Relativity

[GuiltySpark343]

I'm still relatively new to BTC, but I still find it hard to think in terms BTC pricing. For instance, if you told me a watch costs $10 USD, I'd say that's fairly cheap. If you told me the same watch costs 1 BTC, I wouldn't be able to say whether that was "cheap" or "expensive" unless I knew what the BTC/USD exchange rate was.

My point is, when I think of pricing in USD, I don't have to convert USD to JPY or CNY or EUR ... I just "know" because I have a feel of what other things cost in USD, so I have a frame of reference.

Anyone else have trouble gauging BTC's relative worth/cost?

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[tutkarz]

its only because you are not using btc as long and as often as $.

[naphto]

It is because it is not possible to have such reference 


2 years ago someone bough 2 pizzas (really good ones) for 10k btc. Now, it is worth more than 1.2 million USD, some people are selling houses for less than 10k btc.

[bozak]

It will still be a long time before people think if prices in terms of BTC.  The exchange rate has to stabilize first.  Right now, even the merchants that accept BTC almost always peg it to the US dollar exchange rate.  Nobody will think of pricing in BTC until merchants stop pegging the dollar. 

[Ekaros]

And it will be rather hard untill volatility goes down... I think that really is one of the bigger hurdles. 

[tobobit]

And it will be rather hard untill volatility goes down... I think that really is one of the bigger hurdles. 

yes, the volatility is relative to market maniuplation, and the size of available bitcoins relative to worth in fiat is going to make this a BIG hurdle

[jdbtracker]

it is still a very small market, it's prone to instability.

but if I do a little math lets see... at what point will bitcoin become stable.

right now we are sitting at 17 million transactions per day. 75k unique transaction/day with a trade ratio of 2.5...

11 million coins in circulation valued at 118usd/btc = 1.3 billion

moving 35 million dollars per day or 300k btc/day +/- 30kbtc fluctuations average

well the 75k transactions with the trade ratio/volume ratio could be pointing to that right now it takes 75k transactions to the 17 million transactions per day
to move the price thats tiny, 1/233 of the total movement is causing this fluctuation.

The new adopters of the currency are causing this instability their influx is, people who just want to use btc to buy something or use it to transfer funds can't be causing this,
they just want to get in and out so they will find a price that is easy to match.

but what amount of the exchange trade is speculation? day trading? no clue, can't find data.

considering that at it's maximum bitcoin will be moving 45 billion dollars per day... expect a lot of volatility until we reach that number, then it will be rock solid,
or if it atleast gets to 1 billion a day then the price will only fluctuate a tiny bit no more then a few dollars.

but we are sitting at 35 million trade/day so it'll be a while.

someone will have to help me out here with my logic, cause I sure could use some coffee right now.

[stslimited]

I'm still relatively new to BTC, but I still find it hard to think in terms BTC pricing. For instance, if you told me a watch costs $10 USD, I'd say that's fairly cheap. If you told me the same watch costs 1 BTC, I wouldn't be able to say whether that was "cheap" or "expensive" unless I knew what the BTC/USD exchange rate was.

My point is, when I think of pricing in USD, I don't have to convert USD to JPY or CNY or EUR ... I just "know" because I have a feel of what other things cost in USD, so I have a frame of reference.

Anyone else have trouble gauging BTC's relative worth/cost?

correct, and MANY MANY MANY companies use this "frame of reference" naivety to skim profits off of consumers that do not keep up with exchange rates.

example: when Apple or Sony decreases prices of their old hardware 2 years later, it is *usually* because of exchange rate fluctuations that have occurred within that time period so great that they cannot fool enough consumers into thinking they have a fair price. It actually has very little to do with the age of the hardware or giving a break to consumer loyalty.

currently in the bitcoin economy, yes there is a lot of volatility, as such you cannot keep a price the same for 2 years with people thinking it is a fair price.

but your frame of reference is actually something companies count on to gyp you every single day, because they are aware of the exchange rate, which also changes every single day.