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Author Topic: Why BTC is constantly increasing value long term??? Answer here  (Read 1277 times)
R3qUi3M
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January 31, 2014, 04:15:57 PM
 #1

There are couple of factors:

1. Lets imagine you are a miner that mines some new element not known previously on earth. And let's say that this element is harder to get the deeper you mine (the more you mined already). And you try to sell this element for just slight more price than the cost of mining. So you mine it for some time and there comes out the competition that mines also. Now you are going deeper faster but you also mine less due to increasing difficulty. How do you sell now what you have mined? You cannot sell your precious ore for the same price as before because your costs of mining are going higher and higher! To break at least even you have to sell it for the costs of mining. It means that your element is gaining value simply because its becoming more difficult to mine any. Even though it might not have any application in industry or technology its just the fact that something is difficult to obtain gives that thing a value! Simple as that. So i see a straightforward analogy here with ASIC miners and this whole arms race. Note the fact that market is now selling something that is not yet produced or note even designed! They pump a shitload of cash into mining industry that transfers directly into the price of BTC! Why would anyone buy a miner that has predicted mining efficiency lower than price of BTCxExpected ammount you can mine. Sure you can mine some untill your ASIC that is not yet even designed becomes a garbage and by the time you recieve it (most of the time delivery is way late on the schedule) its gonna mine even less than you predicted in the first place! Do you see how fast this difficulty is increasing and what happens to the industry? What idiot on earth would buy hardware like this just to sell it on the present price (AT present TIME)? No one!!! They will sell it for the price that will at least give them break even level!!! So if they predict to mine 40 units in 3 months and they buy hardware for 50k $, and when the hardware comes it turns out that they will mine only 15 units in 3 months, and after 3 months it turns out that they mined only 10 BTC what will they do? Will they consider selling BTC for the orginal price? Of course not. They will sell each BTC for at least 50000$/10 = 5000$. Thats the new BTC price!

2. Secondly BTC is finite suply by its design! You cannot mine more than 21M. So if other fiat currencies are inherently inflational, they will just loose their value in respect to BTC! Thats why we can observe in the chart trend of BTC (during periods of semi-stabilisation) slight uptrend that lasts couple months. Then of course it swings up drasticly... And we approach point 3.

3. Guys who create mining hadrware are doing this to earn BTC! Not real money! They use $ to increase BTC value! User buys miner and he will also earn more money due to BTC increase in value. Thats win-win situation. They who produce dont want to mine themselves because the more their client waits the more they loose BTC after all when BTC are mined by users! They want users to have BTC because it adds more value to BTC. If only producers of miners would mine for themselves there would be nobody to evaluet BTC price. They would just mine for themselves and sell to themselves. Breaking the first rule of currency that money needs to change owners! They invest fiat currency now to create hardware to stimulate BTC mining industry that evetualy gives BTC more value!

4. There is added value to BTC for its untraceability (confiramtion needed). That can potentialy serve as a break free from tax mechanism in the future.

5. In the end there will be only the coin that is mined most due to it's safe usage, divide ability, protected usage and all other additional values that are not yet known or designed.

So i suggest for everybody to seriously look into the subject of alternate currency and how are they differ in algorythm from each other because all the good stuff from them will be implemented into BTC realy soon! Why into BTC? Simply because they (rich ones) already have purchasing power to improve BTC and to not let it die!
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January 31, 2014, 05:19:24 PM
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meh
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January 31, 2014, 05:27:32 PM
 #3

I can't get past #1, it would be better if you could break it down into paragraphs
R3qUi3M
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January 31, 2014, 05:57:09 PM
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Here you go

There are couple of factors:

1. Lets imagine you are a miner that mines some new element not known previously on earth. And let's say that this element is harder to get the deeper you mine (the more you mined already). And you try to sell this element for just slight more price than the cost of mining. What happens next?

So you mine it for some time and there comes out the competition that mines also. Now you are going deeper faster but you also mine less due to increasing difficulty. How do you sell now what you have mined? You cannot sell your precious ore for the same price as before because your costs of mining are going higher and higher! To break at least even you have to sell it for the costs of mining. It means that your element is gaining value simply because its becoming more difficult to mine any. Even though it might not have any application in industry or technology its just the fact that something is difficult to obtain gives that thing a value! Simple as that.

So i see a straightforward analogy here with ASIC miners and this whole arms race. Note the fact that market is now selling something that is not yet produced or note even designed! They pump a shitload of cash into mining industry that transfers directly into the price of BTC! Why would anyone buy a miner that has predicted mining efficiency lower than price of BTCxExpected ammount you can mine. Sure you can mine some untill your ASIC that is not yet even designed becomes a garbage and by the time you recieve it (most of the time delivery is way late on the schedule) its gonna mine even less than you predicted in the first place!

Do you see how fast this difficulty is increasing and what happens to the industry? What idiot on earth would buy hardware like this just to sell it on the present price (AT present TIME)? No one!!! They will sell it for the price that will at least give them break even level!

So if they predict to mine 40 units in 3 months and they buy hardware for 50k $, and when the hardware comes it turns out that they will mine only 15 units in 3 months, and after 3 months it turns out that they mined only 10 BTC what will they do? Will they consider selling BTC for the orginal price? Of course not. They will sell each BTC for at least 50000$/10 = 5000$. If they are unable to sell rightnow they will just wait untill competition is already having same problems as he is right now and then everyone sells for at least 5000$. That's the new BTC price level they just arbitrarly state!

Otherwise if they sold it cheaper than their cost of mining it would be a loss for them. Eventualy we will approach a level when very little BTC can be mined and the price will just skyrocket because people will be using bilion dolar equipment to mine just 0,1BTC a year!

2. Secondly BTC is finite suply by its design! You cannot mine more than 21M. So if other fiat currencies are inherently inflational, they will just loose their value in respect to BTC! Thats why we can observe in the chart trend of BTC (during periods of semi-stabilisation) slight uptrend that lasts couple months. Then of course it swings up drasticly... And we approach point 3.

3. Guys who create mining hadrware are doing this to earn BTC! Not real money! They use $ to increase BTC value! User buys miner and he will also earn more money due to BTC increase in value. Thats win-win situation. They who produce dont want to mine themselves because the more their client waits the more they loose BTC after all when BTC are mined by users! They want users to have BTC because it adds more value to BTC. If only producers of miners would mine for themselves there would be nobody to evaluet BTC price. They would just mine for themselves and sell to themselves. Breaking the first rule of currency that money needs to change owners! They invest fiat currency now to create hardware to stimulate BTC mining industry that evetualy gives BTC more value!

4. There is added value to BTC for its untraceability (confiramtion needed). That can potentialy serve as a break free from tax mechanism in the future.

5. In the end there will be only the coin that is mined most due to it's safe usage, divide ability, protected usage and all other additional values that are not yet known or designed.

So i suggest for everybody to seriously look into the subject of alternate currency and how are they differ in algorythm from each other because all the good stuff from them will be implemented into BTC realy soon! Why into BTC? Simply because they (rich ones) already have purchasing power to improve BTC and to not let it die!

Edited a litle
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January 31, 2014, 06:05:10 PM
 #5

Some people think Bitcoin is all about mining.
Some people think Bitcoin is all about investing.

They are all missing the point.

Anyway the answer is simple. If the demand is greater than the supply, the value will increase, and vice versa. Demand depends on adoption, which is increasing, and the supply will eventually be constant. That is basically all there is to it.

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January 31, 2014, 06:21:15 PM
 #6

You forget that the less suply there is. The more value something has.

By the way. It is the exact same mechanism that will eventualy happen to Oil. The price of oil goes higher the less available suply is on earth... When they discover a cheap technology to mine previously unavailable oil or just a new oil suply the price drops. When there is no available oil, there potentialy can be a war for the last drop of it. Of course just therotecaly because we will just start using electric cars or whatever... and the demand will be non existent. However a single drop of an oil when there is no oil anywhere on earth will still have a value of trilions of dollars even though there is no demand for it.

The demand to obtain something arises not from the neccesity to have but from the scaresity!

Another interesting fact i deducted from cryptocurrency behavior is that it dosent matter what currency you mine. Its something like having one hundread dolar bill (Bitcoin) and 1 dollar bill (LTC for example). That is the main value difference between coins right now. However all actively mined cryptos will gain value in time as there will be more and more competitors to fight for each one of them and more energy required as they progress to be mined out.

What i forecast is that if any crypto currency is mined out it will keep its value (The value that it gained during the mining period) and will just keep increasing its value against any other fiat currency due to fiat currency inflative nature.

I also forecast that rasing value of any cryptocurrency by the act of mining gives value to all other cryptocurrencies (also BTC). In other words: Whatever you mine it will increase the value of that cryptocurrency and all other cryptos vs all fiat currencies on the planet.

I dont know however how will behave the competition on coins vs each other. Is it possible that one crypto that has 50% market value will drop and some diferent currency will get ahead? What are your opinions guys?
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January 31, 2014, 06:23:42 PM
 #7

There are couple of factors:

1. Now you are going deeper faster but you also mine less due to increasing difficulty. How do you sell now what you have mined? You cannot sell your precious ore for the same price as before because your costs of mining are going higher and higher! To break at least even you have to sell it for the costs of mining. It means that your element is gaining value simply because its becoming more difficult to mine any. Even though it might not have any application in industry or technology its just the fact that something is difficult to obtain gives that thing a value! Simple as that. So i see a straightforward analogy here with ASIC miners and this whole arms race.

Wrong on so many levels. It is NOT getting more difficult to mine (aside from the dropping block rewards). The reward is just split up among all miners. Oil price rises above a certain level? Then deep sea drilling starts getting interesting. But thats an ADDITIONAL resource, not splitting up total "oil rewards". And the price does not necesarily go up just because something is rare. It goes up because there is DEMAND. And there are lot of cases were goods are being sold at a loss, remainig stock of items e.g. phones, winter/summer sale etc. Cutting losses is a normal business strategy. There is no guarantee prices will go up. Taking a loss and reinvesting in more profitable ventures is common.
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January 31, 2014, 06:35:19 PM
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Quote
Wrong on so many levels. It is NOT getting more difficult to mine (aside from the dropping block rewards). The reward is just split up among all miners. Oil price rises above a certain level? Then deep sea drilling starts getting interesting. But thats an ADDITIONAL resource, not splitting up total "oil rewards". And the price does not necesarily go up just because something is rare. It goes up because there is DEMAND. And there are lot of cases were goods are being sold at a loss, remainig stock of items e.g. phones, winter/summer sale etc. Cutting losses is a normal business strategy. There is no guarantee prices will go up. Taking a loss and reinvesting in more profitable ventures is common.

Yes but not when you create a currency! Explain me please one thing:

Why if the FED would stop printing money there would be a huge increase in the price of dollar? Did the demand for a dollar change? No! Did the dollar become more scarce than other currencies? Yes!

So why are they still printing?
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January 31, 2014, 06:43:23 PM
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Yes but not when you create a currency! Explain me please one thing:

Why if the FED would stop printing money there would be a huge increase in the price of dollar? Did the demand for a dollar change? No! Did the dollar become more scarce than other currencies? Yes!

So why are they still printing?
If the Fed would stop printing dollars there would a small constant increase in value, since bills also get destroyed one way or another as well. The reason more money is printed is inflation. A small level of inflation is generally considered to be a good thing. This keeps the value of the currency dwindling slightly and encourages spending. And spending is the sole reason for the existance of a currency.

But since you switched topic i guess its fair to assume that you dont consider the analogy between real mining and bitcoin mining to be valid?
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January 31, 2014, 07:02:06 PM
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Not realy... I think its still valid. Look for example on antimatter. Do you know how expensive is creation of it? Still no demand exists and the problem is that it exists only fraction of a second when its created but none the less is expensive as hell to posses antimatter. Do you think drugs would be so expensive if they were legal? They are expensive because the scaresity due to illegality gives them value.

There are places on earth where they mine diamonds just to destroy them after mining! Its because they want to keep the present value of a diamond!
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January 31, 2014, 07:13:50 PM
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Not realy... I think its still valid. Look for example on antimatter. Do you know how expensive is creation of it? Still no demand exists and the problem is that it exists only fraction of a second when its created but none the less is expensive as hell to posses antimatter.
Wow, comparing bitcoins to fundamental research. Now it really starts getting weird.

Do you think drugs would be so expensive if they were legal? They are expensive because the scaresity due to illegality gives them value.
Its not scaresity, just the illegality. In the regions those drugs are planted its the stuff the poor people do.

There are places on earth where they mine diamonds just to destroy them after mining! Its because they want to keep the present value of a diamond!
Citation required. But feel free to buy a couple of petahash of asics and destroy the created bitcoins.
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January 31, 2014, 07:19:50 PM
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Yes but not when you create a currency! Explain me please one thing:
Why if the FED would stop printing money there would be a huge increase in the price of dollar? Did the demand for a dollar change? No! Did the dollar become more scarce than other currencies? Yes!
So why are they still printing?

Increasing the money supply is not the goal. They are printing money in order to 1. keep interest rates low, and 2. fund U.S. spending.

If the Fed would stop printing dollars there would a small constant increase in value, since bills also get destroyed one way or another as well. The reason more money is printed is inflation. A small level of inflation is generally considered to be a good thing. This keeps the value of the currency dwindling slightly and encourages spending. And spending is the sole reason for the existance of a currency.

The "printing" is all electronic. Inflation-is-a-good-thing is a recent invention and it is not generally accepted. And while spending is the reason for the existence of a currency, it is not the reason for an economy.

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January 31, 2014, 07:43:05 PM
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Quote
Citation required. But feel free to buy a couple of petahash of asics and destroy the created bitcoins.

Good point! I imagine that if I had like 10mln BITcoins on my account now, i would just by some eggheads to design me a pentahash ASIC asap. Then i would just outmine all the competition leaving just the small fragments for them. But i wouldnt sell my bitcoins for fiat. I would never spend my mined BITcoins... i would just destroy them. Because they will have a lot less BTC than me, the price of a BTCvsUSD would skyrocket because there would be just few BTC on the market. And with present market awareness of BTC and its untrackability it could not be told whether BTC is so valuable or is there just so few of them Smiley. Would you spend your BTC on a Car knowing that for just one BTC you can live without doing any labor for the rest of your life? Smiley

My BTC is worth to me a trilion of $... even though its present market value is just 2500$ Smiley

Dont worry! In time it will be worth more than a small island Wink
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January 31, 2014, 08:00:16 PM
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You forget that the less suply there is. The more value something has.

By the way. It is the exact same mechanism that will eventualy happen to Oil. The price of oil goes higher the less available suply is on earth... When they discover a cheap technology to mine previously unavailable oil or just a new oil suply the price drops. When there is no available oil, there potentialy can be a war for the last drop of it. Of course just therotecaly because we will just start using electric cars or whatever... and the demand will be non existent. However a single drop of an oil when there is no oil anywhere on earth will still have a value of trilions of dollars even though there is no demand for it.


i stopped reading here, because i can turn a wide range of plants or animals into oil, so i already have my trillion dollar ticket. fuck bitcoin its dead after this post.

trillion dollars BITCHES
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January 31, 2014, 08:17:44 PM
 #15

Huh

What the hell is your problem? That i want to fight the current establishment of montery system or what?
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January 31, 2014, 08:24:14 PM
 #16

you have a big missconception.

If you mine for a rare element and your cost of mining it is lower than the price of this element, than you wouldn't want to continue mining it, right? So if some people stop mining it, the difficulty decreases and it will be more intresting to mine for the MOST profitable miners.  Thus the price of the element dictates WHO can mine profitable, but the price is NOT dictated by the mining cost.

It is a simple case of supply and demand.

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January 31, 2014, 09:17:16 PM
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There are places on earth where they mine diamonds just to destroy them after mining! Its because they want to keep the present value of a diamond!
Citation required. But feel free to buy a couple of petahash of asics and destroy the created bitcoins.

I lol'd so hard.
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