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Author Topic: Square root Applied to Bitcoin. (Near the bottom)  (Read 1445 times)
dsp
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September 11, 2011, 06:50:37 AM
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Here is a simple fact to think about, No matter what there will never be more that 4582 people that hold more than 4582 coins. It may seem like there are huge amounts of bit coin available today but in the long run bitcoins are extremely scarce.

Currently there are no more than 2691 people that hold more than 2691 coins. I.E. 1 BTC is not going to fall to one dollar. As even on this form of 40k users there are 2691 people that will invest that much into bitcoin over the next year. That's only about $200 a month.

Another interesting relation to put the scarcity of bit coins in to perspective is the global birth rate is 50 times that of bit coin. So every time you see a Block created that means 2500 little miracles were added to the planet. And this will only be the case for the next year or so.

If bitcoins were gold atoms and you possessed all 21 million, it would be smaller than a grain of sand.
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The_Duke
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September 11, 2011, 06:52:20 AM
 #2

Here is a simple fact to think about, No matter what there will never be more that 4582 people that hold more than 4582 coins. It may seem like there are huge amounts of bit coin available today but in the long run bitcoins are extremely scarce.


You seem to be assuming that in a year from now anyone will still want to have some bitcoins? What brings you to that assumption?

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dsp
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September 11, 2011, 07:03:47 AM
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Here is a simple fact to think about, No matter what there will never be more that 4582 people that hold more than 4582 coins. It may seem like there are huge amounts of bit coin available today but in the long run bitcoins are extremely scarce.


You seem to be assuming that in a year from anyone will still want to have some bitcoins? What brings you to that assumption?

For it to go to absolute zero there will need to be an agreement between a few hundred thousand people, And that agreement would have to balance to precisely zero and reached at precisely the same time. That's no going to happen. Hell there are only two people on this thread and we cant agree. Being that my nature is to arrive at a decision quickly and stick it thru has served me well to this point in my life, I'm not backing out. Fuck it Ill own em all if need be and these peckers can trade the fraction of one coin for all  I care.
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September 11, 2011, 07:23:39 AM
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For it to go to absolute zero there will need to be an agreement between a few hundred thousand people, And that agreement would have to balance to precisely zero and reached at precisely the same time. That's no going to happen. Hell there are only two people on this thread and we cant agree. Being that my nature is to arrive at a decision quickly and stick it thru has served me well to this point in my life, I'm not backing out. Fuck it Ill own em all if need be and these peckers can trade the fraction of one coin for all  I care.

Have you ever seen a stock graph from a highly speculative penny stock?  It can go incredibly high and peter out to almost zero, with the consent of tens of thousands of investors.

Here is one example I'm familiar with on the Australian stock exchange:
http://hfgapps.hubb.com/asxtools/Charts.aspx?asxCode=SRA&compare=comp_index&indicies=0&pma1=0&pma2=0&volumeInd=9&vma=0&TimeFrame=M10

ASX:SRA.  The graph doesn't go back far enough.  In mid 1999 the stock peaked at $5.95.  For the last 8 years it has been under 20c a share while the business was still open and trading.  A massive speculative bubble burst that never recovered, all with the cooperation of all the shareholders.  All you need is a lack of buyers willing to pay your price, and people wanting to sell.  That's it.

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dsp
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September 11, 2011, 07:34:20 AM
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For it to go to absolute zero there will need to be an agreement between a few hundred thousand people, And that agreement would have to balance to precisely zero and reached at precisely the same time. That's no going to happen. Hell there are only two people on this thread and we cant agree. Being that my nature is to arrive at a decision quickly and stick it thru has served me well to this point in my life, I'm not backing out. Fuck it Ill own em all if need be and these peckers can trade the fraction of one coin for all  I care.

Have you ever seen a stock graph from a highly speculative penny stock?  It can go incredibly high and peter out to almost zero, with the consent of tens of thousands of investors.

Here is one example I'm familiar with on the Australian stock exchange:
http://hfgapps.hubb.com/asxtools/Charts.aspx?asxCode=SRA&compare=comp_index&indicies=0&pma1=0&pma2=0&volumeInd=9&vma=0&TimeFrame=M10

ASX:SRA.  The graph doesn't go back far enough.  In mid 1999 the stock peaked at $5.95.  For the last 8 years it has been under 20c a share while the business was still open and trading.  A massive speculative bubble burst that never recovered, all with the cooperation of all the shareholders.  All you need is a lack of buyers willing to pay your price, and people wanting to sell.  That's it.

I get that But zero is just not in the stars. I don't know what that company did or provided. But as a dividable currency bit coin will still function. As an investment it maybe screwed at that point depending on the old lazy buy and hold stratgy. Scalping on the other hand with a bot is pretty profitable. But then again if it functions as a currency the damn price would start to rise again.

Either way it worth this risk bitcoin is the only thing that could free us of the PayPal Bullshit, The idiots selling swill at identity guard, and the Visa MasterCard Racket.


How about this Ill pay you 1$ to agree with me.......... You want that in bit coin or paypal.
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September 11, 2011, 08:01:07 AM
 #6

If I invest $1000 and get $1 back - then it does not make much difference for me from the situation when I get $0 back.  Zero is not that important.  Also when people stop trading BTC - then it's value goes to zero in practice - that is less then the price of keeping the wallet.dat around.  If BTC was the only possible crytpocurrency - then I would bet it is still a safe investment - but personally I am now waiting for one that does not burn half a million dollars a month in electricity costs.
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September 11, 2011, 08:19:09 AM
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I get that But zero is just not in the stars. I don't know what that company did or provided. But as a dividable currency bit coin will still function. As an investment it maybe screwed at that point depending on the old lazy buy and hold stratgy. Scalping on the other hand with a bot is pretty profitable. But then again if it functions as a currency the damn price would start to rise again.

Either way it worth this risk bitcoin is the only thing that could free us of the PayPal Bullshit, The idiots selling swill at identity guard, and the Visa MasterCard Racket.

Bitcoin has a lot going for it.  It's a great idea but it's failing at being the great investment that some people envisage it to be.  They look at the deflationary spiral and concluded its value could only go up.  As a currency that's a bad thing as people tend to accumulate rather than spend.  The rapidly decreasing value is also bad news for merchants as it introduces massive price uncertainty and requires merchants to add a huge margin to hedge against currency risk.  That's a hidden 'fee' in disguise.

Visa and Mastercard take about 2% in fees.  For that I can buy products from almost anyone anywhere in the world.  Bitcoin is not free of transfer charges but is cheaper.  The problem lies in getting money out of bitcoin.  I need to use either BitPiggy, with a hefty 10% fee or feed my bitcoins to MtGox and pay $10 per withdrawal plus trading fees.  That's quite a penalty.

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dsp
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September 11, 2011, 08:48:43 AM
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I get that But zero is just not in the stars. I don't know what that company did or provided. But as a dividable currency bit coin will still function. As an investment it maybe screwed at that point depending on the old lazy buy and hold stratgy. Scalping on the other hand with a bot is pretty profitable. But then again if it functions as a currency the damn price would start to rise again.

Either way it worth this risk bitcoin is the only thing that could free us of the PayPal Bullshit, The idiots selling swill at identity guard, and the Visa MasterCard Racket.

Bitcoin has a lot going for it.  It's a great idea but it's failing at being the great investment that some people envisage it to be.  They look at the deflationary spiral and concluded its value could only go up.  As a currency that's a bad thing as people tend to accumulate rather than spend.  The rapidly decreasing value is also bad news for merchants as it introduces massive price uncertainty and requires merchants to add a huge margin to hedge against currency risk.  That's a hidden 'fee' in disguise.

Visa and Mastercard take about 2% in fees.  For that I can buy products from almost anyone anywhere in the world.  Bitcoin is not free of transfer charges but is cheaper.  The problem lies in getting money out of bitcoin.  I need to use either BitPiggy, with a hefty 10% fee or feed my bitcoins to MtGox and pay $10 per withdrawal plus trading fees.  That's quite a penalty.

At least with mtgox you know what your in for. I ran a massive e-comm site our margins were razor thin and after all was said and done the credit cards companies got 1/3 of my net profit. Sure we ran at 30% profit but after Advertising Labor you end up at Net 10-15% and after you pay your per transaction fee gateway monthly a couple of chargebacks a month. The percentage is more like 3%-5%. Also I think MtGox will get cheaper as the volume goes up they already have implemented tiered fees. Once they do a billion a month I bet they do away with the $10 fee. I think its a matter of time. MtGox will probably add ACH sooner or later just like etrade. They also will never hit ya with a charge back, or have to carry any of those fees or have a group of morons to resolve that issue. I love the cash like features. If you lose some cash no one feels bad for ya. You have to respect and protect it. Credit Cards allow people to be wreck-less cause they don't bear the cost for their actions.

Either way if bit coin only takes one 100th of a percent of the market share over time it will add up to be a 800 pound gorilla.

Also if you were in a battle with the IRS or Lawsuit and they decided that you owe them 100K, you have no recourse. Bitcoin opens the door for a negation. Ill gladly pay $10 to keep that right.

Or how about Paypal and visa master card have decide that your not intelligent enough to know weather or not you want to donate to wikileaks. I don't really care to much about that. But what if something near and dear to you is not inline with their political agenda.

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September 11, 2011, 08:51:33 AM
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Off topic: Di youd ran the e-commerce website on your own? How did it grow so much?

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dsp
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September 11, 2011, 09:09:54 AM
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Off topic: Di youd ran the e-commerce website on your own? How did it grow so much?

4 People when I sold it. Had a pretty simple product line on, consumables and good margin till the Chinese came into the market direct. One of the first 10 to market. SEO'ed to the max kinda by accident on 150,000 keywords/partnumbers. Started seeing all this traffic from this odd site called Google back in 2000.
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September 11, 2011, 11:49:02 AM
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They also will never hit ya with a charge back, or have to carry any of those fees or have a group of morons to resolve that issue. I love the cash like features. If you lose some cash no one feels bad for ya. You have to respect and protect it. Credit Cards allow people to be wreck-less cause they don't bear the cost for their actions.

From a merchant's point of view I can certainly understand credit cards and PayPal being a royal pain.  The customer can receive a product and then claim a charge back.  You essentially have no recourse and have to give up both the product and money.

From my point of view (the customer) I like the protection PayPal gives me.  I've only had about 200 transactions through eBay but 2 went sour.  The merchant took the money and never responded.  PayPal returned the money after almost 2 months.  With bitcoins there is no possiblity of getting the money back. Unless an escrow service is used (even more fees) I don't see this issue being resolved.

Also if you were in a battle with the IRS or Lawsuit and they decided that you owe them 100K, you have no recourse. Bitcoin opens the door for a negation. Ill gladly pay $10 to keep that right.

If I wanted to hide money real quick then bitcoins could be a viable method.  If only they didn't gyrate so wildly in value.

Or how about Paypal and visa master card have decide that your not intelligent enough to know weather or not you want to donate to wikileaks. I don't really care to much about that. But what if something near and dear to you is not inline with their political agenda.

That is a valid point.  Bitcoins makes it easy to transfer money to anyone you like without official oversight.  The bitcoins still have to hit a real bank account to be worth anything however, so there's still the potential for the cash to be blocked before it reaches someone like Wikileaks.  Bitcoins could also be used to fund groups directly opposed to you.

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September 11, 2011, 04:28:50 PM
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They also will never hit ya with a charge back, or have to carry any of those fees or have a group of morons to resolve that issue. I love the cash like features. If you lose some cash no one feels bad for ya. You have to respect and protect it. Credit Cards allow people to be wreck-less cause they don't bear the cost for their actions.

From a merchant's point of view I can certainly understand credit cards and PayPal being a royal pain.  The customer can receive a product and then claim a charge back.  You essentially have no recourse and have to give up both the product and money.

From my point of view (the customer) I like the protection PayPal gives me.  I've only had about 200 transactions through eBay but 2 went sour.  The merchant took the money and never responded.  PayPal returned the money after almost 2 months.  With bitcoins there is no possiblity of getting the money back. Unless an escrow service is used (even more fees) I don't see this issue being resolved.

Also if you were in a battle with the IRS or Lawsuit and they decided that you owe them 100K, you have no recourse. Bitcoin opens the door for a negation. Ill gladly pay $10 to keep that right.

If I wanted to hide money real quick then bitcoins could be a viable method.  If only they didn't gyrate so wildly in value.

Or how about Paypal and visa master card have decide that your not intelligent enough to know weather or not you want to donate to wikileaks. I don't really care to much about that. But what if something near and dear to you is not inline with their political agenda.

That is a valid point.  Bitcoins makes it easy to transfer money to anyone you like without official oversight.  The bitcoins still have to hit a real bank account to be worth anything however, so there's still the potential for the cash to be blocked before it reaches someone like Wikileaks.  Bitcoins could also be used to fund groups directly opposed to you.

I think new merchants should have to pay some type of transaction insurance, Escrow is one way to solve it with non-reversible transactions. Maybe a bond of some sort that you get back after a period cause every one deserves a chance to run their own bushiness if they want to and they need some way to get established. Either way this is a one time cost, no a recurring cost as with credit cards. BitPay and the like should allow this and a feedback system like the OTC-WOT. But for the companies that are pretty much proven to be honest dealers should not have to bear the average fraud cost. with Credit Cards merchants bear the majority of risk/cost. There are far fewer cases of companies defrauding people than. People defrauding companies. Bitcoin is weighted in the merchants favor but I think in allot of cases the reputation they have to protect serves to protect the customer.
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September 11, 2011, 04:57:36 PM
 #13

Here is a simple fact to think about, No matter what there will never be more that 4582 people that hold more than 4582 coins. It may seem like there are huge amounts of bit coin available today but in the long run bitcoins are extremely scarce.

You _do_ of course realize a BTC can be divided to a 100 million-th, right ?

And if so, then what's your point exactly ?


Its the upper bound of what is possible, Imagine what the price of gold would be if there could only be 4582 people with 4582 ounces....... or 21 million ounces ever.
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September 11, 2011, 05:40:44 PM
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Here is a simple fact to think about, No matter what there will never be more that 4582 people that hold more than 4582 coins. It may seem like there are huge amounts of bit coin available today but in the long run bitcoins are extremely scarce.

You _do_ of course realize a BTC can be divided to a 100 million-th, right ?

And if so, then what's your point exactly ?


Its the upper bound of what is possible, Imagine what the price of gold would be if there could only be 4582 people with 4582 ounces....... or 21 million ounces ever.

There is no upper bound to what's possible as long as you can divide BTCs
to smaller and smaller chunks. To quote Feynmann, "there's plenty of room
at the bottom".

And as a matter of fact, the current limit to chopping up BTC to 10^-8 can
easily be extended further (to put that in the context of your broken gold
analogy, image what you could do with gold if each atom could be split further
and further, to 10th, 100th, 1000th, etc ... of an atom ?)

Sure, the initial BTC holders would become rich, but then who gives a rat's
ass about that, as long as the currency delivers on allowing people to instantly
exchange value without centralized control.

znort987 - well props for a nice Feynman quote, but I don't understand why you think divisibility is relevant to DSPs point.

DSP is just saying that a *maximum* of 4582 people could own 4582 BTC or more.
It's a way of thinking about how large the pool is and how it could be distributed, but specifically with reference to the upper bounds of how many *large holders* of coins there could be.






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September 11, 2011, 07:47:23 PM
 #15

Here is a simple fact to think about, No matter what there will never be more that 4582 people that hold more than 4582 coins. It may seem like there are huge amounts of bit coin available today but in the long run bitcoins are extremely scarce.

You _do_ of course realize a BTC can be divided to a 100 million-th, right ?

And if so, then what's your point exactly ?


Its the upper bound of what is possible, Imagine what the price of gold would be if there could only be 4582 people with 4582 ounces....... or 21 million ounces ever.

There is no upper bound to what's possible as long as you can divide BTCs
to smaller and smaller chunks. To quote Feynmann, "there's plenty of room
at the bottom".

And as a matter of fact, the current limit to chopping up BTC to 10^-8 can
easily be extended further (to put that in the context of your broken gold
analogy, image what you could do with gold if each atom could be split further
and further, to 10th, 100th, 1000th, etc ... of an atom ?)

Sure, the initial BTC holders would become rich, but then who gives a rat's
ass about that, as long as the currency delivers on allowing people to instantly
exchange value without centralized control.



As a currency your right it makes no differences as your exposure to the market is directly proportional to how long you hold on to your coin, If you don't hold it to long you are exposed to little risk and it functions as a currency regardless of price, This is why it cant die no matter what craziness the speculation causes. As a store of value or investment it makes a huge difference as scarcity as relates to supply and demand is a well know economic theory. But here is the key difference. MARKET PENETRATION. Gold has been around for billions years, any one who wants something fungible and scarce is well aware of it. Bitcoin on the other hand has been around for a much shorter time period, and as far as any real market penetration goes it does not even exist yet, we are a minority of such a small proportion.

So then the question then is only will it grow Even at a tiny pace. Well yes it must as once you learn about bit coin you cannot forget.  If you look at the marketing strategy for bit coin it tends to pull you in no matter what then self replicate. For example a merchant starts to accept it, then they will advertise this, Ever small companies will have a few thousand customers. If only a tiny fraction sees the payment option and decides to participate on and on goes the chain. So it targets both sides of the coin so to speak, the hubs (merchants) and nodes (consumers). Think about all the free advertising VISA gets as a payment method. This was key to its success. Once BitCoin becomes a competitive advantage on a cost basis the adoption rate will force participation on a exponential scale. All this in return brings in all sorts of, Service Providers, Consumers, Merchants, investment capital, Speculators, Minners, Scalpers, Market Makers, Idiots, Gamblers, Gold Bugs, Day Traders, Programmers and small start-ups. There is really a little something for everyone and it all just keeps feeding back on itself like holding a microphone to a speaker.

Whats really going to be insane is when we hit the knee of the growth curve.
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