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Author Topic: If the bitcoin limit is reached.  (Read 3215 times)
mariokiller64
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July 10, 2011, 04:43:46 AM
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Won't the price for bitcoins become higher and higher?
I know it's going to take a while for it to reach the max, but when it does, what do you expect of the price?
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July 10, 2011, 05:46:45 AM
 #2

Won't the price for bitcoins become higher and higher?
I know it's going to take a while for it to reach the max, but when it does, what do you expect of the price?

Some people think so.  Wink

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July 10, 2011, 06:59:36 AM
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Let's see.  We'll be extremely close to the limit in 2033?  That's about 22 years from now.  I'd say the current price already reflects the speculation over future Bitcoin scarcity and adoption.  It wouldn't make any sense to invest in Bitcoin if you could get better guaranteed returns, so...  Let's say people wouldn't invest in Bitcoin if the expected returns are less than U.S. bond returns.  Investing in bonds would give you a ~3.5% return per year?  And the current price of Bitcoin is ~$14.50.

14.5*(1+0.035)^22 = ~$39

So, that's what I think the price of a Bitcoin will be in 2033, and it will keep growing at a rate of 3.5%/year after that.

Brother, can you spare a Bitcoin? 18Xe5KqJhmgw5cTjosek2YwnqzG6tDWKNU
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July 10, 2011, 07:12:44 AM
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So you seriously think US Dollar would be accepted as a currency in 2033? Highly unlikely, as a museum exhibit - maybe. So the question about "cost" in 2033 is moot. It will be exactly 1 bitcoin per bitcoin.

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imperi
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July 10, 2011, 07:15:42 AM
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Let's see.  We'll be extremely close to the limit in 2033?  That's about 22 years from now.  I'd say the current price already reflects the speculation over future Bitcoin scarcity and adoption.  It wouldn't make any sense to invest in Bitcoin if you could get better guaranteed returns, so...  Let's say people wouldn't invest in Bitcoin if the expected returns are less than U.S. bond returns.  Investing in bonds would give you a ~3.5% return per year?  And the current price of Bitcoin is ~$14.50.

14.5*(1+0.035)^22 = ~$39

So, that's what I think the price of a Bitcoin will be in 2033, and it will keep growing at a rate of 3.5%/year after that.

Your equation doesn't work considering 14.5 was an extremely arbitrary choice in such a volatile market.
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July 10, 2011, 11:25:20 PM
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So, that's what I think the price of a Bitcoin will be in 2033, and it will keep growing at a rate of 3.5%/year after that.
Real inflation is much more than 3.5%, at least in Latvia. May be in USA is different, but I don't believe.

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July 11, 2011, 12:13:24 AM
 #7

The element of scarcity is only one small aspect of the market price of Bitcoin.

I have a cat named Caesar. There is only one of him in the world, so we've already reached the limit. I don't expect his value to increase much.

Bitcoin's value will increase first and foremost as people come to discover its usefulness in trade.
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July 11, 2011, 02:35:20 AM
 #8

Demand is the single factor which constitutes the price per BTC.

It is true that various traits of our cryptocurrency such as transportability, divisibility, homogeneity, scarcity and others, are factors that stimulate demand, but demand is the father of price.
There are also other external factors that play with demand, however those can only be speculated as to how much they impact.

Once the limit is capped, if everyone is using BTC there will be extremely high demand, thus each should be worth a lot.
Perhaps, 1+ Billion people / 21M BTC == a generous amount.

In-case anyone is worried, divisibility along with decimal shifting, solve the problem of: people > BTC

By then, you would be better of valuing your BTC in its native form, rather than 'so if I convert to USD, pay fees, buy-online with CC, extra fees' and so on.

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July 11, 2011, 03:53:15 AM
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So you seriously think US Dollar would be accepted as a currency in 2033? Highly unlikely, as a museum exhibit - maybe. So the question about "cost" in 2033 is moot. It will be exactly 1 bitcoin per bitcoin.

Are most people on this board this delusional?

I drink it up!
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July 11, 2011, 03:56:11 AM
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So you seriously think US Dollar would be accepted as a currency in 2033? Highly unlikely, as a museum exhibit - maybe. So the question about "cost" in 2033 is moot. It will be exactly 1 bitcoin per bitcoin.

Are most people on this board this delusional?

Well, the U.S. will certainly be part of the European Union by then, so we'd have the Euro.
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July 11, 2011, 04:31:29 AM
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Until every single transaction becomes virtual, not every single currency will be virtual.

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July 11, 2011, 05:04:52 AM
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So you seriously think US Dollar would be accepted as a currency in 2033? Highly unlikely, as a museum exhibit - maybe.
Roll Eyes Oh you.

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July 11, 2011, 06:15:36 AM
 #13

Your equation doesn't work considering 14.5 was an extremely arbitrary choice in such a volatile market.

LOL.  I made that post as kind of a smart-ass reply Smiley  The OP is asking us to predict the future.  If we could predict the future, then the market would be reflecting that right now with its $14.5/bitcoin price.

Brother, can you spare a Bitcoin? 18Xe5KqJhmgw5cTjosek2YwnqzG6tDWKNU
piramida
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July 11, 2011, 08:41:40 PM
 #14

Are most people on this board this delusional?

bitcoins aside, just look around you. I know its hard to see with 99% of the world still accepting USD happily, but you need to look forward a little. That 15 trillion debt is not going away anywhere, everyone knows that the rate it is rising is only going up. Fact? If you need to pay 15 trill rising debt and *you* are the one who decides what the green cut paper is worth, what would be the next logical step for you? Lower the value, print more paper - but the world won't let you go all the way. So what other options? Default, but US is too big to do a Greece-style FU with no reasoning, so some catastrophic event that would crush dollar value to zero and issue a currency reform after that. I'm sorry, can you suggest other exits out of this situation? Realistic, disillusioned?

i am satoshi
Aristotle
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July 11, 2011, 09:28:42 PM
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bitcoins aside, just look around you. I know its hard to see with 99% of the world still accepting USD happily, but you need to look forward a little. That 15 trillion debt is not going away anywhere, everyone knows that the rate it is rising is only going up. Fact? If you need to pay 15 trill rising debt and *you* are the one who decides what the green cut paper is worth, what would be the next logical step for you? Lower the value, print more paper - but the world won't let you go all the way. So what other options? Default, but US is too big to do a Greece-style FU with no reasoning, so some catastrophic event that would crush dollar value to zero and issue a currency reform after that. I'm sorry, can you suggest other exits out of this situation? Realistic, disillusioned?

U.S. debt is only about 100% of 1 year's GDP.  If the government was a person (it's not, and it shouldn't act like one), that's about the maximum amount a person should take out on a loan for a house.  So, I don't think it's catastrophic, yet.  But, it's getting up there.  The government must raise revenue and cut spending sometime soon in the future.  That's the only way it could get out of the hole (that, and lessen the trade deficit).  I'm no economist, but I think the government could raise a lot of revenue by raising taxes on imports, since our economy is extremely import heavy.  If that discourages import consumption, then the trade deficit and employment improves, raising revenues.  A win-win situation?

Brother, can you spare a Bitcoin? 18Xe5KqJhmgw5cTjosek2YwnqzG6tDWKNU
Bitcoin_Silver_Supply
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July 11, 2011, 09:33:28 PM
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I'm no economist, but I think the government could raise a lot of revenue by raising taxes on imports, since our economy is extremely import heavy.  If that discourages import consumption, then the trade deficit and employment improves, raising revenues.  A win-win situation?

Oh don't be so modest, you were one of the first economists!
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July 12, 2011, 06:48:35 AM
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U.S. debt is only about 100% of 1 year's GDP.  If the government was a person (it's not, and it shouldn't act like one), that's about the maximum amount a person should take out on a loan for a house.  So, I don't think it's catastrophic, yet.  But, it's getting up there.  The government must raise revenue and cut spending sometime soon in the future.  That's the only way it could get out of the hole (that, and lessen the trade deficit).  I'm no economist, but I think the government could raise a lot of revenue by raising taxes on imports, since our economy is extremely import heavy.  If that discourages import consumption, then the trade deficit and employment improves, raising revenues.  A win-win situation?

That is true, but I'm watching the situation and I don't see it slowing yet, maybe some measures could be taken yet - but if there is an obvious solution, no Fed economist somehow sees it yet. Maybe you can't tax imports when your own economy can't handle the load or you risk deficits. And 140% of debt/GDP ratio (that what Greece had, at peak!) considered a defaulting unrecoverable economy.

i am satoshi
patvarilly
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July 12, 2011, 07:51:27 AM
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U.S. debt is only about 100% of 1 year's GDP.  If the government was a person (it's not, and it shouldn't act like one), that's about the maximum amount a person should take out on a loan for a house.  So, I don't think it's catastrophic, yet.  But, it's getting up there.  The government must raise revenue and cut spending sometime soon in the future.  That's the only way it could get out of the hole (that, and lessen the trade deficit).  I'm no economist, but I think the government could raise a lot of revenue by raising taxes on imports, since our economy is extremely import heavy.  If that discourages import consumption, then the trade deficit and employment improves, raising revenues.  A win-win situation?

That is true, but I'm watching the situation and I don't see it slowing yet, maybe some measures could be taken yet - but if there is an obvious solution, no Fed economist somehow sees it yet. Maybe you can't tax imports when your own economy can't handle the load or you risk deficits. And 140% of debt/GDP ratio (that what Greece had, at peak!) considered a defaulting unrecoverable economy.

Taxing imports for the sake of being imports would break WTO trading rules.  In practice, this means the US just shrugs and moves on, but it allows other countries to legally retaliate with their own import tariffs, which hurts US exporters, which brings down the US economy, which begets higher import taxes, ...  We've been down this protectionism death spiral before, and it makes things worse than better.

Raising taxes, cutting spending and/or reviving growth are all reasonable alternatives to catastrophe.  Especially given the current relative debt level, which has been shown elsewhere to not, of its own accord, make others unwilling to lend to you, default or hyperinflation now is a purely self-inflicted catastrophe.  Only someone so dogmatic that they're willing to sacrifice absolutely everything to uphold a one-and-only principle (random example: "taxes = violence") would voluntarily go down this route.  For all the pandering and theatrics, such single-principle people are thankfully a fringe minority.
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July 12, 2011, 09:08:54 AM
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bitcoins aside, just look around you. I know its hard to see with 99% of the world still accepting USD happily, but you need to look forward a little. That 15 trillion debt is not going away anywhere, everyone knows that the rate it is rising is only going up. Fact? If you need to pay 15 trill rising debt and *you* are the one who decides what the green cut paper is worth, what would be the next logical step for you? Lower the value, print more paper - but the world won't let you go all the way. So what other options? Default, but US is too big to do a Greece-style FU with no reasoning, so some catastrophic event that would crush dollar value to zero and issue a currency reform after that. I'm sorry, can you suggest other exits out of this situation? Realistic, disillusioned?

U.S. debt is only about 100% of 1 year's GDP.  If the government was a person (it's not, and it shouldn't act like one), that's about the maximum amount a person should take out on a loan for a house.  So, I don't think it's catastrophic, yet.  But, it's getting up there.  The government must raise revenue and cut spending sometime soon in the future.  That's the only way it could get out of the hole (that, and lessen the trade deficit).  I'm no economist, but I think the government could raise a lot of revenue by raising taxes on imports, since our economy is extremely import heavy.  If that discourages import consumption, then the trade deficit and employment improves, raising revenues.  A win-win situation?

There are lots of ways the government can "get out of this hole", but they aren't likely to do any of them for exactly the same reason that they are in the hole.

The bond market will probably collapse in the next few years. This means print print print! because politicians don't want to stop giving handouts in exchange for votes.

I would be very surprised if the usd exists 10 years form now.
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