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Author Topic: long term investment value?  (Read 1301 times)
Desolator
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July 22, 2011, 05:22:06 AM
 #1

BTC is extremely likely to not get destroyed or go away as a whole so it's a pretty respectable investment at the moment.  It looks kinda sad value-wise lately and had apparently bottomed out quite a while ago but then came back.  But I'm not thinking short term.  I mean people buy up newspaper articles and sealed boxed toys and stuff and sit on them for 30-50 years and suddenly they're worth 10,000x more.  People even buy up early release items in MMORPGs on purpose then sell them years later, though that's a lot less legal to try and turn into USD lol.  So buying things for a low price and sitting on them for decades is sometimes a good idea.  What about BTC?

So how good of a long term investment in BTC be and how long term are we talking?  I know like 75 years from now they're gonna be awfully scarce and practically only available from other owners cuz new blocks are gonna be darn hard to find.  But how about like 2-5 years down the road?

I would think that sometime pretty soon, the number of people mining vs the profits will collide into a massive explosion of hash values Tongue KABOOM! lol.  And then nobody's going to start mining cuz the hardware + power compared to BTC conversion ratio will drop.  Then people will stop mining who have been for a long time and because of that, the amount the average miner gets from mining will go up so people will get back into it until it collides again and then tons of people will quit and repeat the cycle over and over.

I just don't see any way that it could possibly exceed a certain price.  As soon as the BTC price peeks over top the cost to operate a miner, more miners will immediately come in and cause the price to lower back down.  If the price quadrupled, do you really think the entire world couldn't come up with 4x more miners when they hear there's like 20 day profitability time period involved?

But then there's the fact that maybe 10x more non-miners than miners will suddenly buy into the system purely for transaction use and shoot the price sky high.

What do you all think about the future considering every single factor involved?  Has anyone ran some actual number estimates?
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Jaime Frontero
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July 22, 2011, 05:34:06 AM
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So how good of a long term investment in BTC be and how long term are we talking?

we'll have a pretty good idea by the end of the year, and we'll probably know close to sure by the end of 2012.

in the meantime; it's pretty handy stuff, Bitcoin.  i'm becoming quite enamored of using it to buy stuff.
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July 22, 2011, 05:44:23 AM
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OP- you put waaaay to much emphasis on miners and their ability to affect price. Mining will become an increasingly small and specialized subset of the bitcoin economy. Bitcoin's value as an investment will depend purely on it's long term usefulness in trade.
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July 22, 2011, 06:27:11 AM
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Oh, I didn't mean to imply that.  I meant it in a more selfish way lol.  If more people mine then "the price" of coins doesn't go down, just the price as far as I'm concerned and I'm concerned about their dollar value compared to time, effort, electricity, and hardware.

They could be at 20 USD and then 4x more miners appear and it stays at 20 USD but now I make them at a 4x slower rate so it might as well be worth 5 USD to me.  So more miners sort of affect the price but don't actually affect the price.

Or perhaps I should say, they make mining worth less, not the currency itself.
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July 22, 2011, 02:16:32 PM
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Bitcoin is a high risk investment at the moment. Don't put money in that you can't afford to lose.

Most of us here buy and hold bitcoin because we like the idea.

Anonymous Cash-By-Mail Exchange: https://www.bitcoin2cash.com
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July 22, 2011, 04:25:09 PM
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There are people who are still sitting on beanie babies, pogs, and 8-tracks because they're convinced one day they'll shoot up in value. I would advise against investing any money you can't do without, and I would advise against investing in Bitcoins if you don't truly believe in the idea that they'll change the world to the extent that will realize the profits you're hoping to get (ie, they don't have the be the one-world-currency to still hold a significant value in the future).

^_^
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July 22, 2011, 07:14:47 PM
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Oh, I didn't mean to imply that.  I meant it in a more selfish way lol.  If more people mine then "the price" of coins doesn't go down, just the price as far as I'm concerned and I'm concerned about their dollar value compared to time, effort, electricity, and hardware.

They could be at 20 USD and then 4x more miners appear and it stays at 20 USD but now I make them at a 4x slower rate so it might as well be worth 5 USD to me.  So more miners sort of affect the price but don't actually affect the price.

Or perhaps I should say, they make mining worth less, not the currency itself.

You didn't read his post.  You are still thinking in terms of what mining does for you.  Read it again.

OP- you put waaaay to much emphasis on miners and their ability to affect price. Mining will become an increasingly small and specialized subset of the bitcoin economy. Bitcoin's value as an investment will depend purely on it's long term usefulness in trade.

Your personal decision to mine or to not mine is of no consequence to anyone but you.

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July 22, 2011, 07:28:46 PM
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Desolator
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July 22, 2011, 08:09:47 PM
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I think you're failing to see my point about how this affects specifically bitcoins.

If I work at a job for $10/hr, and I get a pay cut to $5/hr then I'm getting half the money.  If I keep getting paid $10/hr but the dollar deflates or inflation makes everything in the US cost double, that's the same thing as getting a pay cut to $5/hour cuz I'm basically still getting half the money, just not mathematically.  But dollar values are just arbitrary numbers and the only important thing is what items that meaningless number can buy you.

So on the BTC side, if double the people mine, that means my own mining creates 50% less bitcoins. If BTC drop 50% in their USD value, I'm mining at the same rate but it's 50% less profitable.  So either way, it's exactly the same end results. I'm going to lose 50% profitability on my mining operation in either case.

Obviously that logic does not apply to already owned BTC but right now, that's pretty close to 0 Tongue Let's say I even had 50 BTC and a decent mining rig.  If the value of BTC doubles to 26 USD/BTC, hurray.  Then it's kinda like I have 100 BTC, just not literally.

But compared to the rate I'm mining them at, I don't care what my static pile of coins is worth because now it's insanely hard to get any more of them from then on if there are too many miners.  I can mine indefinitely but the amount I own is definite so mining takes priority.

Back to my crappy analogy, that's like if I'm working and making $10/hr and made about $1000 so far.  Then I find out my $1000 is now worth in effect $2000 cuz of deflation.  Hurray, I'm rich.  But awwww, now I found out my company can only afford to pay me $0.10/hr from now on cuz they hired an extra 100 workers to do my job.  Great, the value of my money went up but I'm basically not going to make any more money so how long is that $1000 going to last even if it is worth $2000 now?

Now, if I had 10,000 BTC and am mining 0.5 BTC/day, that's a different story.  Then I don't give a crap how many people are mining or how productive it is, I care how much my stockpile of coins are worth.  But think about how many people in the world that applies to at the moment.  I'm definitely not one of them! Tongue  And the math says I won't be in the next 5 years either.

So the point is, for me and most of you over the next couple years, if the number of people mining is related too directly to the USD cost and they get way too close together, that's a problem regardless of the actual value of the BTC you already earned.
Dobrodav
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July 22, 2011, 10:24:49 PM
 #10

It is looks like, US goverment interested in bitcoins, - for some reason. I am will not touch that reasons, well, becouse they are stink. But now, i am considering legal status of BTC (at least in US) in much more optimistic light, than a month ago.

You can call me CryptoManiac (lover of crypto theores), but current course of action (and that includes hardly regulated course of BTC now, - that lets smart guys to catch a train),  force me to think about some "God Hand" that regulates BTC market, and wasting any negative press reaction in a sand of theories...

For some reason, US gov (or part of it) - SUPPORT BTC NOW.

Is it for good or for bad for world, I am don`t know. But it is clear for me now, that BTC have green light, at least for 5 y. in US.

We will  meet in not-so-distant future.
Today`s strange music :
http://www.youtube.com/watch?v=V8mCgjbBPMk
Yesterday`s  strange music:
http://www.youtube.com/watch?v=-uCTyC1FGLw
spruce
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July 22, 2011, 10:26:28 PM
 #11


For some reason, US gov (or part of it) - SUPPORT BTC NOW.

Is it for good or for bad for world, I am don`t know. But it is clear for me now, that BTC have green light, at least for 5 y. in US.

Evidence?
Dobrodav
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July 22, 2011, 10:36:26 PM
 #12

Evidence ? No ANY reaction on statement of US senator  - well it was most ridicoulous senator, but anyway. No any statements was declared. Looks like BTC "somehow" dropped out from view field of US goverment. All of them just dont mention it - and THAT is strange. BTC is powerfull instrument in voting race upcoming - and nothing, just silence happened. We see field of silence around of BTC from gov representatives - and that is very strange. That is not "evidence", - yes, but that is warning sign, worse of mentione.


For some reason, US gov (or part of it) - SUPPORT BTC NOW.

Is it for good or for bad for world, I am don`t know. But it is clear for me now, that BTC have green light, at least for 5 y. in US.

Evidence?

We will  meet in not-so-distant future.
Today`s strange music :
http://www.youtube.com/watch?v=V8mCgjbBPMk
Yesterday`s  strange music:
http://www.youtube.com/watch?v=-uCTyC1FGLw
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