Anyone keeping track of merchant profits?

[the joint]

The reason I ask is because I'm wondering how close we are to a legitimate value of BTC.  Obviously there's the electrical/time cost of producing BTC, and there is an economy (kind of) behind it, but to what extent is it truly growing?  This would be valuable knowledge to have while trading and considering future BTC value.  How is the economy doing?

[edd]

BitBrew sales are definitely better each month than the month before. Looks like September will be up about 400% over August, but I really spent a lot on advertising over the same period.

[Etlase2]

BitBrew sales are definitely better each month than the month before. Looks like September will be up about 400% over August, but I really spent a lot on advertising over the same period.

Question: do you keep your sales in BTC or do you convert them to cash?

[P4man]

I would guess bitcoin value today is 99% speculation and 1% trade. There are a few sites that do actual trade, the alpaca socks, bitbrew and a few others, but if you compare that with the valuation of all bitcoins of $35M that has to be (no offense guys) peanuts. 
For now at least, the real question is perhaps how much trade is happening on Silk Road. I have no clue, but its likely more substantial but probably still no where near enough to explain the current valuation.

BTW, the cost of mining has nothing to do with it. THe cost is variable and adjusts to the price of bitcoin.

[edd]

BitBrew sales are definitely better each month than the month before. Looks like September will be up about 400% over August, but I really spent a lot on advertising over the same period.

Question: do you keep your sales in BTC or do you convert them to cash?

I keep as much as possible in BTC but do have to occasionally exchange some for USD in order to cover expenses. Unfortunately, I don't make enough at my "day job" to keep BitBrew going out of my own pocket and FedEx doesn't accept bitcoins, yet.

I wish I had a regular rate at which I exchange to report, but I really only trade BTC when I'm so short on cash that it becomes necessary, so it's erratic, at best. I do support other bitcoin merchants when I can, too.

[the joint]

I would guess bitcoin value today is 99% speculation and 1% trade. There are a few sites that do actual trade, the alpaca socks, bitbrew and a few others, but if you compare that with the valuation of all bitcoins of $35M that has to be (no offense guys) peanuts. 
For now at least, the real question is perhaps how much trade is happening on Silk Road. I have no clue, but its likely more substantial but probably still no where near enough to explain the current valuation.

BTW, the cost of mining has nothing to do with it. THe cost is variable and adjusts to the price of bitcoin.

True, Silk Road helps.

I would argue though that the cost of mining has a psychological impact on the value of BTC.  You have the direct electrical cost, the cost of time, and the cost of hardware.  If the cost of mining had nothing to do with it, then the $/mhash ratio wouldn't mean a thing.

[P4man]

I would argue though that the cost of mining has a psychological impact on the value of BTC.  

Not even that. The cost of mining is not a factor, its a direct result of the price of bitcoins.
Assuming miners act rationally, the total hashrate will level out at a point where mining is marginally cost efficient. Cost being determined by electricity and costs hardware per MH,  and revenue the value those 300 bitcoins /hr are worth. There is no effect the other way round.

[the joint]

I would argue though that the cost of mining has a psychological impact on the value of BTC.  

Not even that. The cost of mining is not a factor, its a direct result of the price of bitcoins.
Assuming miners act rationally, the total hashrate will level out at a point where mining is marginally cost efficient. Cost being determined by electricity and costs hardware per MH,  and revenue the value those 300 bitcoins /hr are worth. There is no effect the other way round.

Mining precludes BTC generation and its value.  Without mining, there is no potential for BTC to have any value whatsoever because you wouldn't have BTC.

If BTC was valued at zero, nobody would mine.  People mine because they assume the product of the work will be valuable.

I don't believe it's a 1-way street.

[P4man]

Mining precludes BTC generation and its value.  Without mining, there is no potential for BTC to have any value whatsoever because you wouldn't have BTC.

Thats nonsense, think about it, when "all BTC are mined", you say BTC value will be zero?

If BTC was valued at zero, nobody would mine. 

Obviously true. Doesnt prove that mining influences price, its the other way around.

People mine because they assume the product of the work will be valuable.

Rational miners mine because the product of their work is at least marginally more valuable than their cost. Which is the case now, and which will on average always be the case, no matter if bitcoins are worth $0.01 or $10.000. All that will change is the number of miners distributing those 300BTC/hour.

[the joint]

Mining precludes BTC generation and its value.  Without mining, there is no potential for BTC to have any value whatsoever because you wouldn't have BTC.

Thats nonsense, think about it, when "all BTC are mined", you say BTC value will be zero?

If BTC was valued at zero, nobody would mine.  

Obviously true. Doesnt prove that mining influences price, its the other way around.

People mine because they assume the product of the work will be valuable.

Rational miners mine because the product of their work is at least marginally more valuable than their cost. Which is the case now, and which will on average always be the case, no matter if bitcoins are worth $0.01 or $10.000. All that will change is the number of miners distributing those 300BTC/hour.

Mining influences price simply because mining generates BTC.  Before any BTC were created, someone had to mine them to create them which gives rise to them having value.  To say mining doesn't influence BTC value is wrong because you can't even have BTC were it not for the first miners.  Additionally, mining influences price because of the total amount of BTC available.  That's what fuels the inflation we're seeing right now.  Miners generate more BTC but the economy is not growing as quick as the supply of BTC.  

Your last point seems to concede to the point I was trying to make?  Miners mine because the product of their work has value.  Why did Satoshi mine the genesis block?  There was no reason to mine the genesis block if value only influences mining and not vice versa.  The value of BTC at this point was zero.  He mined the genesis block because mining led to something of value.

Edit:  To put it another way, if mining gives rise to BTC which gives rise to BTC's value, then it's axiomatic that if you take all miners away , Bitcoin's won't have value.  This can be shown to be the case since you need network confirmations to approve transactions, and you cant confirm these transactions if it weren't for miners solving blocks.  If there were 0 miners, BTC value would be 0 because you can't use them...they lose all utility.

[ercolinux]

I would guess bitcoin value today is 99% speculation and 1% trade. There are a few sites that do actual trade, the alpaca socks, bitbrew and a few others, but if you compare that with the valuation of all bitcoins of $35M that has to be (no offense guys) peanuts. 
For now at least, the real question is perhaps how much trade is happening on Silk Road. I have no clue, but its likely more substantial but probably still no where near enough to explain the current valuation.

I think that trade has a little more than 1% value: You assume less than 350.000$ of trade value, and considering a velocity of 1 and calculating that all the trades was made in the last 5 month that's 1600$/day of trades. There are over 350 web sites that accept bitcoins for almost every thing plus some physical shop/restaurant. That's makes some 4$/day for shop. I think that with this numbers we are at least 5-10% of value for trade and 85-90% for speculation.
Silk Road had probably a lot of high value trades (100's or 1000's of BTC) due to the nature of their products.

Speculations are still to high in bitcoins but things are moving (slowly) toward trades.

[P4man]

Mining influences price simply because mining generates BTC.  Before any BTC were created, someone had to mine them to create them which gives rise to them having value.  To say mining doesn't influence BTC value is wrong because you can't even have BTC were it not for the first miners.  

Digging gold requires pickaxes. That doesnt mean pickaxes have an influence on the price of gold.
Unless pick axes would be so expensive that it would influence how much gold is being dug up, but there is no such analogy for bitcoin, as no matter the amount miners or their hashrate, the creation rate remains the same. Mining is a zero sum game.

Additionally, mining influences price because of the total amount of BTC available.  

Thats where you are wrong. No matter if I mine alone or 1 billion people mine with 6990s, there is only 50 BTC produced per 10 minutes.

That's what fuels the inflation we're seeing right now.  Miners generate more BTC but the economy is not growing as quick as the supply of BTC.

But it doesnt matter how many ppl mine. The creation rate is constant.

Your last point seems to concede to the point I was trying to make?  Miners mine because the product of their work has value.

Yes,clearly, that doesnt mean it influences the price of bitcoins. Its the opposite, with simple math you can calculate approximately how many miners, or more correctly, how many MH/s  there will be for a given BTC value (and a given electricity/hardware cost per MH). In the other direction there is no relationship. None.

If there were 0 miners, BTC value would be 0 because you can't use them...they lose all utility.

Now you confuse mining for the  creation of coins and mining to confirm transactions. Can we agree today no one is mining for the transactions fees? Im only talking about mining for those blocks of 50 BTC, and even if no one did that, BTC wouldnt lose its value. THe opposite is true, if BTC loses its value, no one would mine. It is a direct but one directional relationship that I can put in a simple formula.

[the joint]

Mining influences price simply because mining generates BTC.  Before any BTC were created, someone had to mine them to create them which gives rise to them having value.  To say mining doesn't influence BTC value is wrong because you can't even have BTC were it not for the first miners.  

Digging gold requires pickaxes. That doesnt mean pickaxes have an influence on the price of gold.
Unless pick axes would be so expensive that it would influence how much gold is being dug up, but there is no such analogy for bitcoin, as no matter the amount miners or their hashrate, the creation rate remains the same. Mining is a zero sum game.

Additionally, mining influences price because of the total amount of BTC available.  

Thats where you are wrong. No matter if I mine alone or 1 billion people mine with 6990s, there is only 50 BTC produced per 10 minutes.

That's what fuels the inflation we're seeing right now.  Miners generate more BTC but the economy is not growing as quick as the supply of BTC.

But it doesnt matter how many ppl mine. The creation rate is constant.

Your last point seems to concede to the point I was trying to make?  Miners mine because the product of their work has value.

Yes,clearly, that doesnt mean it influences the price of bitcoins. Its the opposite, with simple math you can calculate approximately how many miners, or more correctly, how many MH/s  there will be for a given BTC value (and a given electricity/hardware cost per MH). In the other direction there is no relationship. None.

If there were 0 miners, BTC value would be 0 because you can't use them...they lose all utility.

Now you confuse mining for the  creation of coins and mining to confirm transactions. Can we agree today no one is mining for the transactions fees? Im only talking about mining for those blocks of 50 BTC, and even if no one did that, BTC wouldnt lose its value. THe opposite is true, if BTC loses its value, no one would mine. It is a direct but one directional relationship that I can put in a simple formula.

The whole point you are missing that renders all of your points invalid is because were not talking about 1 miner vs. 1,000,000 miners...it's about 0 miners vs. any # of miners.  It addresses each of your points except the first in the following ways:

(The first point you mentioned about pickaxes is irrelevant.  There is only one way to produce Bitcoins, and that's cpu/gpu mining.  Not only are there multiple ways of getting gold without pick axes, but the gold is already there.  There's no 'creation' involved, only gathering.  Gold is like oil wells that haven't been drilled yet. That oil has value because it can be recovered and used.  Without ANY miners mining Bitcoins, no quantity is produced).

1.)  There are no 50 BTC created every 10 minutes if there are 0 miners.  (Not an issue of 1 or 1 billion as you suggested).
2.)  The creation rate is 0 if there are no miners.
3.)  0 miners ever = 0 BTC = no value..................any # of miners = some # of BTC = value

Miners give RISE to value. 

[P4man]

Thats just a stupid argument using hypotheticals while not distinguishing between mining for coins and mining for transactions. The latter is all thats needed for bitcoin to operate., the former is the only reason people today mine and neither has an effect on BTC value. The latter has an effect on BTC transaction costs, but just like mining, in reality the relationship is inverse and ultimately the amount of miners will be a result of the amount of BTC transactions. If no transactions are done, no one will mine. If BTC becomes more popular than Paypal, people will mine to earn those transaction fees. None of this proves your point that mining influences BTC price, it simply does not.

[the joint]

Thats just a stupid argument using hypotheticals while not distinguishing between mining for coins and mining for transactions. The latter is all thats needed for bitcoin to operate., the former is the only reason people today mine and neither has an effect on BTC value. The latter has an effect on BTC transaction costs, but just like mining, in reality the relationship is inverse and ultimately the amount of miners will be a result of the amount of BTC transactions. If no transactions are done, no one will mine. If BTC becomes more popular than Paypal, people will mine to earn those transaction fees. None of this proves your point that mining influences BTC price, it simply does not.

This is not a hypothetical in the sense that the whole argument is based upon that situation.  The question is whether miners influence BTC value.  Take away ALL miners, and see what happens to the value.

Even if it is a case of 1 vs. 1,000,000 the distribution of BTC among those people matters.  You're the one talking about hypotheticals -- "If the price is 'x' there will be 'y' # of miners."  That is a hypothetical proposition.  And the nature of the proposition matters because you are essentially arguing that in the case of 1 vs. 1,000,000 miners, the distribution of BTC among those miners is irrelevant, and it's simply not.  Let's say the price is $4.86, which it is.  Now, lets say you solve the block solo (despite there being 1,000,000 other miners) and you get all 50 BTC.  Let's also say you think the price will continue to decline.  Which would you be more apt to sell?  50 BTC that you got in a down market, or .02 BTC that you got from your pool?  The distribution matters because the amount of BTC in someone's wallet has psychological effects on trading.  Trading influences price.  There are many reasons why miners influence price and there is absolutely zero evidence to suggest a 1 way function here.  This applies in the case of 1 vs. 1,000,000 miners and in 0 vs. any # of miners.

Edit:  Consider this example.
Scenario 1.  You have 1 person with 20,000,000 BTC and 999,999 people splitting the remaining 1,000,000.  This suggests 1 person mining all by himself for a long time and the other 999,999 joining in much later.
Scenario 2.  1,000,000 all have 21 BTC.  All 1,000,000 mine together at same rate starting at the same time.

Do you think the value of BTC will be the same in each case?

[Etlase2]

The distribution matters because the amount of BTC in someone's wallet has psychological effects on trading.  Trading influences price.  There are many reasons why miners influence price and there is absolutely zero evidence to suggest a 1 way function here.  This applies in the case of 1 vs. 1,000,000 miners and in 0 vs. any # of miners.

YOU ARE WRONG. P4MAN IS RIGHT. STOP ARGUING.

[the joint]

The distribution matters because the amount of BTC in someone's wallet has psychological effects on trading.  Trading influences price.  There are many reasons why miners influence price and there is absolutely zero evidence to suggest a 1 way function here.  This applies in the case of 1 vs. 1,000,000 miners and in 0 vs. any # of miners.

YOU ARE WRONG. P4MAN IS RIGHT. STOP ARGUING.

I'm not one for ad homs, but you're an idiot.

Think for yourself.

Edit:  By the way.  It has a psychological effect on me.  And 1 person is all it takes to prove you wrong.  I mine, I influence the price because I trade.  My trades depended on what I had in my wallet, and once it crossed a threshold (my threshold is 1 BTC) then I sold.  If I continued to mine but didn't acquire 1 BTC, I wouldn'tve sold.  But, I mined and it did cross 1 BTC many times, so I sold.  I affected the price.  Hence, miners affect price.

Again, idiot.

[Etlase2]

I'm not one for ad homs, but you're an idiot.

Think for yourself.

heh, I had the very same argument with p4man in another thread and he wouldn't budge. I was being highly sarcastic for his benefit.

[P4man]

This is not a hypothetical in the sense that the whole argument is based upon that situation.  The question is whether miners influence BTC value.  Take away ALL miners, and see what happens to the value.

By that logic, the sun and the rotation speed of the earth influences BTC price. Take away either  and see what happens to its value.

Even if it is a case of 1 vs. 1,000,000 the distribution of BTC among those people matters.  You're the one talking about hypotheticals -- "If the price is 'x' there will be 'y' # of miners."  That is a hypothetical proposition.  And the nature of the proposition matters because you are essentially arguing that in the case of 1 vs. 1,000,000 miners, the distribution of BTC among those miners is irrelevant, and it's simply not.  Let's say the price is $4.86, which it is.  Now, lets say you solve the block solo (despite there being 1,000,000 other miners) and you get all 50 BTC.  Let's also say you think the price will continue to decline.  Which would you be more apt to sell?  50 BTC that you got in a down market, or .02 BTC that you got from your pool?  The distribution matters because the amount of BTC in someone's wallet has psychological effects on trading.  Trading influences price.  There are many reasons why miners influence price and there is absolutely zero evidence to suggest a 1 way function here.  This applies in the case of 1 vs. 1,000,000 miners and in 0 vs. any # of miners.

On average, this is simply not true.  Each 0.02 BTC a miner earns on a block could push his wallet over whatever psychological barrier. And if there are less miners earning more BTCs each, dont forget this implies BTCs are worth less, otherwise there would not be fewer miners. The only reason this would not be true is if miners act irrationally and they are behaving like speculators,  investing dollars or euro's in mining with the expectation of increasing prices. Incidentally such or other speculation is about the only thing defining BTC prices today. The networks global hashrate is a result of this price, its not a factor determining it.

[the joint]

This is not a hypothetical in the sense that the whole argument is based upon that situation.  The question is whether miners influence BTC value.  Take away ALL miners, and see what happens to the value.

By that logic, the sun and the rotation speed of the earth influences BTC price. Take away either  and see what happens to its value.

Even if it is a case of 1 vs. 1,000,000 the distribution of BTC among those people matters.  You're the one talking about hypotheticals -- "If the price is 'x' there will be 'y' # of miners."  That is a hypothetical proposition.  And the nature of the proposition matters because you are essentially arguing that in the case of 1 vs. 1,000,000 miners, the distribution of BTC among those miners is irrelevant, and it's simply not.  Let's say the price is $4.86, which it is.  Now, lets say you solve the block solo (despite there being 1,000,000 other miners) and you get all 50 BTC.  Let's also say you think the price will continue to decline.  Which would you be more apt to sell?  50 BTC that you got in a down market, or .02 BTC that you got from your pool?  The distribution matters because the amount of BTC in someone's wallet has psychological effects on trading.  Trading influences price.  There are many reasons why miners influence price and there is absolutely zero evidence to suggest a 1 way function here.  This applies in the case of 1 vs. 1,000,000 miners and in 0 vs. any # of miners.

On average, this is simply not true.  Each 0.02 BTC a miner earns on a block could push his wallet over whatever psychological barrier. And if there are less miners earning more BTCs each, dont forget this implies BTCs are worth less, otherwise there would not be fewer miners. The only reason this would not be true is if miners act irrationally and they are behaving like speculators,  investing dollars or euro's in mining with the expectation of increasing prices. Incidentally such or other speculation is about the only thing defining BTC prices today. The networks global hashrate is a result of this price, its not a factor determining it.

First of all, besides changing the context entirely, what you said about the sun and speed of earth rotation does nothing to disprove what I said.  If anything, you're pointing out another valid example where removal of a cause axiomatically removes its effect. 

Second, I never argued that price doesn't influence the number of miners.  I'm arguing for reciprocal influence.

It's not either/or, it's both.