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Author Topic: What determines the value of the bitcoin?  (Read 8130 times)
kingbc
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July 05, 2011, 06:38:15 PM
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I do not fully understand the BTC economy. My assumption is the major exhanges, irc channels and this forum determine the value of the bitcoin. Can someone clear it up for me? Thanks!
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The network tries to produce one block per 10 minutes. It does this by automatically adjusting how difficult it is to produce blocks.
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July 05, 2011, 06:41:27 PM
 #2

I think it is just supply and demand.

If I am willing to pay $15 for a bitcoin then to me its value is $15...

What determines the price of honey?  What people will pay for it...

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BitcoinPorn
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July 05, 2011, 06:43:27 PM
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Markets and merchants will in the end keep things flowing.  Combined with amount of miners.  And a few other million little factors.

BitOffer
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July 05, 2011, 07:07:12 PM
 #4

go here and click on the bottom right (HELP)
http://mtgoxlive.com

This is a cumulative graph of the outstanding orders on the MtGox exchange. It shows how much BTC/USD will have to be bought/sold before the market rate hits a certain USD price. For example, let's say you want to know how much USD would have to be spent buying BTC before the price reaches 40 USD. First find 40.0 on the bottom axis. Then find where the blue line intersects $40.0. Now find what value that corresponds to on the right axis. If it corresponds to $200000 then that's how much USD would have to be spent buying BTC before the price reached 40 USD.
thinkingBTC
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July 05, 2011, 07:11:20 PM
 #5

irc channels and this forum determine the value of the bitcoin.

I often think the same somethimes  Undecided
kingbc
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July 05, 2011, 07:48:01 PM
 #6

Thanks for the replies guys.
TerraformProjectAlpha
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July 05, 2011, 09:10:43 PM
 #7

Faith in bitcoin determines the price.  Whatever increases faith, increases the price, and vice a versa.  This may sound scary, that it is only practically backed by faith and opinion, but the US dollar is based on nothing else as well. It is up to us to supply the faith, and up to the community to support bitcoin to make it succeed. 
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July 05, 2011, 09:26:35 PM
 #8

Yes, right now, speculation determines the value...almost entirely. Eventually, if bitcoin continues to gain real traction as a transaction mechanism, the value should be determined by the portion of GDP being transacted with BTC compared to the supply of BTC.

Bitcoin is the first monetary system to credibly offer perfect information to all economic participants.
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nealmcb
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July 05, 2011, 09:32:06 PM
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See a related discussion of short-term trends at What technical indicators might be appropriate for analyzing Bitcoin currency trading? - Personal Finance and Money - Stack Exchange
En Banc
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July 05, 2011, 10:10:24 PM
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Like the others, I agree that demand is what determins the price of BTC.

When I look at it a bit closer, I think demand is currently based largely on two factors: The utility of BTC and speculation. Utility is the current ability to use bitcoins to buy things that you want and speculation is the belief that BTC may one day be much more than they are now, i.e. future utility.

There are always fundemental drivers, intrinsic values so to speak, to anything that is currently - or is trying currently - to become 'currency'. In the case of the USD it is the 'law' i.e. the force of the US Government. It is people's familiarity with it and status quo. In the case of BTC it is people who are trying to set a new medium for exchange.

So as others put it, the BTC community who is going to decide whether or not the BTC succeeds.

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HonestAbe
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July 06, 2011, 12:37:43 AM
 #11

It is the same factors that influence the value of other currencies.  What determines the value of the dollar?
MKW2012
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July 06, 2011, 03:09:05 AM
 #12

I agree with the other members that its supply and demand. Also, greed and fear really dictate this market to the extreme. Once we see more liquidity in Bitcoin the value will have a better sense of stability.
HonestAbe
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July 11, 2011, 10:26:01 PM
 #13

So once we see this stability do you think we see other online currencies pop up or have they already?
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