New exchange (Bitcoin Market)

[ihrhase]

Unless there is a way to determine demand, no one will be using them as a currency.  Even now, every Bitcoin has a value.  The key is finding it and tracking it.  I want this to be a real market where buyers and sellers determine the value based on their demand.  It will match buyers and sellers (it can already do that) accordingly.  I will only be a broker.  I don't think we should be worried about what the value is.  Our main concern should be accurately determining that value as it fluctuates.  If it's 100,000BC/$1, 1000BC/$1, or even 1,000,000BC/$1 then whatever...  The fact we are worrying about people dumping Bitcoins suggests we haven't determined an accurate value yet.

The value of a money is what one can expect to gain in exchange for said money....

I am not worried about people dumping BC's on your exchange, I am saying any value is arbitrary until people come to accept BC as a medium of exchange...

[dwdollar]

The value of a money is what one can expect to gain in exchange for said money....

I am not worried about people dumping BC's on your exchange, I am saying any value is arbitrary until people come to accept BC as a medium of exchange...

I don't think their value is arbitrary.  Just really really small.  A medium of exchange or currency needs to have a "stable value" or at least a value that can exist within a certain range for an extended period of time.  This builds trust.  When there are multiple exchanges trading Bitcoins and each exchange is tracking a similiar exchange rate it will build trust.  Eventually it will reach a critical mass.

[ihrhase]

I don't think their value is arbitrary.  Just really really small.  A medium of exchange or currency needs to have a "stable value" or at least a value that can exist within a certain range for an extended period of time.  This builds trust.  When there are multiple exchanges trading Bitcoins and each exchange is tracking a similiar exchange rate it will build trust.  Eventually it will reach a critical mass.

Really now?  Do you know why people used gold as money?  How about unbacked paper?

Trust is not built by corresponding blips on the internet, it is built by being able to use regularly and gain an expected result...

If no one can purchase anything but $ with bitcoins then bitcoin is nothing more than a gamble on anticipating other people's expectations on the utility of bitcoin.

IF one can only purchase consumer goods OR capital goods with bitcoin, an exchange is necessary to fuel the economy with transaction material, for example:
If I sell widgets and I accept bitcoin for them, if I cannot buy widget supplies to generate widgets in bitcoin, I will require an exchange for the purpose of attaining the capital goods necessary to resupply my production cycle.  Conversely, if I can buy my capital goods in bitcoin, but no one will buy my consumer good in bitcoin, I will require an exchange to resupply, using bitcoin.  However if both transactions are taking place using the bitcoin medium of exchange, I may only need an exchange if there are not enough goods to exchange my profits in a (subjectively) worthwhile manner...

Is it that you and another exchange collude that give bitcoin value, or is it that I can expect to use bitcoin in exchange for goods?  If an exchange rate is stable from one exchange to the next, it builds trust that the exchanges are legit, but does nothing to secure a value to bitcoin.

[Suggester]

If the BC marketplace cannot provide real world goods and services for BC, then it will be doomed to failure...

Some people are stuck on the idea that BC is valued at the expense for generating BC's...

BUT...

The problem is that if there is no commodity available that people want, one cannot expect to see people pay $ for BC, regardless of the cost one incurs in generating them...

It is like saying I spent $X on creating Salmon and Sauerkraut Smoothies, so people should buy it for $X, but since no one wants Salmon and Sauerkraut Smoothies, no one will buy them, most likely they will not take them for free. 

OR they will buy it for $X in hope that soon enough it will cost $2X to generate them so they can run away with a quick 100% profit via selling them to someone who'll sell them for $4X. I can't get this chronic-deflating scenario out of my head, darn. I for one will easily buy $100 worth of coins and offer whatever I'm gonna sell in the future for Bitcoins also, provided that the price was approximately constant near the lowest global cost of electricity (about $3/month/CPU). Only then will I be virtually sure that I won't have problems transferring my coins out of the system for cash or vice versa at any time later, not waiting fearfully for a price bubble to pop.

[NewLibertyStandard]

The problem with keeping the price at production cost is that there is not enough supply to meet demand. If the price of bitcoins is at the bare minimum and everyone tries to buy $100 worth of bitcoins, there will not be enough bitcoins in existence for everyone to get as many as they want. But if the price fluctuates based on demand, then the price will rise until everyone can get as many dollars worth of bitcoins as they want. In fact if someone wants a trillion dollars worth of bitcoins and had nearly a trillion dollars, then they could do it. All they would have to do is buy all the available bitcoins everyday, which would cause the value to rise until how many they have is worth a trillion dollars. If everyone only wants $0.01 worth of dollars and no more, then as everyone sells their excess bitcoins, the value of bitcoins falls until how many they have is worth $0.01. There is always the risk that everyone will try to sell their bitcoins, thus devaluing your bitcoins, but that's just how the system works and the rest of us bitcoin users are fine with that risk. All currencies, stocks and commodities work the same way although with differing levels of risk and growth. If you just want the most stable currency available, invest equally in the Swiss franc (CHF), the Singapore dollar (SGD), the New Zealand dollar (NZD) and the U.S. dollar (USD). Perhaps you can create a currency which is backed 100% by those four currencies and automatically exchange the ratio of balances within the reserve as the value of the currencies change so as to maintain an equal value of each currency at all times. Good luck with that. :-P

[Suggester]

The problem with keeping the price at production cost is that there is not enough supply to meet demand. If the price of bitcoins is at the bare minimum and everyone tries to buy $100 worth of bitcoins, there will not be enough bitcoins in existence for everyone to get as many as they want.

How can you say that when this very problem exists at the bigger scale under the current model? If that occurs, it will encourage more people to use their machines in generating since they'll be selling $3 worth of electricity for $5 or whatever. If it reaches something like $12, very few people will buy and would prefer to generate it themselves. Free market economy!

In fact if someone wants a trillion dollars worth of bitcoins and had nearly a trillion dollars, then they could do it. All they would have to do is buy all the available bitcoins everyday, which would cause the value to rise until how many they have is worth a trillion dollars.

I don't see why this is NOT a problem under the current model. But in any case, so be it. Let him buy a trillion dollars worth of bitcoins and make me rich because I'll be selling him my $3 block for $50 every month.

If everyone only wants $0.01 worth of dollars and no more, then as everyone sells their excess bitcoins, the value of bitcoins falls until how many they have is worth $0.01.
There is always the risk that everyone will try to sell their bitcoins, thus devaluing your bitcoins, but that's just how the system works and the rest of us bitcoin users are fine with that risk.

If this occurs then the project would be already dead. Otherwise why would you sell your block which you paid $3 for for less than $3?

All currencies, stocks and commodities work the same way although with differing levels of risk and growth. If you just want the most stable currency available, invest equally in the Swiss franc (CHF), the Singapore dollar (SGD), the New Zealand dollar (NZD) and the U.S. dollar (USD). Perhaps you can create a currency which is backed 100% by those four currencies and automatically exchange the ratio of balances within the reserve as the value of the currencies change so as to maintain an equal value of each currency at all times. Good luck with that. :-P

I'd go for that if there was a way to anonymously generate and transfer it online

[NewLibertyStandard]

The value of a bitcoin is not based on the cost to produce a bitcoin but rather on whatever people are willing to pay for it. If it costs $3.00 to produce some number of bitcoins but no one is willing to buy them, then although their intrinsic value is $3.00, their actual value is not $3.00. If you buy a car for $20,000, then at that moment when you purchase it, it is worth $20,000 but its value drops as soon as you drive it off the lot unless you can convince someone to pay more than $20,000 for it. Bitcoins are only worth as much as you can sell them for. Right at this moment ฿23,789.91 is worth $138.41 because that is how much I will pay for that many bitcoins. But ฿47,579.82 is not worth $276.82 unless someone buys more bitcoins from me. My exchange rate is the accurate value of bitcoins within the limits of my available balances. Your understanding of how people behave is severely lacking. Not everyone operates under the same motives as you. Even given equal information and equal understanding, not everyone operates with the same motives as you. And you come off as arrogant and ignorant when you make black and white statements about how people will behave. People are buying and selling bitcoins. At certain points in the future people may buy more frequently than they sell and at other times people may sell more than they buy and the value of bitcoins will adjust. There is nothing wrong with selling your bitcoins at a profit. The people who are buying the bitcoins at above production costs are adults, capable of making their own financial decisions. I am completely transparent in how my exchange rate works. No one is conning anyone else out of their money. All the facts are available to everyone, not to mention also the source code to Bitcoin itself.

[Suggester]

You're the one who demonstrates day after another your total economic ignorance. I told you a zillion times that price simply HAS to equal cost. If it's more, everybody will generate and sell for a profit to exploit that difference. If it's less, everybody would buy instead of generating because it's cheaper. In the end, the equilibrium of cost=price is inevitable. I can't understand how a mature person supposedly running an exchange service can't grasp such a very simple and clear concept.

Bitcoin is not a national currency. It's not subject to import and export influences. It's not subject to inbound or outbound immigration. It's got nothing to do with central banks' interest rates. It's something which you exert a fixed and built-in-stone amount of effort to acquire. You're comparing apples to elephants when you keep talking about BTC as if it was a Dollar or a Euro.

[NewLibertyStandard]

Bitcoin is a working example of you being wrong today and it will continue to be a working example of you continuing to be wrong tomorrow. Supply and demand will always have a much greater influence on the value of bitcoins than production costs. And factors apparently beyond your comprehension, outside of your little economic model, will continue now and forever to affect the supply and demand of bitcoins.

If it's more, everybody will generate and sell for a profit to exploit that difference. If it's less, everybody would buy instead of generating because it's cheaper.

LOOK AT MY EXCHANGE!!! According to your oh so smart evaluation, my available dollars should be zero. Are they? ARE THEY?

[dwdollar]

You're the one who demonstrates day after another your total economic ignorance. I told you a zillion times that price simply HAS to equal cost. If it's more, everybody will generate and sell for a profit to exploit that difference. If it's less, everybody would buy instead of generating because it's cheaper. In the end, the equilibrium of cost=price is inevitable. I can't understand how a mature person supposedly running an exchange service can't grasp such a very simple and clear concept.

Bitcoin is not a national currency. It's not subject to import and export influences. It's not subject to inbound or outbound immigration. It's got nothing to do with central banks' interest rates. It's something which you exert a fixed and built-in-stone amount of effort to acquire. You're comparing apples to elephants when you keep talking about BTC as if it was a Dollar or a Euro.

That would be true if an infinite amount could be generated at any one time.  It is the scarcity created by finite production which drives value above production cost.

[dwdollar]

I don't think their value is arbitrary.  Just really really small.  A medium of exchange or currency needs to have a "stable value" or at least a value that can exist within a certain range for an extended period of time.  This builds trust.  When there are multiple exchanges trading Bitcoins and each exchange is tracking a similiar exchange rate it will build trust.  Eventually it will reach a critical mass.

Really now?  Do you know why people used gold as money?  How about unbacked paper?

Trust is not built by corresponding blips on the internet, it is built by being able to use regularly and gain an expected result...

If no one can purchase anything but $ with bitcoins then bitcoin is nothing more than a gamble on anticipating other people's expectations on the utility of bitcoin.

IF one can only purchase consumer goods OR capital goods with bitcoin, an exchange is necessary to fuel the economy with transaction material, for example:
If I sell widgets and I accept bitcoin for them, if I cannot buy widget supplies to generate widgets in bitcoin, I will require an exchange for the purpose of attaining the capital goods necessary to resupply my production cycle.  Conversely, if I can buy my capital goods in bitcoin, but no one will buy my consumer good in bitcoin, I will require an exchange to resupply, using bitcoin.  However if both transactions are taking place using the bitcoin medium of exchange, I may only need an exchange if there are not enough goods to exchange my profits in a (subjectively) worthwhile manner...

Is it that you and another exchange collude that give bitcoin value, or is it that I can expect to use bitcoin in exchange for goods?  If an exchange rate is stable from one exchange to the next, it builds trust that the exchanges are legit, but does nothing to secure a value to bitcoin.

I'm not trying to create value out of nothing or facilitate a Ponzi scheme.  Just a market for buyers and sellers and a way to track demand versus the US Dollar.  Every buyer may have a different reason for buying and every seller may have a different reason for selling.  Resupplying a production cycle is just one reason of many.  The exchangers are not going to create trust in bitcoin all by themselves, but they are a critical piece that must be in place.

[ihrhase]

The US Government has made a position, you should be aware of it...

and your exchange seems to be down...

on a side note...

Price has nothing to do with cost Suggester, maybe you should not wave the economic ignorance finger at anyone else before you keep it from being pointed at yourself...

If price does not equal cost do you not sell your product at a loss in order to recoup capital and try a new venture?  Maybe you will suggest hoarding your product from the market, because if no one wants it they might after you tell them they cannot have it...

The fact is price is subjective, if the market will not support the price at cost the market is not wrong, the entrepreneur is wrong, he had employed his capital incorrectly, and that is the end of that story...

[FreedomFirst]

I agree with ihrhase wholeheartedly about the government. The government doesnt like competition and if you do enough to get their attention, they'll spare no cost to bring the network down. Sad but true. It doesnt even matter if its legal or illegal. Legality has nothing to do with it. The US government always has and always will bend laws or manufacture crimes to make an example of those who contest its power in any way shape or form. I dont agree with the US Government one bit but when it comes to the government the old maxim is true. Whoever has the gold makes all the rules.

So until things changes, we're all criminals whenever the government decides so. And Im not just referring to Bitcoin or its users.

As to bitcoin's value, its all a matter of basic economics... Supply VS Demand. Currently I see a lot of supply but almost no demand. Unless demand is created in volume nothing else matters. With excess supply and little demand...there is very little value and it will remain so until demand is created. If the demand doesnt increase proportionally to the supply IE if supply increases and demand stays the same or lessens then value will decline of course.

People tend to make economics far more complicated than it really is.

Sorry DwDollar but Ihrhase has it on the nose with what he's saying.

[dwdollar]

I think I've found the problem with the frequent market crashes.  It will be another day or two before I have an update to fix it.

The server was down today due to an unrelated hardware problem.  It is back up at http://98.168.172.185:8080/ and I updated the redirect at http://www.bitcoinmarket.com/

Stay positive people!

[dwdollar]

I've decided its time to try some real trading.  I think it will be more exciting for everybody (myself included).  If you're interested there is more info on the site.  You can deposit either Dollars or Bitcoins or both.  This isn't a donation!  It's the real thing, but I want to keep it on a small scale for now.

I'm using Paypal for the cash handling, until I find something better.  I kept all the accounts from the last update so some of you won't have to re-register.  I also created an account and placed a bid for 500 Bitcoins @ $.0067/BC which I think is NewLibertyStandard's current exchange rate.

I enabled SSL but it's a self-signed certificate right now (you'll get notifications that will try to scare you away).

If you have any questions you can post them here or send them to bitcoinmarket@gmail.com



https://98.168.172.185/
www.bitcoinmarket.com

[DannyM]

The SHA1 fingerprint of your SSL certificate is 5A 69 7D 11 98 65 0A FE BA 4A 1C DA 90 4E 8B B9 87 1F A6 88, correct?

Thanks for this service by the way.

[dwdollar]

The SHA1 fingerprint of your SSL certificate is 5A 69 7D 11 98 65 0A FE BA 4A 1C DA 90 4E 8B B9 87 1F A6 88, correct?

Thanks for this service by the way.

Yep, that's correct.

[ihrhase]

Is there a human volume to your market, do you have population numbers as of right now DW?

[DannyM]

It looks like you can only have one open order at a time, is that correct? Is it desirable to add the feature of allowing multiple open orders?

[The Madhatter]

That URL is bunk.

The NZD? New Zealand is bankrupt.

The USD? The US is almost in a depression and it might lose its status as a reserve currency. (Not to mention rampant inflation.)

I'd just choose gold or silver.

If you just want the most stable currency available, invest equally in the Swiss franc (CHF), the Singapore dollar (SGD), the New Zealand dollar (NZD) and the U.S. dollar (USD).