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Author Topic: why bitcoin is one day 30$ and a other 5$  (Read 2971 times)
rouhaud
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September 16, 2011, 04:15:19 AM
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i'm not a economist just i think one things :

in real economy they are some mark : dollar and gold

all real money have a value

for euro to compare of franc we have decide 1 euro = 6.55957 franc

the dollar us is the most comparative money it's a mark.

when a society like microsoft or any else enter in the stock exchange we decided to say 1 action cost x dollar the first day and after with the time and trader they play with this value + or -

but BITCOIN what is the first value : Huh when is was created 1 BTC cost how many dollar or euro?
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September 16, 2011, 04:31:25 AM
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The price value is always given by the market.

And the market is comprised of sellers and buyers, the price would be an agreement between the maximum value that the seller can sell and the minimum value for the buyer

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September 16, 2011, 06:53:43 AM
 #3

Bitcoins are created for "free" by mining.  It's not really free because it requires a lot of electricity to run the computation.  There was no initial "IPO" like for a stock - it's all gradually generated by mining.

More info: https://en.bitcoin.it/wiki/FAQ#How_are_new_Bitcoins_created.3F

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September 16, 2011, 06:08:01 PM
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The first value is whatever you bought in at, which is different for everyone. Thus, if you bought in a 1 dollar than that´s the value it is for you.

Sorry to state the obvious.

What if we look at everybody and try to average. Of course that´s the million dollar question. Personally I think it´s way less than a dollar but I heard about Bitcoin years ago when the value was at that so my group perspective is influenced by my individual perspective.

 I guess I could cash out what little I have left after losing most of it to mybitcoin but its more use to me in it´s present form... thus no matter how low it goes I don´t feel inclined to sell up. To reiterate, I´d rather risk losing money because I find the utility of bitcoin useful enough to justify the risk. Somewhere in this is the real value of bitcoin.

Make sense?
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September 22, 2011, 11:47:27 PM
 #5

What if we look at everybody and try to average. Of course that´s the million dollar question. Personally I think it´s way less than a dollar but I heard about Bitcoin years ago when the value was at that so my group perspective is influenced by my individual perspective.

I make some guestimates based on this in my proposal for EnCoin, a coin that is based around its cost to produce in electricity.

https://bitcointalk.org/index.php?topic=44682.0

If the cost to produce a bitcoin has been linear, my estimate is that the average bitcoin has cost $1.80. Include 5 million dollars worth of computer hardware, and the cost is around $2.50 per coin. The current cost to produce a coin is $3.60 or $4.30 if you include hardware. This, of course, is using all kinds of gross generalizations about the cost of electricity and the linear progression of cost, but it gives an idea.

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September 23, 2011, 03:01:23 AM
 #6

It is a very small market, easily cornered by speculators, the fluctuations will continue to be big until there are more widespread acceptance of bitcoins for transactions.  Then there will be real demand and supply mechanism at work.  But I think it is still some way off.
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September 23, 2011, 06:46:29 AM
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S & D.



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September 25, 2011, 01:45:56 AM
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For bitcoin to stabilize it would need a MASSIVE injection of capital, in the forms of 1,000,000's. That, in effect, would create a central authority on bitcoin (1 entity controlling the entire markets flexibility.). We all turn to bitcoin in part to run it ourselves, no?

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September 26, 2011, 02:53:09 PM
 #9

No matter how decentralized the bitcoin claim it is, as soon as it connected to existing real world financial system (for example exchange), then it's destiny will be centralization, since in the real world the "free" market is centrally controled by capitalists/banks

I still prefer a fixed exchange rate by peg the bitcoin value to a basket of currencies and commodities such as rice, petroleum, gold etc... This will make it the most stable currency in the world, and get wide adaptation

This very-low-risk property will become the biggest benefit of bitcoin, no one can use market power to change the price, but there is another problem of liquidity, but I think people will realize that no one can have both liquidity and stability at the same time




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September 27, 2011, 08:25:42 PM
 #10

No matter how decentralized the bitcoin claim it is, as soon as it connected to existing real world financial system (for example exchange), then it's destiny will be centralization, since in the real world the "free" market is centrally controled by capitalists/banks

I still prefer a fixed exchange rate by peg the bitcoin value to a basket of currencies and commodities such as rice, petroleum, gold etc... This will make it the most stable currency in the world, and get wide adaptation

This very-low-risk property will become the biggest benefit of bitcoin, no one can use market power to change the price, but there is another problem of liquidity, but I think people will realize that no one can have both liquidity and stability at the same time

LOLZ You can't fix an exchange rate without a central authority.  You also can't do it without massive liquidity to hold that fixed rate.

A fixed rate & bitcoin are mutually exclusive.
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September 28, 2011, 06:48:42 AM
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No matter how decentralized the bitcoin claim it is, as soon as it connected to existing real world financial system (for example exchange), then it's destiny will be centralization, since in the real world the "free" market is centrally controled by capitalists/banks

I still prefer a fixed exchange rate by peg the bitcoin value to a basket of currencies and commodities such as rice, petroleum, gold etc... This will make it the most stable currency in the world, and get wide adaptation

This very-low-risk property will become the biggest benefit of bitcoin, no one can use market power to change the price, but there is another problem of liquidity, but I think people will realize that no one can have both liquidity and stability at the same time

LOLZ You can't fix an exchange rate without a central authority.  You also can't do it without massive liquidity to hold that fixed rate.

A fixed rate & bitcoin are mutually exclusive.

Some one have fixed the total amount of BTC, so there is also a way to fix the BTC value.

Like put into the block chain some digits which indicate that 1 BTC is worth XXX$, no matter how much supply or demand, and that value is calculated from each days price of a basket of commodities and several major currencies

In such case, maybe some people can not buy enough BTC if they have enough money, since there is not enough BTC to sell (liquidity problem), but there will always be certain amount of BTC in the market, since the value is higher than the electricity cost and machine investment, there will always be people who are willing to sell

DeathAndTaxes
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September 28, 2011, 10:53:41 PM
 #12

Ever heard of black market or unofficial exchange rates.

You can decree that 1BTC =$10 but if people collectively don't feel it is worth that they will trade it for more or less.


Say you "fix" BTC and it is worth $10 (using a basket of goods).  I make a post saying hey I got 50 BTC and I will sell them for $400 cash.  Guess what I just violated the official exchange rate.

A simple decree is worthless.  Exchanges like MtGox would still exist and they would ignore the decree.

Even in the "real world" fixed exchanges rates aren't backed up by words but but serious $$$$.  The central bank in China dumps massive amounts of yuan onto the market to force the exchange rate to where they have pegged (fixed) it against the dollar.  They prevent speculation by a) a clear policy and b) the firepower of billions of dollars worth of leverage.  Anyone who tries to speculate against the Central bank of China loses.  They either buy too high or sell to low. 

Simple version:
LOLZ.  A decree would be useless.  You can't have a fixed exchange rate without massive liquidity and central bank.  Fixed exchange rate is simply incompatible with bitcoin.
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September 29, 2011, 06:53:39 AM
 #13



Simple version:
LOLZ.  A decree would be useless.  You can't have a fixed exchange rate without massive liquidity and central bank.  Fixed exchange rate is simply incompatible with bitcoin.


Exactly as you said, if you go with free market exchange, then the people who have the most capital rules. Even MTGOX could be maintained by a few powerful player who have enough reserve of BTC and capital to establish the rate they want

It seems centralized control will always be the destiny no matter what original form it takes


On further thought, maybe BTC can implement a mechanism to check the exchange rate and deny all the transactions made with another rate than official, but that would require it also trace the flow of the other currency... Wow, if it can do that, then it will take over the existing electronic transaction system and become the real powerful fixed exchange rate mechanism

Etlase2
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September 30, 2011, 08:55:28 AM
 #14

Like put into the block chain some digits which indicate that 1 BTC is worth XXX$, no matter how much supply or demand, and that value is calculated from each days price of a basket of commodities and several major currencies

If you want a coin that has a stable price--instead of forcing that price on the people, you need to guide the people into keeping that price. This can never happen with bitcoin, but see the link in my signature for a proposal that would do a much better job of it.

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