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Author Topic: when will there be stability?  (Read 1468 times)
stevendobbs
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September 03, 2011, 10:57:34 AM
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the value of bitcoin vs currencies continues to vary a great deal, what, if anything can be done about this?

Might it be possible for the complexity of the mining puzzle to be modified so that 1 bitcoin converges on 1 €?

Steven Dobbs, co founder of thunderworks ltd
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stevendobbs
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September 03, 2011, 11:19:05 AM
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Stability would be a good thing. Im thinking of selling some assets in bitcoins, i'd like to register some bitcoin like bonds. where i'd pay back say, 10% improvement on the bond in say, 6 months.. ..but that option is somewhat removed, because if bitcoin shot up to €20 in a few weeks then that would impose a risk on my ability to make good on a bitcoin to bitcoin bond.

things start getting better when stability is achieved.

Steven Dobbs, co founder of thunderworks ltd
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September 03, 2011, 02:38:01 PM
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Might it be possible for the complexity of the mining puzzle to be modified so that 1 bitcoin converges on 1 €?

This is almost impossible. BTC is in it's very nature volatile to an extreme which for many of it's users is an added charm as you can always make a bit of extra cash from trading.

If you're planning on issuing BTC to BTC bonds then you really need a mining operation to cover it unless you want to run a fairly mad risk.

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September 03, 2011, 02:46:41 PM
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The only ways I know to stabilize BTC involves regulation. That is not going to be well received here.
I'm not an economist or anything, but I believe what you see in the bitcoin economy is a pure supply/demand model.

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September 03, 2011, 03:27:12 PM
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The only thing that will bring stability relative to Bitcoin's torrid history is sheer mass. It won't happen until Bitcoin is a $Billion+ market.

Don't hold your breath...

Agreed, volatility becomes a far more expensive prospect when one BTC = 1,000 USD  Cheesy

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September 03, 2011, 04:54:17 PM
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wont that just attract bigger fish though? who don't worry about the cost of $1000 coins?
grod
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September 03, 2011, 05:30:13 PM
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wont that just attract bigger fish though? who don't worry about the cost of $1000 coins?

$1000 coins mean a 21 * 10^9 or 21 billion dollar market cap (and at least 1.5 billion net worth for Satoshi) for all of bitcoin.  If that is justified (read: a large portion of the earth's population uses bitcoin daily) then the unit price doesn't matter -- people will simply buy a fractions of a coin.

If you are speculating with a less than 10 year time horizon what should interest you more is the current market cap of existing bitcoins and the trend of interest in the ecosystem, not so much the price per unit.
grod
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September 03, 2011, 05:35:49 PM
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Exactly that.  Building up pressure artificially has never resulted in the intended outcome.  And artificial stability and bogus volume through bot churn simply means the downside (or upside) pressure builds longer before exploding.

Bitcoin will become more "stable" when it becomes more mainstream.  By definition, if you use bitcoin as the baseline it's all the other currencies that are unstable!

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September 03, 2011, 05:58:37 PM
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$1000 coins mean a 21 * 10^9 or 21 billion dollar market cap (and at least 1.5 billion net worth for Satoshi) for all of bitcoin.  If that is justified (read: a large portion of the earth's population uses bitcoin daily) then the unit price doesn't matter -- people will simply buy a fractions of a coin.

If you are speculating with a less than 10 year time horizon what should interest you more is the current market cap of existing bitcoins and the trend of interest in the ecosystem, not so much the price per unit.


If a large portion of the earth uses bitcoin it will be higher than 21 billion. Google's market cap is about 170 billion, and they're not money. They're just an advertising company.
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September 03, 2011, 06:33:48 PM
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Bitcoin stablized around $13-14 then collapsed.
Bitcoin stablized around $10-$11 then collapsed.
Bitcoin is presently stablizing around $8-$9.
Then it will collapse.

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grod
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September 03, 2011, 06:46:54 PM
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If a large portion of the earth uses bitcoin it will be higher than 21 billion. Google's market cap is about 170 billion, and they're not money. They're just an advertising company.

Google's market cap is determined by current and projected future revenue.  If bitcoin is generating revenue per coin (and deflation counts) then sure, you can compare the two.  But do so on a ROI, not user base metric.  In other words, simply being money is not enough.

But you are correct -- if say 5 billion people each want to have an average $100 worth of bit coins we'll be looking at a 500B market cap and $23,000 dollars per bitcoin.   Median net worth in the US is around 150 thousand per capita.  Let's say 10% of that goes to bitcoins -- we're talking 15 * 300m = 4.5B potential market cap (and $214/BTC price) from the US population alone. It's simple math.

To be on topic: stability will also require regulated derivative markets.  Options and futures exist to provide stability to current commodities and currencies both.  Derivatives shift risk from producers and consumers to speculators, who have historically "lost" 95% of the time.
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September 03, 2011, 06:55:11 PM
 #12

Bitcoin stablized around $13-14 then collapsed.
Bitcoin stablized around $10-$11 then collapsed.
Bitcoin is presently stablizing around $8-$9.
Then it will collapse.

This again...

Another Johnny-come-lately salivating over the prospect of buying in at a lower exchange rate.
This guy registered on 15th of April, in 2010. 2010! That’s when the BTC/pizza exchange rate was 10k.

He’s been around for a year longer than you.

But I forgot, he’s said something negative about Bitcoin. Hunt him down. Damn Johnny-come-lately. Angry
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September 03, 2011, 06:59:14 PM
 #13

Why would you assume that he has not invested or mined at the time? Everyone who is being critical at all is just jealous and wants to buy in cheap?

Seriously, this type of thinking here is starting to disturb me.

PS: He hasn’t even been critical. He’s just shared his observation of a pattern he thinks is likely to occur again, and it happened to be bearish.
Minsc
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September 03, 2011, 07:24:58 PM
 #14

My point is that it's not stable.  It seems to stablize for a month, then jumps somewhere else the next month.  It would be nice if it stayed the same amount and just swung about $2-3 dollars every few days but continued to stay the same amount.

When will there be stability?  When we get enough websites going like "Okay $X per bitcoin is our exchange rate and we won't change it more than once a month".  Then people will get accustomed to that price.

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Minsc
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September 03, 2011, 07:39:57 PM
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I don't mind if it's unstable, I just don't like how it's unstable.  It sits in an artificial stablity for several weeks, then it jumps to some new artificial stability.  This is bad.

I would like if it stablized at around the same point and jumped a few bucks up and down but always stayed mostly around the same point.

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stevendobbs
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September 04, 2011, 04:11:32 PM
 #16

is the instability introduced by the algorithm which changes the complexity?

Is that part of the problem? I'm wondering if the most important factor in the price of a bitcoin is the complexity of creating new bitcoins. This recently dropped, and the price likewise dropped. Its as thought it over damps with respect to the exchange rate?

Perhaps the complexity routine could in some way be rewritten so that it might dampen speculation?

A small market surely requires greater stability controls?

I don't know how the above could be done, as the bitcoin idea of maintain a constant rate of solution seems reasonable. Perhaps its adjustments are too severe?



If the bitcoin economy was large, then I think it could indeed float free of other currencies, but at the moment it is risky for anybody to dabble in providing actual services in bitcoins because of the fluctuation.

Steven Dobbs, co founder of thunderworks ltd
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September 04, 2011, 04:33:19 PM
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is the instability introduced by the algorithm which changes the complexity?

Is that part of the problem? I'm wondering if the most important factor in the price of a bitcoin is the complexity of creating new bitcoins. This recently dropped, and the price likewise dropped. Its as thought it over damps with respect to the exchange rate?

Perhaps the complexity routine could in some way be rewritten so that it might dampen speculation?

A small market surely requires greater stability controls?

I don't know how the above could be done, as the bitcoin idea of maintain a constant rate of solution seems reasonable. Perhaps its adjustments are too severe?



If the bitcoin economy was large, then I think it could indeed float free of other currencies, but at the moment it is risky for anybody to dabble in providing actual services in bitcoins because of the fluctuation.

Just use bitpay or convert bitcoins quickly. Stability will come as others have said when the market is more mature ($1B+) has nothing to do with mining difficulty. That has gone down due to the exchange rate and alternate chains in my opinion.
stevendobbs
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September 04, 2011, 04:50:28 PM
 #18

that is a good point about the introduction of new chains.

Steven Dobbs, co founder of thunderworks ltd
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