Vast expansion of BTC utility/reputation - but no rise in BTC price? Why?

[mgburks77]

The reason Bitcoin price doesn't rise because there is No Demand For It.
Yes, the acceptance has grown but people don't have any reason to buy BTC to purchase stuff.

The reason that bitcoin price was exploded in December is a lot of Chinese wants to move their wealth out of the country.
Of course they still do now but it's lot harder, since government is trying to stop it.

Too bad there isn't some product that everyone wants, but is exclusively available for purchase with BTC.

[1714925109]

1714925109

[Dr Bloggood]

So over the last 2 months we have seen expansion with BTC on many, many levels: For example, a whole bunch of new BTC ATMs were installed, many more people have heard of BTC now (does your auntie know what it is now?), a lot more businesses are accepting BTC, the MSM press is suddenly filled with articles about it, new services popping up everywhere - but the price has not been rising!

Name one Bitcoin business that would not work today if Bitcoin was $10.

What are you implying, can you get more specific? And by "BTC business", do you mean some Service like Bitpay or a BTC exchange or businesses that accept BTC as payment?

I mean all of them.  But mostly Bitpay, their customers, and businesses that take BTC directly. 

Name one that would not work today if Bitcoin was $10.

There would be (and was) a lot less interest in BTC at $10, so most of them wouldn't be in existance, I think that's pretty obvious.

For a good guess as to which ones wouldn't be in existance, go back to the time at which BTC was at $10, and take a look at the BTC businesses that were in existance back then.

I'm talking about expansion of the currency and it's usage.

[Dr Bloggood]

Be patient, OP.  

Finally - somebody who has held his account since May 2011... and that's all you have to say?

[pungopete468]

This is my thought:

The Q4 2013 price spike was a bubble because the price increased without proportion to the utility.

The utility has increased dramatically stabilizing the bubble so now it is no longer a bubble, rather a support base...

From here the price can spike to a new bubble or can slowly increase as additional utility and adoption comes along.

I expect a new price spike followed by even more dramatic adoption and increased utility. Lather, rinse, and repeat...

[thethingis]

Someone above asked what businesses couldn't run with BTC at $10... it's not that there's 1 particular... it's that the whole economy at $10 is only $210MM (actually like $130MM or so right now).. that won't support many businesses, especially ones that would like to go 100% BTC.

Bitcoin needs to be $10,000 or $100,000 (i.e. $210B or $2.1T) if it hopes to capture significant share.

But it can't go there unless it's a compelling value proposition to users. Not there yet.

Also, the overhang of people who will be super-rich (and super-duper-rich) at $100,000 is a problem. I wish bitcoin had seen a quicker uptake so even out the distribution early. Alas, I was a late-comer.

[Dr Bloggood]

Someone above asked what businesses couldn't run with BTC at $10... it's not that there's 1 particular... it's that the whole economy at $10 is only $210MM (actually like $130MM or so right now).. that won't support many businesses, especially ones that would like to go 100% BTC.

Bitcoin needs to be $10,000 or $100,000 (i.e. $210B or $2.1T) if it hopes to capture significant share.

But it can't go there unless it's a compelling value proposition to users. Not there yet.

Yeah, my thoughts exactly.

[Dr Bloggood]

This is my thought:

The Q4 2013 price spike was a bubble because the price increased without proportion to the utility.

The utility has increased dramatically stabilizing the bubble so now it is no longer a bubble, rather a support base...

From here the price can spike to a new bubble or can slowly increase as additional utility and adoption comes along.

I expect a new price spike followed by even more dramatic adoption and increased utility. Lather, rinse, and repeat...

Yup, I feel ya!

Very well put.

[h3rlihy]

I agree with the guy that said be patient. I think it's just stabilising for now preparing for a new spike soon

[aesma]

So over the last 2 months we have seen expansion with BTC on many, many levels: For example, a whole bunch of new BTC ATMs were installed, many more people have heard of BTC now (does your auntie know what it is now?), a lot more businesses are accepting BTC, the MSM press is suddenly filled with articles about it, new services popping up everywhere - but the price has not been rising!

Name one Bitcoin business that would not work today if Bitcoin was $10.

What are you implying, can you get more specific? And by "BTC business", do you mean some Service like Bitpay or a BTC exchange or businesses that accept BTC as payment?

I mean all of them.  But mostly Bitpay, their customers, and businesses that take BTC directly.  

Name one that would not work today if Bitcoin was $10.

They would work except that there would be 80 times less money to work with.

edit : my bad I hadn't seen the new posts.

[mestar]

Services like Bitpay are just a one way shortcut to a Bitcoin exchange.  Surely, if money starts flowing in and out of exchanges, you would not consider that an "expansion of BTC utility".

In fact, with more one way spending with instant conversion to not BTC money, you would expect the price to fall with it.

[cryptoanarchist]

Be patient, OP.  

Finally - somebody who has held his account since May 2011... and that's all you have to say?

Pretty much. The price has gone up hundreds of dollars in just 3 months. If any security on the stock market went from $150 to $850 in 3 months, people would be going nuts. In Bitcoinworld, people feel its not happening fast enough.

As far as being here from 2011 - I got super stoked watching the price go up to $30, and watched and read countless stories and vids about how bitcoin was going to zero in the months that followed. It spent the remainder of the year and much of 2012 languishing in single digit prices before finally cracking $10 again- and that was huge news at the time.

So yeah, just be patient. Buying crypto at todays prices will make you look like a genius in a year or two - count on it. Just be patient.

[smooth]

I'm going to chime in here because I've thought about these issues a lot.

First I'll say that I agree with almost everything on this thread, especially the comments about money coming in from China, and then getting blocked. Kudos to everyone here for having a pretty good grasp of what's going on. Much better than I remember the Economics subforum (It's been a lot while since I browsed it.)

The thing is, BTC doesn't go up because you can use it on Tiger Direct or Overstock or anywhere else. It only goes up because more people want to buy it than sell it. It is also true that in the short term these deals create downward pressure, not upward, because they provide another method and another reason to sell (exchanging for other goods is the same as selling). Long term these deals can help if there are enough of them to create a large economy where people buy, hold, and spend all in BTC. But that takes more than a few of these deals.  A lot more.

There is actually a direct and fairly simple relationship between the net amount of money coming in and the price. You can work it out yourself if you set up an equilibrium equation.

BTW, did anyone notice the news about BTC China reopening for deposits? If that holds it could be big.

[guybrushthreepwood]

BTW, did anyone notice the news about BTC China reopening for deposits? If that holds it could be big.

I thought this would've been massive news and caused a price spike... but nothing.

[Dr Bloggood]

Be patient, OP.  

Finally - somebody who has held his account since May 2011... and that's all you have to say?

Pretty much. The price has gone up hundreds of dollars in just 3 months. If any security on the stock market went from $150 to $850 in 3 months, people would be going nuts. In Bitcoinworld, people feel its not happening fast enough.

As far as being here from 2011 - I got super stoked watching the price go up to $30, and watched and read countless stories and vids about how bitcoin was going to zero in the months that followed. It spent the remainder of the year and much of 2012 languishing in single digit prices before finally cracking $10 again- and that was huge news at the time.

So yeah, just be patient. Buying crypto at todays prices will make you look like a genius in a year or two - count on it. Just be patient.

That's great to hear, coming from somebody who has been in this game for that long, and obviously successfully.

I have a question though: Back then, was the cycle of business expansion/rise of BTC price seemingly out of sync as well? It seems like they are not happening simultaneously at all, and I'm wondering why.

[Dr Bloggood]

The thing is, BTC doesn't go up because you can use it on Tiger Direct or Overstock or anywhere else. It only goes up because more people want to buy it than sell it. It is also true that in the short term these deals create downward pressure, not upward, because they provide another method and another reason to sell (exchanging for other goods is the same as selling). Long term these deals can help if there are enough of them to create a large economy where people buy, hold, and spend all in BTC. But that takes more than a few of these deals.  A lot more.

I can absolutely not follow that reasoning, because for a shop to exchange its earned BTC against fiat, that shop has to have earned those BTC from a customer, and that customer must have bought his BTC from somewhere. And if he is spending BTC of that amount regularely, he also has to buy BTC regularely. So it's all a zero sum game, but BTC gets more used and more bought, so that's good for BTC.

It's not like BTC are just sold at the exchange by a shop and price goes down. That would really only apply if somebody took a chunk of their BTC savings (meant as savings indeed) and bought some goods and never bought BTC back to fill up his BTC wallet. Which is the rare case.

There is actually a direct and fairly simple relationship between the net amount of money coming in and the price. You can work it out yourself if you set up an equilibrium equation.

Can you put up that calculation for us? Would be very, very interesting to see!

[techstorm2]

I agree with others, weve seen a massive increase to almost $1000 since november and most of the good news since is priced into this.

Its nice to see a bit of stability in the price over the last month, i think the next big move will be to $10k when we get some of the big players falling in like dominos.

Hope this happens over the next 12 months.

 

[Sonny]

The thing is, BTC doesn't go up because you can use it on Tiger Direct or Overstock or anywhere else. It only goes up because more people want to buy it than sell it. It is also true that in the short term these deals create downward pressure, not upward, because they provide another method and another reason to sell (exchanging for other goods is the same as selling). Long term these deals can help if there are enough of them to create a large economy where people buy, hold, and spend all in BTC. But that takes more than a few of these deals.  A lot more.

I can absolutely not follow that reasoning, because for a shop to exchange his earned BTC against fiat, that shop has to have earned those BTC from a customer, and that customer must have bought his BTC from somewhere. And if he is spending BTC of that amount regularely, he also has to buy BTC regularely. So it's all a zero sum game, but BTC gets more used and more bought, so that's good for BTC.

It's not like BTC are just sold at the exchange by a shop and price goes down. That would really only apply if somebody took a chunk of their BTC savings (meant as savings indeed) and bought some goods and never bought BTC back to fill up his BTC wallet. Which is the rare case.

I guess his reasoning is:
When you spend your bitcoin, it is essentially you send the bitcoin to coinbase/bitpay, and the sites sell bitcoin.
The more people spending their bitcoin on Tiger Direct or Overstock, the more selling orders are set up.

[cryptoanarchist]

Be patient, OP.  

Finally - somebody who has held his account since May 2011... and that's all you have to say?

Pretty much. The price has gone up hundreds of dollars in just 3 months. If any security on the stock market went from $150 to $850 in 3 months, people would be going nuts. In Bitcoinworld, people feel its not happening fast enough.

As far as being here from 2011 - I got super stoked watching the price go up to $30, and watched and read countless stories and vids about how bitcoin was going to zero in the months that followed. It spent the remainder of the year and much of 2012 languishing in single digit prices before finally cracking $10 again- and that was huge news at the time.

So yeah, just be patient. Buying crypto at todays prices will make you look like a genius in a year or two - count on it. Just be patient.

That's great to hear, coming from somebody who has been in this game for that long, and obviously successfully.

I have a question though: Back then, was the cycle of business expansion/rise of BTC price seemingly out of sync as well? It seems like they are not happening simultaneously at all, and I'm wondering why.

There wasn't a whole lot of big news as far as merchants go in 2011, other than the Silk Road. I predicted back in Oct that the price would hit $1000 late January so the quick rise I felt was a little too soon when compared to the difficulty increase imo.

I think the biggest problem is that people trust the news cycle too much. If you ignore it, you'll find it easier to buy on bad news and sell on good news by just following the numbers.

[smooth]

I guess his reasoning is:
When you spend your bitcoin, it is essentially you send the bitcoin to coinbase/bitpay, and the sites sell bitcoin.
The more people spending their bitcoin on Tiger Direct or Overstock, the more selling orders are set up.

Pretty much that. Keep in mind though, just because they are using coinbase or bitpay doesn't mean they necessarily have to sell. That is an option in the APIs. Overstock's CEO for example, recently said they won't necessarily be selling all their coins and will be looking at using them to pay employees and suppliers.

Up until now these companies have been selling up front. If that changes and they start holding or building up a supply chain of vendors (and employees) who receive Bitcoin then the whole thing becomes more useful and more people will want it.

One issue (good or bad depending on how you look at it) with the Overstock and Tiger Direct is they get the companies into the headlines but since they don't offer the customer any incentive for using Bitcoin, usage will remain quite low. With credit cards many get points, frequent flier miles, cash rebate, etc. For the customer in these cases using Bitcoin is a loss. These companies need to share some of the payment-processing savings with the customer, not try to keep it all. (A counterexample is Gyft, which gives a 3% rebate for bitcoins -- that is probably too high, but a good deal for buyers.)

It's not like BTC are just sold at the exchange by a shop and price goes down. That would really only apply if somebody took a chunk of their BTC savings (meant as savings indeed) and bought some goods and never bought BTC back to fill up his BTC wallet. Which is the rare case.

You have no way to know how rare that is or isn't. There are certainly people with moderately large to very large holdings from anywhere from six months to five years go who don't need to refill their wallet just because they spend a little. There are also people who need to buy every bitcoin they use. But as I explained earlier this latter group doesn't benefit from paying with BTC at Overstock or Tiger Direct; they are better off using a credit card.

[pleiotropik]

link to the 1 year chart:  http://bitcoincharts.com/charts/mtgoxUSD#rg360zigDailyztgWza1gSMAzm1g50za2gSMAzm2g200zi2gVolzvzlzp

March-April -> Cyprus ramp
Oct-Dec -> China ramp.

---> next ramp will have an external booster same as the 2 before.  Periods of "stagnation" are the points where future vendors/today's hoarders are accumulating the commodity at a steady clip while overall supply-demand equation remains stable.

The external booster will be monetary/financial in nature, hard to predict but most likely Eurozone, although i wouldn't discount a chinese solvency/liquidity dislacation as possible source of monetary shock. i discount USD trouble this year... i might be wrong.  The end result in any case is that when fiat money (no matter which government issues) shows valuation and/or liquidity troubles, BTC demand  shoots up, therefore price corrects to a new supply demand equilibrium.