Congratulations on the 0.5 low-mintage sales! I'm sure it is exciting for you personally; I find it exciting for the marketplace as a whole. As you pointed out awhile back...I take it as another indicator of a maturing market. One that realizes the numismatic premium comes from a number of factors, but mintage counts being a very, very important one. I view it almost hierarchically. Germane, common sales (maybe a loose 1 BTC Brass coin) provide the comfort for someone to make a 20 BTC buy like the 0.5 BTC rare piece. One of those sales may set up for a 25 BTC S1 sale, which may set up for a 100 BTC Bar sale (x of 17), a 1000 coin or bar (x of 1, 2, 3, or 5).
I am of course talking my book here, but I anticipate that within this collectible community, we will see a greater normalization of prices, with mintage and wow-factor being the two key determinants. A next evolution from there would be more sensical prices as we move up the grading scale. It is oversimplistic to simply say that all MS-66s should have an xxx% premium relative to an MS-65. Each piece is different. Years from now, with proper tracking tools in place, I envision something similar to what we have with the coin grading sites today. A place where you can see the total mintage for a certain coin, but that mintage is then further split out based on the known quantities in each grading. An MS-67 1 BTC Silver S3 is a pretty common grade. Yet I don't think we'll ever see an MS-67 25 BTC S1.
This tracking site is something that would be a great thing to implement onto my site, CoinFIRM, along with the Casascius and other eBooks and eventual galleries and databases.
It will indeed be interesting to see what a 1000
BTC coin or bar will one day sell for; im sure that all parties involved will seek anonymity so I would not at all be surprised if such a sale is not public at all.
Another burning question is, where do we get the info or these sale figures, and what should the numbers be tracked as (
BTC or $)? What sources will we get the info for regarding sales that have taken place? Simply watching one forum for these sales is very narrow-minded, even if a large portion of coin owners and traders have accounts here. It may well be that some holders of the 1000
BTC pieces are not even registered here. Will we follow the sales that take place on eBay in dollars, and convert that to
BTC (at the time of the sale) for tracking purposes? I would agree that Casascius coin sales and values should be measured relative to
BTC, because they already hold intrinsic btc value and so fourth, and are expected to rise along with btc value. Still, it does seem silly; almost like measuring the value of rare 1900's gold coins relative to how many ounces of gold they can buy. Something to think about
On a bit of an unrelated note, I notice Nubbins is really emphasising the 'chain of custody'; PGP docs and so fourth. While that's all good and fine, I really dont think they give additional value in a practical sense. Supposedly they would reduce the danger that someone would use some tech to remove the hologram and put it back; but really I think its a moot point since it has not been attempted and even when it happened, the hologram looked noticeably different. Especially in the case of the very rare 0.5
BTC S2's; nobody in their right mind would try to remove the S2 hologram to steal 0.5btc, when the coin is worth 20
BTC and the removal would at least put a huge risk in destroying it for what... a 2-3% additional value. Especially if a coin is ANACS graded, I believe its legitimacy is irrefutable.
The questions you are asking are excellent ones to ask. There is no right answer in my view, except the one that the consensus of the market migrates towards. Debating approaches, and choosing what is and is not important to collectible value. This is what ultimately defines what the market is, and what it is not.
-Your ideas about automated price extraction, alongside broadening the net of sales captures would clearly be an improvement. I look forward to using it as an additional source of data. Feel free to throw us a link sometime!
-Seeing sales prices in terms of USD. Build your site in whatever format you think will be most helpful to consumers. If your approach varied from this threads, that would be great, it would allow the market to be more broadly informed, compare the two views. Eventually, people will get a sense for which is preferable, and the reasons why. This can only help move us (the market) closer to answering the question - How does one valuate a bitcoin collectible? I'll try to include a few rationale for why I (firmly, deeply) believe that BTC-based valuation
must ultimately be chosen as the valuation method, or else the collectible market necessarily turns into a bitcoin anti-investment, and an alternative means to bet against the market without shorting on an exchange.
-Chain of custody/PGP docs. I have not personally taken the effort to generate these for my coins. The day I have a sale which is dependent on this additional security, I will take the time to generate them. I'd encourage you to do a little more reading up on the subject. The counterfeiting approach which used a hypodermic needle to inject a loosening agent left a barely-noticeable mark. Many of our coins have scratches or scuffs. To be absolutely sure, one is putting the entire value of their purchase in the hands of their own expertise. Not worth a thief's effort for the example you gave, where the bitcoin value is a small percentage of the net value. Take instead the example of a 100 BTC Series 2 bar. The Series 1s may go for 300+, but I believe Series 2 regularly go for sub-200. A thief could determine the private key, then sell the coin at a later date. Days/weeks/months/years later, they could reserve the private key, and get the money from the sale alongside the bitcoin value on the bar.
This last part is an attempt at explaining the BTC rationale more fully. I have thought on this for hours and hours and hours. I am still looking for an exquisitely simple way to condense the argument. This is the best I can present it to date.
Price Tracking in BTC, not USD1. I find BTC as the best-correlated anchor for sales. I have seen loose 1 BTC Brass S1 coins go for 3 BTC when Bitcoins were $5, $120, $600, and still today at $300. Perhaps the numismatic premium went up 100x, cut in half, and all the while happened to track the changing BTC/USD value. A simpler explanation would be that valuation is held in buyer/seller's minds in terms of BTC. Prices are "sticky", and a seller today was a buyer yesterday. When that buyer bought, in this market, there's a very, very good chance they used Bitcoins. This creates an anchor in their mind. A future sale above that is a win, below is a loss. I have personal instances of this same BTC-premium constancy, across large price variation, for 1 BTC, 5 BTC, and 25 BTC prices.
2. Let's walk through an example of what happens to the market if, instead of BTC premiums, the market chooses to use USD valuation.
Bitcoin price is at $100.
Ekko decides to invest. With his $1000, he buys 10 electronic BTC. Ekko pays $100 for each bitcoin, $100 being the bitcoin value.
Colin also decides to invest. With his $1000, he guys 5 of the 1 BTC silver pieces at 2 BTC apiece. Colin pays $200 for each coin, $100 being the bitcoin value, $100 being the numismatic premium.
Years pass, and bitcoin price reaches $10,000.
Ekko sells his 10 electronic bitcoin and receives $100,000.
Colin sells his 5 collectible bitcoin, and receives $50,000 plus the numismatic premium for his coins. That premium went from $100 / coin all the way up to $1000 / coin! He gets another $5,000 for this, and receives $55,000 in total.
What if instead of selling once it hits $10,000, they HODL?
Ekko still has 10 BTC.
Colin would be able to sell his physical for cash and/or trade for electronic. His holdings would increase from 5 BTC to 5.5 BTC.
Bitcoins is a paradigm-shifting technology for which exponential rises, Elliot Wave theory, and sigmoid curves can apply; it is entirely reasonable to assume exponential growth. This is far less common within a collectible niche.
If the market adopts USD premiums for the collectible value portion of a bitcoin's valuation, an investor looking to hold bitcoins long-term will come out best avoiding collectible bitcoins, unless the numismatic appreciation of collectibles outpaces the appreciation rate of BTC itself.
I believe markets are efficient, and practical. A market will not take a 'suicide pill'. I believe that in time, as 1000s of collectors personally grapple with the same decision, and realize their reluctance to sell a piece for less BTC than they used to buy it, that eventually, this mentality will become adopted.
We'll see.
