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Author Topic: How many bitcoins is "enough"?  (Read 7444 times)
ribuck
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November 24, 2010, 03:46:57 PM
 #1

If someone had a hundred thousand dollars, they could buy at least 210,000 bitcoins, which is 1% of all the bitcoins that will ever be issued. Of course it would be stupid if everyone did that, because it would mean that only 100 people could ever play with bitcoin.

On the other hand, if bitcoin grow to 210 million users, the average user will have just 0.1 BTC, and we can be ten times as wealthy as average just by hoarding one coin. Some people think bitcoin might one day need to be subdivided beyond the eighth decimal place, but even at 8 decimals each bitcoin would be worth about a million dollars in today's terms.

Obviously there's an optimum value somewhere between those two extremes. How many BTC should one aspire to hold, before freely trading the rest?
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nanotube
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November 24, 2010, 05:00:43 PM
 #2

for those of us without hundreds of thousands of spare USD to throw around... the more important question is how much can you afford to risk? because at the moment, bitcoin does carry with it some significant risks. think of it as diversifying into another asset. Smiley

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skull88
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November 24, 2010, 05:50:06 PM
 #3

Obviously there's an optimum value somewhere between those two extremes. How many BTC should one aspire to hold, before freely trading the rest?
Nobody can look into the future, spending them al for goods now can save you a lot of money or you can make big profits by keeping them al.
If you buy for example a mp3 player now for 200BTC and bitcoins become worthless, you got a free mp3 player.
If Bitcoin becomes bigger as paypal and you saved al your coins you are a milionair.

Nobody can tell you what to do, but my opinion, spent some, save some. Just like you do with "normal" money. To give you amounts like how much to spent and how much to save, is impossible, I can't look into your wallet. Wink

BTC: 1MifMqtqqwMMAbb6zr8u6qEzWqq3CQeGUr
LTC: LhvMYEngkKS2B8FAcbnzHb2dvW8n9eHkdp
mpkomara
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November 24, 2010, 05:52:48 PM
 #4

if one person bought 210,000 bitcoins for 100,000 dollars, the next person would have trouble accomplishing the same feat.  There is also a matter of timing. There aren't 21,000,000 bitcoins available today- there are 4.7 million- so this mass buying would have to occur 150 years from now or whatever.
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November 24, 2010, 06:02:26 PM
 #5

The goal of this project is to create a better vector for the transmission of value - better money.

We need this better money to conduct our commerce. To trade and create wealth.

Do not horde the bitcoins. Spend them. The have no inherent value, their value is in their utility. To not spend them removes that value.

If you want to horde money with no inherent value, there are lots of bullshit national currencies. If you want to save up and invest in your future, use gold.

Accept the bitcoins for business. Spend the bitcoins for business. We need an economy, not some pretend commodity trading game.

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November 24, 2010, 06:11:35 PM
 #6

The goal of this project is to create a better vector for the transmission of value - better money.

We need this better money to conduct our commerce. To trade and create wealth.

Do not horde the bitcoins. Spend them. The have no inherent value, their value is in their utility. To not spend them removes that value.

If you want to horde money with no inherent value, there are lots of bullshit national currencies. If you want to save up and invest in your future, use gold.

Accept the bitcoins for business. Spend the bitcoins for business. We need an economy, not some pretend commodity trading game.

I disagree. Hoard them if you can stand it! As the value rises you will all be tempted out of your stashes.

I am accumulating because I know I will spend a lot on coffee in the short term, and I need to make sure I still have 10BTC left in 2030 to buy my spaceship.

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November 24, 2010, 06:16:22 PM
 #7

I'm still mainly hoarding at the moment. But I don't intend to keep it that way.

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grondilu
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November 24, 2010, 06:20:07 PM
 #8

The goal of this project is to create a better vector for the transmission of value - better money.

We need this better money to conduct our commerce. To trade and create wealth.

Do not horde the bitcoins. Spend them. The have no inherent value, their value is in their utility. To not spend them removes that value.

If you want to horde money with no inherent value, there are lots of bullshit national currencies. If you want to save up and invest in your future, use gold.

Accept the bitcoins for business. Spend the bitcoins for business. We need an economy, not some pretend commodity trading game.

I partially agree.  Indeed there is no real point in hoarding any kind of money.  There are much better ways of investing :  shareholdings, precious metals, gov. bonds (if you like this crap), and so on...

However, saving money is not that bad either.  It's pretty much a matter of personnal choice.  But I don't think it's bad for an economy.  Besides, "economy" in some languages (such as french) litteraly means "savings".

I'd say it's ok to save in monetary units when you have some value to preserve, but you don't trust any other asset.
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November 24, 2010, 06:21:10 PM
 #9

I'm still mainly hoarding at the moment. But I don't intend to keep it that way.


Idem.  I hope there will be more stuffs to buy in the future.
ribuck
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November 24, 2010, 08:07:48 PM
 #10

I am accumulating because I know I will spend a lot on coffee in the short term, and I need to make sure I still have 10BTC left in 2030 to buy my spaceship.

You've nailed it there. Maybe I'll put 10 BTC aside, and spend the rest :-)

Now here's a thought. Suppose that I expect BTC to rise in value by 50% every year. Then, I just decide what I want my annual income to be. Suppose I want to be able to spend $20,000 per year. Here's how to do it: start with $60,000 worth of BTC, and in the first year spend $20,000 worth. The left-over $40,000 of BTC increases 50% to be worth $60,000 again. Every year I could spend $20,000 worth, forever, if the value of BTC rises at the expected rate.

Obviously, for different rates of increase and annual spending amount, the initial bitcoin amount varies.

Anyway, that's hypothetical for me. As nanotube reminded us, we have to be willing to lose it all, so I'm not going to be hoarding anywhere near that level.
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November 24, 2010, 08:16:58 PM
 #11

It is unreasonable to expect that the rate of increases that we have seen in the past year will continue.  Personally, I expect that the market will continue to expand for about another year, and then the dramatic increases will taper off as the system begins to mature.  So by 2012, the rallies will no longer be so dramatic, and by 2015 either everyone and your grandmother will know what Bitcoin is or the entire system will have failed or obviously will fail.  By then the GPU miners will be old hat and you will be able to buy hardware based computer cards designed specificly to mine Bitcoin and/or any related cryptocurrencies.  Nor do I expect that Bitcoin will be the only one by this time, if it proves at all successful. 

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
ribuck
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November 24, 2010, 08:23:04 PM
 #12

... by 2015 either everyone and your grandmother will know what Bitcoin is ...

For sure this will happen by 2015. Even then, I think Bitcoin will still be too hard to use for many people (i.e. those who type Google into the search box when they want to go to google.com). So it will languish for a few years before finally crashing or soaring. My guess is 2020.

Ideas take time to mature. Even Google, with its megabuck funding, only became used by grandmothers 10 years after it was conceived.
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November 24, 2010, 08:31:00 PM
 #13

... by 2015 either everyone and your grandmother will know what Bitcoin is ...

Ideas take time to mature. Even Google, with its megabuck funding, only became used by grandmothers 10 years after it was conceived.

I am assuming we're in the starting period. It seem very very very slow growth. Then we hit a period, then BAAAAAAAAAAAAAAM. We follows the J-curve until growth taper off.


The hard part is maintaining momentum until we get to the growth spurt.

MoonShadow
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November 24, 2010, 08:43:21 PM
 #14

Ideas take time to mature. Even Google, with its megabuck funding, only became used by grandmothers 10 years after it was conceived.

I have to point out at this point, that the concept that Bitcoin is based upon was conceived at least 15 years ago.  It's based directly off of a technical paper from 1995, which in turn is based of other similar concepts a decade older.

And your grandmother doesn't have to use it, to have heard of it.  I think that it is actually quite unlikely that very many people who trade in bitcoins in the future will actually use the Bitcoin network in any direct sense.  More likely there will be a number of different Mybitcoin.com's with different foci, targeting different niche user groups like banks do now.  I doubt, seriously, that Paypal would cease to exist in a Bitcoin dominated future, as they would simply adapt to the currency like they have for every other currency that exists in any major online market.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
MoonShadow
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November 24, 2010, 08:44:33 PM
 #15



The hard part is maintaining momentum until we get to the growth spurt.


Have you been paying attention for the past six months?

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
kiba
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November 24, 2010, 08:49:46 PM
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The hard part is maintaining momentum until we get to the growth spurt.


Have you been paying attention for the past six months?


We are doing fine at the moment. We just saw a few new services opening up.

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November 24, 2010, 08:57:31 PM
 #17



The hard part is maintaining momentum until we get to the growth spurt.


Have you been paying attention for the past six months?


We are doing fine at the moment. We just saw a few new services opening up.

Ah, I see.  You speak of the 'seen' without regard to the evidence of the 'unseen' market.  Just as the movement of the trees tells you that the wind is real even though you cannot see it, the movement of both the difficulty and the market price tells you that the network is in an expansionary period that any reasonable person might call a 'growth spurt'.  I would bet dollars to donuts that there is already much trade of the currency in the darker markets of the world, particularly in the US.  It wasn't the black markets that brought down the Soviet Union, it was the black markets that kept the important things going.  The same is true here in the US, and most of Europe.

I wonder if there is a copy of Mybitcoin.com running as a tor hidden service, obscuring much economic activity even from the blockchain.

If someone is running such a thing, I want to know.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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November 24, 2010, 09:07:02 PM
 #18

ribuck--

i did the loan math, and here's the results:

if bitcoins increase relative to the dollar at 50% a year, why don't you take out a $300,000 15yr loan repayable at 7% per annum.  yearly payments equal $28,212 on the loan, you can pay yourself $20,000 per year in salary, and only by the end of year 7 do you have to sell out some bitcoins to cover your dollar liabilities.  At the end of year 15, you will have paid $394,968 on your original loan of $300,000, you will have paid yourself $300,000 in salary, and you will be left with 69,785 BTC which will be equal to 10.2 million dollars.

In the retirement plan you designed at the end of year 15, you will have paid yourself $300,000 in salary and be left with 137 BTC, equivalent to exactly 30,000 dollars.

the rate, by the way will be 219 USD/BTC
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November 24, 2010, 09:33:44 PM
 #19

My economics professor in college said a good economy is when the amount of money spent equals the amount of money saved.  For example, if I made $100 a week then I should spend $50 and save $50.

Also, right now bitcoin is not very liquid.  If it was more people would be spending.

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November 24, 2010, 09:50:31 PM
 #20

If bitcoin is based on computer power shouldn't it follow moores law?

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