Liquidity problem

[yvv]

What? Bitcoin no is pyramid. We great investment are!

It was not mean to be, but it actually is right now.

By that logic any appreciating asset is a pyramid scheme.

No. It depends on how it is appreciating.

[yvv]

Bitcoin has uses besides trading

Yes, I know. But this is more in theory than in practise.

[MonadTran]

The amount of fools who are ready to bring money into system saturates quickly.

Good news! We don't need fools right now, we need intelligent people.

[notme]

Bitcoin has uses besides trading

Yes, I know. But this is more in theory than in practise.

So you admit your theory doesn't apply here in reality?

[yvv]

Bitcoin has uses besides trading

Yes, I know. But this is more in theory than in practise.

So you admit your theory doesn't apply here in reality?

My theory?? Bitcoin business on every corner in the world is not my theory. I do not see any businesses around me. But I see a lot of dreamers who think that they can live just selling forever rising in price bitcoins.

[notme]

Bitcoin has uses besides trading

Yes, I know. But this is more in theory than in practise.

So you admit your theory doesn't apply here in reality?

My theory?? Bitcoin business on every corner in the world is not my theory. I do not see any businesses around me. But I see a lot of dreamers who think that they can live just selling forever rising in price bitcoins.

I misunderstood you, so you misunderstood me.  I now see you are saying the uses are more theoretical than practical.  Now that you have made yourself clear all I can say is this: Maybe you spend too much time on the speculation subforum.

[yvv]

Bitcoin has uses besides trading

Yes, I know. But this is more in theory than in practise.

Everything is working just fine. http://blockchain.info/charts/tx-trade-ratio

You should expect the currency exchange volume to be some multiple of spending for goods/services.

Does not the same happen if just more and more hoarders are attracted by the rising price?

[Odalv]

Bitcoin has uses besides trading

+1  ... smarter guy will buy Bitcoin and upgrade some service (endless oportunities .. better exchange, better security .. but keep compatibility with Bitcoin 0.1)

[yvv]

My theory?? Bitcoin business on every corner in the world is not my theory. I do not see any businesses around me. But I see a lot of dreamers who think that they can live just selling forever rising in price bitcoins.

You didn't see a computer in every home 20 years ago.
I look forward to times when everyone buys bread with BTC using their smartphone in a grocery store.
Just wait 20-50 years.

You will definitely be able to buy bread in a grocery store using smartphone in nearest future, no questions. I doubt a lot that it will a bitcoin, though. Better technology will come up.

Buy the way, you gave me not bad life expectancy.

[Jutarul]

Right now, capitalization of bitcoins is $1B. If it continues to appreciate 10 times per year, its capitalization would reach $1T in 3 years. To reach this number, every single person in developed world would need to invest $1K into bitcoins.

false.

No investment is needed at all. Only the time preference for saving vs. dissaving has to change for the price to move. To give you an extreme example - if everybody stops selling bitcoin, the price is infinite. If nobody buys bitcoin, the price is zero. No funding needed. Please study price discovery mechanisms before you make conclusions like that.

Oh yes, money appear out from thin air. Don't you understand that if some miners or hoarders make X USD profit from selling bitcoins, this is just because other hoarders lose exactly the same amount?

You're mixing two things. Bitcoin valuation and mining profits.

If price moves up the opportunity cost for holding purchasing power increases, putting a downward pressure on prices (negative feedback). However, as prices move up and bitcoin hoarders fill their immediate consumption needs by spending, their time preference gets lowered, ie they can tolerate a higher opportunity cost. This leads to a situation in which their purchasing power increases faster then they are spending it (enrichment). This enrichment does not have to match the incoming purchasing power. (Not zero sum)

The influx of new bitcoins from miners puts an additional downward pressure on price because they can arbitrage from the cost of production.

[notme]

Bitcoin has uses besides trading

Yes, I know. But this is more in theory than in practise.

So you admit your theory doesn't apply here in reality?

My theory?? Bitcoin business on every corner in the world is not my theory. I do not see any businesses around me. But I see a lot of dreamers who think that they can live just selling forever rising in price bitcoins.

I too see a lot of dreamers who think everyone will be paying for their Amazon goodies in Bitcoin. Which is most likely a misapplication without some sort of intermediary layer.

Rather, Bitcoin will more likely evolve into a sort of SWIFT system for cryptos. Yeah, there will be those with some bitchange swapping it for e-books and VPN serivce, but that will essentially be a backwater of the crypto economy. 

I also see this as a likely future, and it fits with my statement that Bitcoin has other uses besides exchanging for fiat.  Still, there is a lot going on in the bitcoin economy besides fiat exchange, and if someone is bothered by the dreamers maybe they should quit hanging out in the forum dedicated to dreaming about the future.

[johnyj]

And why new people won't want to spend that much money into bitcoin, if they saw this thing appreciated 10 times per year averagely

This happens only because each year newcomers pay 10 times more to buy bitcoins from those, who bought them 10 times cheaper last year. This will not happen forever. When inflow of newcomers into the system will stop, the game will be over. This happens with all financial pyramids sooner or later.

Most of the people are not used to several times profit per year, but some people do. FED is printing 2.8 billion USD per day, that profit is almost infinite, and they don't really feel uncomfortable about it

Of course there is always a concern about sustainability when bitcoin reaches full market saturation, but as more and more saving can be put into it, I don't see why people are going to panic sell. Miner's productivity is much higher than those central bankers who print money out of nothing, if their work worth 2.7 billion USD per day, miner's work will worth at least 27 billion per day, which put a bitcoin price at 7.5 million USD

By the way, all the bubble comes to an end because of two things: Increased supply of the asset and decreased fiat money supply. For bitcoin the first is not going to happen, so it only depends on the second. I'm afraid FED is not going to tighten a lot any time soon, they have much bigger problem right now. And even FED tightens, bitcoin could still gain in value, since reduced amount of fiat money will create requirement for other transaction medium

[yvv]

Still, there is a lot going on in the bitcoin economy besides fiat exchange, and if someone is bothered by the dreamers maybe they should quit hanging out in the forum dedicated to dreaming about the future.

Are you kidding? There is plenty of information on this forum about development of very interesting technologies. We are now in speculation subforum, that is why all  talking is about silly dreams.

[notme]

Still, there is a lot going on in the bitcoin economy besides fiat exchange, and if someone is bothered by the dreamers maybe they should quit hanging out in the forum dedicated to dreaming about the future.

Are you kidding? There is plenty of information on this forum about development of very interesting technologies. We are now in speculation subforum, that is why all  talking is about silly dreams.

That's my point.  Speculation is dedicated to dreaming, so why come here and complain about dreamers?

[crumbs]

Right now, capitalization of bitcoins is $1B. If it continues to appreciate 10 times per year, its capitalization would reach $1T in 3 years. To reach this number, every single person in developed world would need to invest $1K into bitcoins.

false.

No investment is needed at all. Only the time preference for saving vs. dissaving has to change for the price to move. To give you an extreme example - if everybody stops selling bitcoin, the price is infinite. If nobody buys bitcoin, the price is zero. No funding needed. Please study price discovery mechanisms before you make conclusions like that.

Sorry to necro this, but it's repeated over & over on this forum, though the reasoning's junk.

If nobody is selling bitcoins, the price is not infinity -- it's simply *undefined.*  If you wish to avoid reductio ad absurdum, remember that infinite value is not simply a mathematical fallacy, it flops IRL, too.  There are other currencies around, so if no one is selling bitcoins -- people simply stop using bitcoins, and return to using something exotic, like the dollar.

If nobody buys bitcoins, the price is not zero, it is again *undefined*.  It's the old "divide by zero" goof.  Please learn to math, folks.

[johnyj]

Here is a more detailed scenario:

Suppose that 2 years are enough long to wait until users start to spend part of their coins, then today we will see some part of the coins from 2011 flowing out. It was 7200 coins per day, so if every bitcoin investor spend 10% of their investment after 2 years, there will be about 720 coins per day flow into the market, for either re-invesment or consumption, this supply is steady and definite

New investors will only spend coins after they have saved for 2 years, so there is almost no coin outflow from current coin generation, they all get saved

And for each year passed, more and more people will reach the maturity of their investment. But, due to the rise of bitcoin price, they might need to spend less and less amount of coins to get their fiat investment back, so the result might still be less than 720 coins net outflow per day

With such small amount of coin supply in the market, if there is a speculator holding hundreds of thousands of coins, he will surely cause wild price fluctuation

[yvv]

Still, there is a lot going on in the bitcoin economy besides fiat exchange, and if someone is bothered by the dreamers maybe they should quit hanging out in the forum dedicated to dreaming about the future.

Are you kidding? There is plenty of information on this forum about development of very interesting technologies. We are now in speculation subforum, that is why all  talking is about silly dreams.

That's my point.  Speculation is dedicated to dreaming, so why come here and complain about dreamers?

I don't come to speculation subforum. I watch the "recent posts" page, and see a lot of speculation threads there, which seem funny to me. Sorry for making you read my complains. I'll try to ignore such topics next time.

[Jutarul]

To give you an extreme example - if everybody stops selling bitcoin, the price is infinite. If nobody buys bitcoin, the price is zero. No funding needed. Please study price discovery mechanisms before you make conclusions like that.

Sorry to necro this, but it's repeated over & over on this forum, though the reasoning's junk.

If nobody is selling bitcoins, the price is not infinity -- it's simply *undefined.*  ... If nobody buys bitcoins, the price is not zero, it is again *undefined*.  It's the old "divide by zero" goof.  Please learn to math, folks.

Yes - a more precise terminology is price extinction, because these extreme cases describe a collapse of the sales market. Every pricing mechanism needs a solid ongoing trade volume, to be considered relevant. The infinities just indicate the workings of the underlying pricing scheme.

[notme]

Still, there is a lot going on in the bitcoin economy besides fiat exchange, and if someone is bothered by the dreamers maybe they should quit hanging out in the forum dedicated to dreaming about the future.

Are you kidding? There is plenty of information on this forum about development of very interesting technologies. We are now in speculation subforum, that is why all  talking is about silly dreams.

That's my point.  Speculation is dedicated to dreaming, so why come here and complain about dreamers?

I don't come to speculation subforum. I watch the "recent posts" page, and see a lot of speculation threads there, which seem funny to me. Sorry for making you read my complains. I'll try to ignore such topics next time.

Thank you.

[SOSLOVE868]

The problem is that the coin supply on the market will always be limited (long term perspective), and that will cause short term price volatitlity

And why new people won't want to spend that much money into bitcoin, if they saw this thing appreciated 10 times per year averagely

Because bitcoins is a beta stuff... And it is likely to disappear at any time.
You might want to give it a try, and spend 100 USD in bitcoins, but will you spend 1 000 USD or 10 000 USD for 1 bitcoin considering the fact that it can disappear and lost all his value?!

With an higher price, less people will buy, and the price will never increase linearly.

Instead if price is really high, you can go for 0.1 BTC for try instead of whole 1 BTC....I do not see that price is really a problem for people use it.