Why BTC is losing value.

[TattleCoin]

Hello,
I wrote an article on my site about why I think Bitcoins have been losing value over the past couple weeks. I think it all boils down to the fact that Bitcoin is a deflationary currency. Anyways, I'd love to hear what you all think!

-Wolf


My article,

http://tattlecoin.com/2011/rumor-bitcoin-falling/

[Elwar]

Except that Bitcoin is at a 50% inflation right now.

Gold is also a deflationary currency and yet its price is skyrocketing.

But if people were mining gold faster than people were buying it, it too would be losing value.

[wolftaur]

A lot of the people in Bitcoin are just treating it as an investment, but there are a lot of people, myself included, who have actually spent some coins on businesses that take Bitcoin. I honestly think the recent value drop has more to do with the fact that markets just change than anything. There's certainly been enough unrest in pretty much every other market the last couple years -- to expect that Bitcoin wouldn't experience some of the same is unrealistic.

Anything that makes investors flock to "safe bets" like government-issued bonds is going to hit Bitcoin to some extent because right now we simply have the fiat value set primarily by traders and speculators, and there is currently no real reason to buy bitcoins for the purpose of spending them. If that were to change the whole definition of the exchanges' markets could change as well.

[MrCrabs]

Looks like you speaking the truth. Maybe once all the bitcoins are issued people might start spending them.

[TattleCoin]

Except that Bitcoin is at a 50% inflation right now.

Gold is also a deflationary currency and yet its price is skyrocketing.

But if people were mining gold faster than people were buying it, it too would be losing value.

Where did you get that statistic?

Gold is about to explode. There are plenty of investors shorting gold right now.

A lot of the people in Bitcoin are just treating it as an investment, but there are a lot of people, myself included, who have actually spent some coins on businesses that take Bitcoin. I honestly think the recent value drop has more to do with the fact that markets just change than anything. There's certainly been enough unrest in pretty much every other market the last couple years -- to expect that Bitcoin wouldn't experience some of the same is unrealistic.

Anything that makes investors flock to "safe bets" like government-issued bonds is going to hit Bitcoin to some extent because right now we simply have the fiat value set primarily by traders and speculators, and there is currently no real reason to buy bitcoins for the purpose of spending them. If that were to change the whole definition of the exchanges' markets could change as well.

I've used bitcoins to buy products as well. I think that all markets change, but you can find definite reasons for those changes. I totally agree with you on the last part though. There is no incentive to use bitcoins for online transactions yet. Almost all of the BTC businesses have predecessors that use USD.

Looks like you speaking the truth. Maybe once all the bitcoins are issued people might start spending them.

We only have 3 years to wait, right?

[skilo]

Its been on the decline for about 2 months now give or take a few days.

Right now its at $7.40 and falling.

I think the whole mybitcoin incident might have something to do with it.

[max in montreal]

they will all be out in the year 2140...

[ElectricMucus]

This has nothing to do with the number of people buying bitcoins.

It has everything to do with their real value which is 4-7$ right now. The amount of power needed to generate them is their value.
This is their base value. Anything more would need a real economy behind bitcoin which is pretty much non-existent.

So to anyone complaining who hoarded their bitcoins and didn't buy anything with them: Its your fault and your fault alone. 

[adamstgBit]

BTC is losing value.... hmmm why is this.... hmmm.... could it be that their is more supply then demand??

SELL SELL SELL!

Why is BTC losing value?
in ten years the answer to this question will be simple .... Its the weekend, everyone is shopping!

[the founder]

Here's the problem guys.. we're printing more bitcoins than Zimbabwe is printing their dollars.    This is going to continue to go down until next year when it get's cut to 25 bitcoins every 10 minutes...  even then it's still going to be highly inflationary.  

We need some venture capital firms lining up to work with bitcoin companies,  we need places to spend them.. we need more people using bitcoins.. not less people with more bitcoins.

In this case we need 100,000 people with 1 bitcoin each than 1 guy with 100,000 bitcoins.  

because currently we have the latter, and we need the prior.

[BCEmporium]

Except that Bitcoin is at a 50% inflation right now.

Gold is also a deflationary currency and yet its price is skyrocketing.

But if people were mining gold faster than people were buying it, it too would be losing value.

That's a misconception of the market, actually most of the liberalism havoc is due to such "linear view" of "supply and demand".
Between supplies and demands there's speculation. Actually the gold will not be "skyrocketing" much longer as speculators by betting so much on gold's future are in fact removing value of it. You see... things have value based on their use, they're worthy or needed and cause demand, more demand = higher prices. By speculation, gold hasn't any demand on its main purpose, jewelery, as being so expensive it becomes a bad investment and ultimately a danger to its bearer.

The same went on with Bitcoin, by being so deflationary at such fast pace it literally broke all bitcoin-based businesses, what created less demand and speculators were just inflating a bubble of something themselves made worthless... just what they're doing to gold now and something else when the current gold bubble blasts.

[sadpandatech]

Except that Bitcoin is at a 50% inflation right now.

Gold is also a deflationary currency and yet its price is skyrocketing.

But if people were mining gold faster than people were buying it, it too would be losing value.

Where did you get that statistic?

Gold is about to explode. There are plenty of investors shorting gold right now.

https://goldsilver.com/news/fiat-currency-is-the-bubble-not-gold/

[helloworld]

[There is no incentive to use bitcoins for online transactions yet. Almost all of the BTC businesses have predecessors that use USD.

USD = bank accounts = real names and identities

[Elwar]

Where did you get that statistic?

Bitcoin at 50% inflation:
https://bitcointalk.org/index.php?topic=3105.0

[aq]

2010: 100%
2011: 50%

So bitcoin had lets say 75% inflation from summer last year to summer this year, yet it managed to go from $0.06 to ~$10. Apparently inflation is not the most important factor.

[Litt]

This has nothing to do with the number of people buying bitcoins.

It has everything to do with their real value which is 4-7$ right now. The amount of power needed to generate them is their value.
This is their base value. Anything more would need a real economy behind bitcoin which is pretty much non-existent.

So to anyone complaining who hoarded their bitcoins and didn't buy anything with them: Its your fault and your fault alone. 

No. And really.. No.

[the founder]

2010: 100%
2011: 50%

So bitcoin had lets say 75% inflation from summer last year to summer this year, yet it managed to go from $0.06 to ~$10. Apparently inflation is not the most important factor.

It's adoption rate grew faster than 75%. ..  Then adoption rate was 3000% now it's 20% and inflation is 50%

We need to get more coins out to more people

[TattleCoin]

Where did you get that statistic?

Bitcoin at 50% inflation:
https://bitcointalk.org/index.php?topic=3105.0

But there will be 33% inflation next year. So inflation is dropping.

[tiberiandusk]

Perhaps people should start buying and selling things with Bitcoin. Perhaps on BitBid.net.

[N12]

We need to get more coins out to more people

Why do we need to do that? To ensure the position of the bitcoin wealthy?

I’d say we need to polish the Bitcoin client, infrastructure, everything, before we try to attract new people.