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Author Topic: Dr BitLove or How I Learned to Stop Worrying and Love the Market: 320B/year  (Read 603 times)
jdbtracker
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April 25, 2013, 02:15:42 AM
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Well everyone has seen the crazy swings that happen on the bitcoin exchanges.
Just a little while ago a whale of a transaction plummeted the price of bitcoin...
This is going to continue to happen as long as people don't stand firm on their price.
There are a lot of bots out there... and what about the people who are just manipulating the price by exchanging between their own accounts?

Go to the end of the page to find the potential Net worth of Bitcoin:

Can we do this? Can we agree that Bitcoin is a Money Transfer program?

but that's not what I am here to discuss... lets explore the market and understand it

So how much volume are we moving on the network? right now blockchain.info says:

66,567 transactions, estimated at nearly  400,000 BTC or 60.5 million dollars/ day

That's only a small fraction of Bitcoins total capacity.
but we must consider what is available on the markets in total demand vs supply


http://blockchain.info/charts/trade-volume?timespan=1year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

If we follow the trend provided by the blockchain.info site. Volume at the exchanges is increasing at a set pace.

in the past year there have been 5 magnitude changes in volume towards the positive, with erratic shifts
on a 180 day scale it is visible... see the pattern?


http://blockchain.info/charts/trade-volume?timespan=180days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

on a 60 day scale the pattern is more easily discernible.

http://blockchain.info/charts/trade-volume?timespan=60days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

I can see the pattern... the system is going to continue doing this as it scales in price.

But, how do we exclude the price of BTC to get a better picture of how Bitcoin is growing as a Money Transaction system?




Now lets explore total unique Bitcoin transactions per day volume; this will tell us how many Customers we are attracting...

We will not consider Total transactions since we do know that we are keeping our Customer base happy.

http://blockchain.info/charts/n-transactions-total

if you look at the 180 day trend line... the system has recently reached a plateau, what is causing this? Why has our new Customer base stagnated?


http://blockchain.info/charts/n-transactions?timespan=180days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

This Plateau began in March of this year, after a specific date what happened on this date?

http://blockchain.info/charts/n-transactions?timespan=60days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

Just a few days before that massive dip in transaction volume occurred after the Hard Fork of March 11 an unfortunate event in itself... it explains the dip
but not the plateau that has occurred.


http://bitcoinmagazine.com/bitcoin-network-shaken-by-blockchain-fork/

Here is the Number of transactions over the same period as the previous graph excluding popular address'; This shows the increase in new users using the system.
It drops dramatically around the time of the April 2013 Crash.


http://blockchain.info/charts/n-transactions-excluding-popular?timespan=60days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

Using Google.com to find the reason why... lets explore what the media on the most popular Search Engine has been sharing to the world; Lets look at the headlines.

let me give you the answer: It's quite Negative. Bitcoin is at a certain stage in it's life; let me explain it with a quote from Gandhi," First they ignore you, then they ridicule you, then they fight you, and then you win."  Right now we are at the beginning of the Fight you phase... so stay strong Brothers and Sisters.

Fincen Regulations choking Bitcoin entrepreneurs
http://www.americanbanker.com/bankthink/fincen-regulations-choking-bitcoin-entrepreneurs-1058606-1.html

Virtual Terror Finance
http://www.jpost.com/Features/FrontLines/Article.aspx?id=310318

Bitcoin has limited Usefulness
http://www.latinospost.com/articles/17450/20130424/bitcoin-news-economists-limited-usefulness-currency-hahahaha-rotfl-adds-former.htm

Bitcoins back above 120 as wild swings continue
http://blogs.marketwatch.com/thetell/2013/04/22/bitcoins-back-above-120-as-wild-swings-continue/

Bitcoins dystopian future
http://lifeboat.com/blog/2013/04/bitcoins-dystopian-future

Internet drug dealing on the rise thanks to bitcoin
http://www.rawstory.com/rs/2013/04/18/internet-drug-dealing-on-the-rise-thanks-to-bitcoin-currency-and-coded-listings/

The Bitcoin bubble bad hypothesis
http://nationalinterest.org/commentary/the-bitcoin-bubble-bad-hypothesis-8353

If you read a lot of the articles that were available during March and April they were very negative... I know I looked at them everyday, scanned the news, only negative missleading news was available on google News.

Get Omea Reader and setup your RSS feeds to scan the news for relevant data... You'll see what I'm talking about. Though recently a whole bunch of websites previously blocked by Google have been released in the last 24 hours.

please install YaCy: it is a peer to peer search engine. it is not censored like Google... they complain about China's Censorship and do it right under our noses... time to change that, so download and search the relevant data
I know it's a pain in the butt to get used to, but you'll figure it out, takes a while to use all the features properly.

http://yacy.net/en/index.html

https://gitorious.org/yacy

or find it on www.isohunt.com...


Now that we have proven the effect of the news on Bitcoins New user base, lets explore the true value of Bitcoin, taking into account the transaction volumes using the Efficient Markets Hypothesis.

According to the efficient-markets hypothesis (EMH), which still dominates the analysis of financial markets; The EMH states that the market value of an asset is equal to the best available estimate of the value of the services or income flows it will generate. In the case of a company stock, this is the discounted value of future earnings. Since Bitcoin generates revenue through Transaction Fees and the Introduction of bitcoins into circulation by the Miners, it must appreciate in value because of future Business growth.

 An endless appreciation, with no flow of earnings or liquidation value, is precisely the kind of bubble the EMH says can’t happen to Bitcoin, due to the future value of it's market.

According to the EMH, bubbles are impossible in well-developed financial markets even if the majority of participants are acting irrationally, provided there is a sufficient supply of rational speculators. By selling the asset short, these speculators can burst the bubble, and profit when it returns to its true value, In the case of Bitcoin, the calculation is as follows.


Here are the relevant trend lines:

Miners Revenue from Bitcoin mining and Transaction Fees 1-year
http://blockchain.info/charts/miners-revenue

The 60 day trend line
http://blockchain.info/charts/miners-revenue?timespan=60days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=



Mining Operating profit Margin 1-year
http://blockchain.info/charts/miners-operating-profit-margin

MIning operating profit Margin 180-days
http://blockchain.info/charts/miners-operating-profit-margin?timespan=180days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

Transaction fees in USD over 180-days
http://blockchain.info/charts/transaction-fees-usd?timespan=60days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

Same Transaction fees in BTC to Exclude fluctuations in BTC/USD price
http://blockchain.info/charts/transaction-fees?timespan=180days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

network Defecit: Shows difference between transaction fees and cost of bitcoin mining.
http://blockchain.info/charts/network-deficit?timespan=60days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

Cost % of Transaction volume: A chart showing miners revenue as a percentage of the transaction volume.
http://blockchain.info/charts/cost-per-transaction-percent

Cost per transaction:A chart showing miners revenue divided by the number of transactions over 60 days.
http://blockchain.info/charts/cost-per-transaction?timespan=60days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

Total number of transaction occuring Daily over a 1 year period
http://blockchain.info/charts/n-transactions-total?timespan=1year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

Now the calculations:


Operating Margin % including Transaction fees + Mining Revenue over the last 60 days is:  

34% to 73% = a 200% increase over 60 days

Mining Revenue in USD including Transaction fees + Mining Revenue over 60 days is:

$123,047USD to $624,818USD = a 500% increase over 60 days.

Transaction Fees in USD over 180 days is:

$1937.00USD to $8041.00 USD = a 400% increase over 180 days

In BTC that is:

BTC23 BTC to BTC52 BTC = a 200% increase when price fluctuations are excluded

Calculating Fees alone, excluding Introduction of bitcoins into circulation by miners over 180 days is:

-$120,306USD to -$484,271USD = a -400% Deficit in cost of operating miners to Transaction fees over 180 days

Cost % of transaction fees to total volume over a 1 year period is:

4.44% to 1.1% = a net drop of -400% over that one year period.

Cost per transaction over 60 day period

$2.12USD to $10.03 = a 500% increase in cost per transaction over a 60 day period

Number of Daily Transactions; growth over a 1 year period:

2,922,942  to 16,673,748 transactions = 550% increase over a 1 year period


Conclusion:  

The fees for all the transactions are completely voluntary and should remain so, users that need urgency should pay their fees, those that do not don't have to; That is as it should be.

But the net loss occurring to the miners means only one thing... That the cost of each transaction would have to increase exponentially just to offset the price of operations if the Bitcoin lottery of 25BTC/10min was removed.

 At current deficit of $625,000.00USD/day and a daily transaction volume of 17 million transactions/day the price/transaction should be 4 cents/transaction just for the miners to break even.

The absolute minimum value of USD/BTC has to be pegged to the net loss in revenue of the miners.

This price is based on the fact that the Miners are living off of the Bitcoin Lottery alone, for all transaction fees to be free that is the price that Bitcoin would have to adopt.

But of course I do not expect anyone to expend their resources for free so average cost of living should be pegged to that number as-well, whatever that may be.

If we follow the trend of transactions occurring/day over the last year I estimate that Bitcoin will grow 550% at this time next year would equal 100,000,000 transaction/day.

but... how much is Bitcoin Truly worth?

 at a cost of 4 cents/transaction and considering that total economic transactions occurring world wide on any give day is

If we follow the Boston Consulting Groups numbers for the G20 countries alone; the internet economy will grow to 4.2 trillion dollars  and they comprise 80% of the internet... this is not taking into account normal daily purchases done off-line.

https://publicaffairs.linx.net/news/wp-content/uploads/2012/03/bcg_4trillion_opportunity.pdf

and the Credit Card and debit card transaction reach a comparable level of 4 trillion as-well

http://www.nerdwallet.com/blog/credit-card-data/credit-card-transaction-volume-statistics/

Bitcoin has the potential to earn 4 cents on every transaction done globally at 8 trillion total USD value of purchases and at 4% transaction fees/ total economic value

Bitcoin is worth:  320 billion dollars/ year




WTO statistics: are claiming a yearly transaction volume of 15 trillion, but I have no intention of thinking Bitcoin will permeate every level of the economy.

http://www.wto.org/english/res_e/statis_e/statis_bis_e.htm?solution=WTO&path=/Dashboards/MAPS&file=Map.wcdf&bookmarkState={%22impl%22:%22client%22,%22params%22:{%22langParam%22:%22en%22}}


If you think my efforts are worth something; I'll keep on keeping on.
I don't believe in IQ, only in Determination.
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April 27, 2018, 02:42:05 PM
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In my mind thats must be connected with the country that you're trading from, for my country even 10 bitcoin is a whale, thats how I see that

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