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Author Topic: There is No Bubble  (Read 2636 times)
peach
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June 25, 2011, 10:10:43 PM
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It is my belief that Bitcoins' current price is not dangerously speculative nor are they in a bubble of any reasonable magnitude.

As someone who deals with website rankings, trends, and internet virality on almost a daily basis, I immediately became interested in just what fashion Bitcoin's user population is expanding as a possible indicator for why it is BTCs have experienced such a significant growth in the past couple months. A few questions arose: "How much of BTCs recent gains are due to speculation, hivemind, hype, and hoarding?" and "Does BTCs recent growth correlate to a greater number of users?"

In attempts to answer these questions, I looked at some traffic data from Alexa.com:


And the Google insight trend for the term 'bitcoin':


And finally the price of BTC in ~the same time period:


Although you may find this graph rather uninteresting, I see this somewhat loose correlation as an indicator that the recent jump in price is not due (primarily) to an increase in hoarding, speculation, or hype, but rather to a simple jump in users. This is not to say, however, that hype did not cause the jump in users and interest.
It is simply being said that Bitcoins are unlike precious metals as of late in regards to their principal reason for an increase in price.

What is your take on it?

If you found my post helpful or interesting, any donations would be hugely appreciated and help my enormous college debt immensely:
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June 25, 2011, 10:31:01 PM
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that the recent jump in price is not due (primarily) to an increase in hoarding, speculation, or hype, but rather to a simple jump in users.


I fail to see the difference between a bitcoin user and a bitcoin speculator.
what are all these new users using bitcoin for?
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June 25, 2011, 10:35:55 PM
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that the recent jump in price is not due (primarily) to an increase in hoarding, speculation, or hype, but rather to a simple jump in users.


I fail to see the difference between a bitcoin user and a bitcoin speculator.
what are all these new users using bitcoin for?


As we know, BTCs value isn't judged by its usefulness and application but by attention and revolutionary nature. The more people are interested in it, the higher the price, the more it will be used/spent. Period.

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June 25, 2011, 10:37:00 PM
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that the recent jump in price is not due (primarily) to an increase in hoarding, speculation, or hype, but rather to a simple jump in users.


I fail to see the difference between a bitcoin user and a bitcoin speculator.
what are all these new users using bitcoin for?


I'm only relatively new (February, 2011), but I use bitcoins to buy things.  That's kinda what they were made for.  I have some savings, but I spend quite a few.  When I do, I buy new ones with the fiat I would have spent.

As we slide down the banister of life, this is just another splinter in our ass.
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June 25, 2011, 10:41:00 PM
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that the recent jump in price is not due (primarily) to an increase in hoarding, speculation, or hype, but rather to a simple jump in users.


I fail to see the difference between a bitcoin user and a bitcoin speculator.
what are all these new users using bitcoin for?


I'm only relatively new (February, 2011), but I use bitcoins to buy things.  That's kinda what they were made for.  I have some savings, but I spend quite a few.  When I do, I buy new ones with the fiat I would have spent.

Exactly. And to steal a quote from Bittalk.tv, who referenced The Pirate Bay's founder saying: "If 10% of the black market was dealt with using BTC, their value would increase by a factor of 600."

This is not to say the black market will be the largest medium wherein BTC are spent. It is simply an example to put things into context.

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June 25, 2011, 11:14:59 PM
 #6

And to steal a quote from Bittalk.tv, who referenced The Pirate Bay's founder saying: "If 10% of the black market was dealt with using BTC, their value would increase by a factor of 600."
If you're referring to this, then it's not the founder of The Pirate Bay but the founder of the Swedish Pirate Party: Rickard Falkvinge.
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June 25, 2011, 11:15:55 PM
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I think the bitcoin community, on average, is crazier and more speculative, and generally more economically irrational, than the Ron Paul BuyGoldEvenAtStupidHighPricesof$1500 community

If that's true, you should be able to do pretty well trading against such people.

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June 25, 2011, 11:25:54 PM
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if bitcoins were stabilized the black market could use it. But right now is just the internet version on monopoly.
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June 25, 2011, 11:29:58 PM
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if bitcoins were stabilized the black market could use it. But right now is just the internet version on monopoly.

If the black market used it, it would stabilize.  Welcome to the chicken and the egg.  However, if I ran a cartel I would pick up a few thousand and then push it really hard.  The crooks who can grok it will make out handsomely if they can explain it to their buddies.

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June 25, 2011, 11:33:08 PM
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Quote
that the recent jump in price is not due (primarily) to an increase in hoarding, speculation, or hype, but rather to a simple jump in users.


I fail to see the difference between a bitcoin user and a bitcoin speculator.
what are all these new users using bitcoin for?


As we know, BTCs value isn't judged by its usefulness and application but by attention and revolutionary nature. The more people are interested in it, the higher the price, the more it will be used/spent. Period.

unfortunately, your "Period" prevents me from adding how stupid this argument is.
reminds me of the time when business were judged by their number of page impressions instead of a business plan or revenue.
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June 25, 2011, 11:40:56 PM
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Quote
that the recent jump in price is not due (primarily) to an increase in hoarding, speculation, or hype, but rather to a simple jump in users.


I fail to see the difference between a bitcoin user and a bitcoin speculator.
what are all these new users using bitcoin for?


As we know, BTCs value isn't judged by its usefulness and application but by attention and revolutionary nature. The more people are interested in it, the higher the price, the more it will be used/spent. Period.

unfortunately, your "Period" prevents me from adding how stupid this argument is.
reminds me of the time when business were judged by their number of page impressions instead of a business plan or revenue.

So I take it you would find any gold-owners stupid if gold wasn't used in jewelry/decorative purposes?

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June 25, 2011, 11:41:53 PM
 #12

I think the bitcoin community, on average, is crazier and more speculative, and generally more economically irrational, than the Ron Paul BuyGoldEvenAtStupidHighPricesof$1500 community

If that's true, you should be able to do pretty well trading against such people.

Buying a mutual fund and going to sleep for 10 years will beat even the best btc trader
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June 25, 2011, 11:50:02 PM
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I think the bitcoin community, on average, is crazier and more speculative, and generally more economically irrational, than the Ron Paul BuyGoldEvenAtStupidHighPricesof$1500 community

If that's true, you should be able to do pretty well trading against such people.

Buying a mutual fund and going to sleep for 10 years will beat even the best btc trader

Not at all.

An optimistic outlook for a mutual fund is 7-9% gain annually. That's practically nothing compared to the returns people have made on BTC.

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June 25, 2011, 11:57:24 PM
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June 26, 2011, 12:02:00 AM
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yea everyone sell your bitcoins so I can buy cheap  Wink

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June 26, 2011, 12:03:11 AM
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yea everyone sell your bitcoins so I can buy cheap  Wink

well, I doubt you guys are gonna sell it off to about 0,20$ or more anytime soon, so naaa. I'm not buying.
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June 26, 2011, 12:05:54 AM
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I think the bitcoin community, on average, is crazier and more speculative, and generally more economically irrational, than the Ron Paul BuyGoldEvenAtStupidHighPricesof$1500 community

If that's true, you should be able to do pretty well trading against such people.

Buying a mutual fund and going to sleep for 10 years will beat even the best btc trader

Not at all.

An optimistic outlook for a mutual fund is 7-9% gain annually. That's practically nothing compared to the returns people have made on BTC.

We won't have any idea who is right until bitcoin has existed for 10 years.  Or if your mutual fund will even beat inflation.

As we slide down the banister of life, this is just another splinter in our ass.
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June 26, 2011, 12:13:00 AM
 #18

Quote
that the recent jump in price is not due (primarily) to an increase in hoarding, speculation, or hype, but rather to a simple jump in users.


I fail to see the difference between a bitcoin user and a bitcoin speculator.
what are all these new users using bitcoin for?


I'm only relatively new (February, 2011), but I use bitcoins to buy things.  That's kinda what they were made for.  I have some savings, but I spend quite a few.  When I do, I buy new ones with the fiat I would have spent.
To me this is the Core of the adoption process. People Buy some BTC,, save some, spend some, and Buy some more... I think You're Doing It Right !
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see my website, PM if Interested, Thanks !
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June 26, 2011, 01:31:49 AM
 #19

Not quite sure what you're getting at, Chod.

Implying that A-shares of BRK experienced a bubble?

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peach
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June 26, 2011, 01:48:52 AM
 #20

Not much can be predicted solely based on technical aspects of graphs, so I wasn't clear.
And there hasn't been worry among any circles about a bubble among BRK.A shares.

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