it not to be, one has a clear view on its fundamentals.  Fundamentals are never "growth to infinity", but are "steady state" arguments that are sustainable.

In the long term, fundamentals always win.  That is why a real Ponzi, which has no fundamentals, always collapses.

So I'm trying to find out what are the fundamentals of bitcoin.  As I said, my opinion is that it is "money to buy stuff".  Some think it is "store of value".  My *opinion* which can be wrong, is that that can only come much later.  But "expectations to the moon" are never fundamentals by themselves.

Good points. When the top is reached, wherever that is, it will be turbulent in a number of years until trust is established among the many.

[JorgeStolfi]

MMM, the company created by Sergei Mavrodi that ran one of the largest Ponzi schemes in history, is a Silver Member of The Bitcoin Foundation:
https://www.reddit.com/r/Bitcoin/comments/2mgi7w/well_known_ponzi_scheme_become_silver_member_on/

http://en.wikipedia.org/wiki/MMM_(Ponzi_scheme_company)

With friends like those, does bitcoin need enemies?