Yes. Bitcoins are only worth what Bitcoin users are prepared to buy or sell them for and or exchange for goods and services.
New items of 'monetary' value and any currency (digital or otherwise) can often have increased volatility and price fluctuation at inception.
I'm also a very new Bitcoin user and can realize the potential for such a system. I'm starting to run an exchange for Bitcoins / Liberty Reserve and as a day Forex trader I'm very interested in developing the exchange rates into a 'live' system.
I believe that NewLibertyReserve re-calculated the way in which the exchange rate is calculated. The current rate is a lot more realistic for the amount of Bitcoins currently in circulation. To be honest it's impressive to actually have an existing exchange rate at all. Good Work.
I have yet to contact NewLibertyReserve properly, but I have been using the existing exchange rate with other 'known' factors and estimates to try and make some long term predictions for Bitcoin using a Neural Network
Here are some of the 'know' factors: electricity used to generate bitcoins, internet and equipment costs, time, total number of bitcoins, average blocks generated daily, total blocks generated daily, average number of nodes / users daily ... etc
We can then use existing 'real' market data to increase the accuracy of future predictions and exchange rates. All this can be calculated without an actual 'market' for Bitcoins. However, market factors will of course need to be factored in, in future.
I've included Gold and Silver fixings in USD into the model in an attempt to make the predictions more accurate. It's in early stages, but I will be sharing my work and findings, eventually.
Here are a bunch of links to help anyone who might be interested.http://www.rapidminer.com/
leading open-source system for data mining. AI Financial Prediction etc.http://www.neuralmarkettrends.com/
Trading Trends In The Markets. Has some good tutorials.http://leenissen.dk/fann/
Fast Artificial Neural Network Library is a free open source neural network library.http://dit.ipg.pt/MBP/
Multiple Back-Propagation is a free software application (released under GPL v3 license) for training neural networks with the Back-Propagation and the Multiple Back-Propagation algorithms.http://people.ok.ubc.ca/rlawrenc/research/Papers/nn.pdf
A good paper on applying neural networks to trading.
To much theory and not enough 'method'. Also a sever lack of time... Anyone know of a crazy investor or philantropist and an entire development team with not much to do at the moment ? lol
~ Keep generating those Bitcoins folks, "Theirs Gold in them their Hills !"