Bitcoins have lost $174,108,376.60 since June 9th 2011

[the founder]

Total Value of Entire Bitcoin Economy $36,132,198.05

We need USD $1,060,797.82 per month to enter to the bitcoin economy to keep the current value of USD $4.911101029921 per BTC

$245.56 worth of BTC are printed every 10 minutes by mining or $1,060,797.82 per month or $12,729,573.87 per year

Bitcoins traded at nearly $35 at their peak with ~6,000,000 coins in circulation on June 9, 2011 the total Bitcoin economy was valued at $210,000,000
 
Bitcoins are now trading at $4.911101029921 with 7357250.000000001 coins in circulation the total Bitcoin economy is now valued at $36,132,198.05

This represents a net loss of $209,999,964.00 from peak to this exact moment (updated in real time) of the entire bitcoin economy.

If Bitcoins were stable at their peak of $35 on June 9, 2011 , the bitcoin economy would be worth $257,503,750.00 rather than $36,132,198.05


http://www.flexcoin.com/calc/

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[Stephen Gornick]

Title edit ... June 9th?

[Phinnaeus Gage]

Total Value of Entire Bitcoin Economy $36,132,198.05

We need USD $1,060,797.82 per month to enter to the bitcoin economy to keep the current value of USD $4.911101029921 per BTC

$245.56 worth of BTC are printed every 10 minutes by mining or $1,060,797.82 per month or $12,729,573.87 per year

Bitcoins traded at nearly $35 at their peak with ~6,000,000 coins in circulation on June 9, 2011 the total Bitcoin economy was valued at $210,000,000
 
Bitcoins are now trading at $4.911101029921 with 7357250.000000001 coins in circulation the total Bitcoin economy is now valued at $36,132,198.05

This represents a net loss of $209,999,964.00 from peak to this exact moment (updated in real time) of the entire bitcoin economy.

If Bitcoins were stable at their peak of $35 on June 9, 2011 , the bitcoin economy would be worth $257,503,750.00 rather than $36,132,198.05


http://www.flexcoin.com/calc/

WOW! I didn't look at it that way. I looked at it this way: https://bitcointalk.org/index.php?topic=1672.msg20372#msg20372

A 36X increase. (rounded)

[evoorhees]

These are pretty misleading figures.

You're basically taking a wildly volatile new commodity, looking at the highest peak price on one day and comparing it to the price today. You cannot say that $200m has been lost, without acknowledging that $200m was first created, and in fact the aggregate value is still massively increased this year.

Also - don't confuse "market cap" with the value of the bitcoin economy. The market cap of Bitcoins has fallen substantially since June/July. However, the value of the bitcoin economy has risen. More merchants and many more tools. Greater security after repeated vulnerabilities have been attacked.

Again, people concern themselves too much with the current market price of a Bitcoin. It is related to, but not synonymous with, the value of the Bitcoin economy.

[Sannyasi]

These are pretty misleading figures.

You're basically taking a wildly volatile new commodity, looking at the highest peak price on one day and comparing it to the price today. You cannot say that $200m has been lost, without acknowledging that $200m was first created, and in fact the aggregate value is still massively increased this year.

Also - don't confuse "market cap" with the value of the bitcoin economy. The market cap of Bitcoins has fallen substantially since June/July. However, the value of the bitcoin economy has risen. More merchants and many more tools. Greater security after repeated vulnerabilities have been attacked.

Again, people concern themselves too much with the current market price of a Bitcoin. It is related to, but not synonymous with, the value of the Bitcoin economy.

lol i was just typing a similar response when i decided it wasn't worth it. indeed, this is very misleading- the only way to lose that much money is if every single person holding bitcoins bought at it's highest value.... and then the person who sold them ran off with all the money and stopped trading. I deem this a 'failpost'

[Gabi]

Total Value of Entire Bitcoin Economy $36,132,198.05

We need USD $1,060,797.82 per month to enter to the bitcoin economy to keep the current value of USD $4.911101029921 per BTC

$245.56 worth of BTC are printed every 10 minutes by mining or $1,060,797.82 per month or $12,729,573.87 per year

Bitcoins traded at nearly $35 at their peak with ~6,000,000 coins in circulation on June 9, 2011 the total Bitcoin economy was valued at $210,000,000
 
Bitcoins are now trading at $4.911101029921 with 7357250.000000001 coins in circulation the total Bitcoin economy is now valued at $36,132,198.05

This represents a net loss of $209,999,964.00 from peak to this exact moment (updated in real time) of the entire bitcoin economy.

If Bitcoins were stable at their peak of $35 on June 9, 2011 , the bitcoin economy would be worth $257,503,750.00 rather than $36,132,198.05


http://www.flexcoin.com/calc/

[the founder]

You can call it a "failpost" or "trolling" if you wish.. but figures are figures... and the figures are 100% accurate.  Flame on,   the point is that it's still right and denying it isn't helping the situation.

Now if you want to pick a differing moment in time,  rather than it's peak...  let's say the spot price from 2 months ago..  you'll see roughly $100,000,000 dollar loss.

The end result is that we're still printing bitcoins like wildfire,  but the whole bitcoin economy is decreasing value so fast,  and printing bitcoin like that isn't helping.

So feel free to flame on,  but at the end it's right...  the formula is right.. and the figures are right...  and honestly you can't argue it without trying to change the topic.. which is Bitcoins have lost nearly a Quarter Billion Dollars since June 9th 2011.

So keep posting "failposts"  or "trolling"  ... but avoid the topic and the math... because as you know.. it's not arguable.

[Elwar]

If you have 3 apples worth $1 each you have $3 worth of apples.

If you have 300 apples worth $.01 each you still have $3 worth of apples.

You do not say that you have lost $297 since apples were worth $1.

[Gabi]

Yeah, your math is right, and? It's still trolling, nothing more.

I say that bitcoin worth increased of an INFINITE amount, and i am RIGHT

[AndyR]

Why all this talk of fiat dollars anyway? There are more bitcoins than there were in June, and they are real capital, whoever holds them, whatever some traders may think they are "worth" in comparison to the failing American dollar. Let the traders and speculators bandy about their numbers and scream terror as they run back to the "security" of their government lies guised as currency. I know where the true future of capital lies, and I am more confident than ever of the real value of bitcoin.

[Elwar]

Why all this talk of fiat dollars anyway? There are more bitcoins than there were in June, and they are real capital, whoever holds them, whatever some traders may think they are "worth" in comparison to the failing American dollar. Let the traders and speculators bandy about their numbers and scream terror as they run back to the "security" of their government lies guised as currency. I know where the true future of capital lies, and I am more confident than ever of the real value of bitcoin.

And you can get them easier.

for now...

[the founder]

If you have 3 apples worth $1 each you have $3 worth of apples.

If you have 300 apples worth $.01 each you still have $3 worth of apples.

You do not say that you have lost $297 since apples were worth $1.

That's not what happened...    

You had 3 apples worth 1 dollar each.
Now you have 300 apples worth .0001 penny each.

Your 3 dollars turned to 3 cents.

You grew hundreds of apples when the price per apple was crashing...

Except with bitcoins we printed millions of them when the price was crashing...   so the dollar figure is bigger,  but the concept is the same.

Yeah, your math is right, and? It's still trolling, nothing more.

I say that bitcoin worth increased of an INFINITE amount, and i am RIGHT

But yet you're still down (as a market, not you personally) $210,000,000


I am not trying to pick a fight people,  it's just simple math.. .

[Gabi]

Problem, no one ever spent 210.000.000$ in bitcoins 

[the founder]

Problem, no one ever spent 210.000.000$ in bitcoins 

See again,  everyone combined spent 210,000,000 in coins...  either by trading, mining, selling....  so yes,  EVERYONE spent $210,000,000

[omarabid]

I'm not sure if you are serious or you have studied economics. Well, I didn't.

But this is what I learnt: When a house is destroyed, there are loses like in war. The lose is valued at the price of the home. But when the central bank lose $500m of bills in the sea, they can simply print them again. They lost few thousands of dollars of paper value.

Money is not wealth. Bitcoin lost nothing.
Imagine there is 10million bitcoins in the system, hold by members that doesn't want to sell at any price. And there is just one member that he is ready to sell. A kid from the other part of the world is interested to purchase a coin. He just want to try the thing. He is ready to put $50 for it. So there is one trade, and the value of bitcoin is $50.

This doesn't mean that the members have $0.5billion. They have nothing unless there is a buyer willing to buy at that price.

I hope you get these simple basics/facts.

[Gabi]

Problem, no one ever spent 210.000.000$ in bitcoins 

See again,  everyone combined spent 210,000,000 in coins...  either by trading, mining, selling....  so yes,  EVERYONE spent $210,000,000

Not really, 210.000.000 never circulated.

[Elwar]

I am not trying to pick a fight people,  it's just simple math.. .

So at its peak the Bitcoin economy had $210,000,000 worth of coins.

And you are saying that we have lost $210,000,000 since then.

So the entire Bitcoin economy is now worth $0?

[Anonymous]

The $210,000,000 implies that if all Bitcoins were to change hands at once, that would be the price. That obviously never occurred. The figure really has little relevance in that sense. Only a fraction of this purported value was sold at that price.

[the founder]

Problem, no one ever spent 210.000.000$ in bitcoins 

See again,  everyone combined spent 210,000,000 in coins...  either by trading, mining, selling....  so yes,  EVERYONE spent $210,000,000

Not really, 210.000.000 never circulated.

Sure it did... either it was 100,000 BTC to buy a pizza in 2010 or it was horded assuming the price was going to increase .. hence the time value of money was applied... every single one of those coins was circulated or stored for resale.

The only ones that were not were ones that were destroyed due to hard drive failure or other technical or human error.

[dsp]

Well using this math every time BTCUSD moves $0.01 its costing someone $73K.

[Anonymous]

Problem, no one ever spent 210.000.000$ in bitcoins 

See again,  everyone combined spent 210,000,000 in coins...  either by trading, mining, selling....  so yes,  EVERYONE spent $210,000,000

Not really, 210.000.000 never circulated.

Sure it did... either it was 100,000 BTC to buy a pizza in 2010 or it was horded assuming the price was going to increase .. hence the time value of money was applied... every single one of those coins was circulated or stored for resale.

The only ones that were not were ones that were destroyed due to hard drive failure or other technical or human error.

Well, most coins haven't touched the market. The price of said coins are moot at this point. The demand is most likely not there.

[the founder]

I am not trying to pick a fight people,  it's just simple math.. .

So at its peak the Bitcoin economy had $210,000,000 worth of coins.

And you are saying that we have lost $210,000,000 since then.

So the entire Bitcoin economy is now worth $0?

Clearly you didn't read the post.

"If Bitcoins were stable at their peak of $35 on June 9, 2011 , the bitcoin economy would be worth $257,503,750.00 rather than $36,132,198.05 "

So I have no idea where you got 0 from $36,132,198.05

[the founder]

Well, most coins haven't touched the market. The price of said coins are moot at this point. The demand is most likely not there.

THANK YOU!!  

"The demand is most likely not there."

That is the point,  yet we're still printing!

I find it from a historical perspective to be one of the biggest bubbles in history,  on par with the top 5 collapses combined of the .com crash.

I am NOT saying that this is the end, I believe that when the rate of mining is cut from 50 to 25 it will have a chance,  but not until that point.

[dsp]

So looking at mtgox I can move the price up a penny by buying $800 of coins right now. Makes you wonder why no one is doing this. $800 = $70K. Its like a printing press with this new math.

[Gabi]

Well, most coins haven't touched the market. The price of said coins are moot at this point. The demand is most likely not there.

THANK YOU!!  

"The demand is most likely not there."

That is the point,  yet we're still printing!

I find it from a historical perspective to be one of the biggest bubbles in history,  on par with the top 5 collapses combined of the .com crash.

I am NOT saying that this is the end, I believe that when the rate of mining is cut from 50 to 25 it will have a chance,  but not until that point.

We know there will never be more than 21 millions of bitcoin, so even if we print, we already know the maximum.

And the bubble was in june, not now.

[sadpandatech]

You grew hundreds of apples when the price per apple was crashing...

Except with bitcoins we printed millions of them when the price was crashing...   so the dollar figure is bigger,  but the concept is the same.

I am not trying to pick a fight people,  it's just simple math.. .

Except with bitcoins ~5,000,000.00 (0's used instead of 5mil to make it sound bigger) of them were printed when the price was .01 to .25 )save a short spike to almost a buck last year.

[evoorhees]

You can call it a "failpost" if you wish.. but figures are figures... and the figures are 100% accurate.  Flame on,   the point is that it's still right and denying it isn't helping the situation.

Now if you want to pick a differing moment in time,  rather than it's peak...  let's say the spot price from 2 months ago..  you'll see roughly $100,000,000 dollar loss.

The end result is that we're still printing bitcoins like wildfire,  but the whole bitcoin economy is decreasing value so fast,  and printing bitcoin like that isn't helping.

Founder - I gotta refute this stuff.

Yes, your figures are 100% accurate. Nobody is refuting the numbers. Rather, it is the implications you're drawing from those figures which are problematic.

- A $100,000,000 fall in the market cap of Bitcoins is not correctly described as a "$100,000,000 loss".  The aggregate value of all coins fell by $100,000,000, true, but only after rising by more than that immediately prior. Just as if you bought Apple stock for $100, and it rises to $200, then falls to $130, it would be misleading to say that one's investment brought about a $70 loss. What you're doing is taking the potential loss of a person who bought at the peak, and applying that to the entire bitcoin community, and claiming a hundred million dollars have been lost.

- And I've seen you post frequently on the topic of inflation. You seem severely against the fact that coins are created so quickly - and you ascribe the loss in market value to this inflation rate. This too is misleading. Remember, the inflation rate HAS NOT CHANGED at any time since Bitcoins were worth less than a penny to when they were worth $30. The fact is that their meteoric rise earlier this year occurred in the exact same inflationary environment. In other words, the inflation rate is not the primary driver of market price. Rather, it's the sentiment of individual buyers and sellers which is the primary driver of market price. If sentiment changes, the price can quite quickly skyrocket again, regardless of the 7200 coins printed each day.

- Finally, you said, "the whole bitcoin economy is decreasing value so fast."  This is utterly false. You are again confusing the market price of a Bitcoin with the value of the economy.  Just as the market price of a dollar doesn't determine the value of the USD economy, neither does the market price of a Bitcoin determine the value of the BTC economy. Similarly, just as the value of the dollar has fallen continually for the past 80 years, the value of the USD economy is vastly larger now than it was then. Same with Bitcoins - just as the value of the Bitcoin has fallen continually for the past few months, the value of the BTC economy is larger now than it was back then.

Confusing the value of all the economic behavior and production of the Bitcoin world with the current spot price of a Bitcoin is folly, and I can tell it's bringing you great distress. The Bitcoin economy is getting more valuable, productive, diverse, and secure with each passing month, and a falling spot price of Bitcoins does not in any way refute this claim.

[dsp]

Well, most coins haven't touched the market. The price of said coins are moot at this point. The demand is most likely not there.

THANK YOU!!  

"The demand is most likely not there."

That is the point,  yet we're still printing!

I find it from a historical perspective to be one of the biggest bubbles in history,  on par with the top 5 collapses combined of the .com crash.

I am NOT saying that this is the end, I believe that when the rate of mining is cut from 50 to 25 it will have a chance,  but not until that point.

Just cause one person sells one coin for $35 and then a day later it is worth $5 means nothing cause only two people are involved in that market. And relative to that bitcoin may as well be two people relative to any other bubble you have seen. Millions of people were involved in the housing bubble. BitCoin is not even known or held by more than thousand people. The price on the exchange is almost meaningless at this point. Its kinda like doing math on google stock while they were booting the first server in the doorm at Stanford.

[Steve]

Do you honestly think that if you had $250 million that you could buy 7 million bitcoins today?  I doubt it.

Market cap is a meaningless figure when it comes to bitcoin or any other currency.  Bitcoin is not a stock (where market cap would indicate the total value of a company).  To illustrate why this is a meaningless figure, consider that when bitcoin was trading at $35, if everyone cashed out all their bitcoins, people would have received nowhere near $210,000,000 for them.  Conversely, if I offered to by all bitcoins in existence for $210,000,000, I would have obtained no where near the 6+ million bitcoins that had been mined as of that date.  

It's tempting to think in terms of market cap, but it is in reality an utterly meaningless statistic in relation to bitcoin.  The market cap is just a figure derived from the total number of bitcoins mined and the last trade price.  And the last trade price is a trailing indicator that, depending on circumstances, may not even have any relation to the next trade price.  Open bid and ask orders are better indicators of what the next trade is likely to be, but the open orders on the exchanges have a very wide price range for a relatively small number of bitcoins (compared with the total amount mined).  Again, there is no way that 6+ million bitcoins could have ever been sold for $210,000,000...and I'd say that's still true today.  There's also no way that 6+ million bitcoins could have ever been bought for $210,000,000...and that's also still true today.  I doubt $1 billion could buy you 6+ million bitcoins.

The statistic that is far more relevant is the volume of bitcoin traded for other currencies, goods, or services.  I'd be interested if anyone had some educated guesses on that statistic over time (you can't simply add up exchange volume and block chain volume, but one could come up with some models that incorporated those figures).

Of course, this may be little consolation to those that purchased bitcoin when they were trading at $35.  

[evoorhees]

Problem, no one ever spent 210.000.000$ in bitcoins 

See again,  everyone combined spent 210,000,000 in coins...  either by trading, mining, selling....  so yes,  EVERYONE spent $210,000,000

Extremely false.  Consider a hypothetical to illuminate the folly of that statement.

Suppose tomorrow, Bitcoins suddenly became perceived as wildly valuable (maybe Australia decided to make them national currency). Immediately, sell orders would disappear all the way up to, say, $1,000 per Bitcoin.

At that moment, when the MtGox price of a Bitcoin is $1,000, there is suddenly a "market cap" of $1,000 X 7,300,000 = $7.3 billion dollars.

Question, Founder - Did "everyone spend" $7.3 billion?

If the question is still unclear to you, take the example to an extreme - suppose an alien civiliation was to make Bitcoin the galactic currency. Suddnely, nobody would sell a coin below $1 gazillion each. MtGox price is now $1 gazillion per coin. Did we all spend $7.3 million gazillion dollars?

No.

[the founder]

Well using this math every time BTCUSD moves $0.01 its costing someone $73K.

Correct!!   it's costing the market $73,000 (or increasing the value of holders by an aggregate amount of $73,000)

So looking at mtgox I can move the price up a penny by buying $800 of coins right now. Makes you wonder why no one is doing this. $800 = $70K. Its like a printing press with this new math.

It's not new math,  it's how things have been done since the Egyptians and Romans measured their relative Money Supply

[Steve]

Remember, the inflation rate HAS NOT CHANGED at any time since Bitcoins were worth less than a penny to when they were worth $30. The fact is that their meteoric rise earlier this year occurred in the exact same inflationary environment.

This is not quite correct.  The inflation rate has in fact been steadily declining.  From block 0 to block 1, the annualized inflation rate was infinitely large.  From block 1 to block 2, the annualized inflation rate was 5,256,000%.  Currently the annualized inflation rate is ~35.7%.

[evoorhees]

Remember, the inflation rate HAS NOT CHANGED at any time since Bitcoins were worth less than a penny to when they were worth $30. The fact is that their meteoric rise earlier this year occurred in the exact same inflationary environment.

This is not quite correct.  The inflation rate has in fact been steadily declining.  From block 0 to block 1, the annualized inflation rate was infinitely large.  From block 1 to block 2, the annualized inflation rate was 5,256,000%.  Currently the annualized inflation rate is ~35.7%.

Okay you're right  , the rate is constantly changing, but the quantity of new coins per day is not changing. However, this further proves my point - for the meteoric rise in price occurred under a higher rate of inflation than what we're currently experiencing.

Thus, The Founder ought to stop preoccupying his concerns with the inflation rate...

[the founder]

Founder - I gotta refute this stuff.

Yes, your figures are 100% accurate. Nobody is refuting the numbers. Rather, it is the implications you're drawing from those figures which are problematic.

- A $100,000,000 fall in the market cap of Bitcoins is not correctly described as a "$100,000,000 loss".  The aggregate value of all coins fell by $100,000,000, true, but only after rising by more than that immediately prior. Just as if you bought Apple stock for $100, and it rises to $200, then falls to $130, it would be misleading to say that one's investment brought about a $70 loss. What you're doing is taking the potential loss of a person who bought at the peak, and applying that to the entire bitcoin community, and claiming a hundred million dollars have been lost.

- And I've seen you post frequently on the topic of inflation. You seem severely against the fact that coins are created so quickly - and you ascribe the loss in market value to this inflation rate. This too is misleading. Remember, the inflation rate HAS NOT CHANGED at any time since Bitcoins were worth less than a penny to when they were worth $30. The fact is that their meteoric rise earlier this year occurred in the exact same inflationary environment. In other words, the inflation rate is not the primary driver of market price. Rather, it's the sentiment of individual buyers and sellers which is the primary driver of market price. If sentiment changes, the price can quite quickly skyrocket again, regardless of the 7200 coins printed each day.

- Finally, you said, "the whole bitcoin economy is decreasing value so fast."  This is utterly false. You are again confusing the market price of a Bitcoin with the value of the economy.  Just as the market price of a dollar doesn't determine the value of the USD economy, neither does the market price of a Bitcoin determine the value of the BTC economy. Similarly, just as the value of the dollar has fallen continually for the past 80 years, the value of the USD economy is vastly larger now than it was then. Same with Bitcoins - just as the value of the Bitcoin has fallen continually for the past few months, the value of the BTC economy is larger now than it was back then.

Confusing the value of all the economic behavior and production of the Bitcoin world with the current spot price of a Bitcoin is folly, and I can tell it's bringing you great distress. The Bitcoin economy is getting more valuable, productive, diverse, and secure with each passing month, and a falling spot price of Bitcoins does not in any way refute this claim.

===
- The peak price was used of course to show the magnitude of the problem,  however even at $17 dollars it's still a $100,000,000 dollar loss.

- Regarding inflation ..  I know the inflation rate hasn't changed,  that's the problem... because the demand changed but inflation didn't match the weakening demand... and the point is that the BTC economy HAS shrunk...  while we're printing them off at a crazy astronomical rate.

- I will cede to you that new software and development is going into bitcoins,  I personally put $100,000 USD into flexcoin ...  I'm sure Mt. Gox, Tradehill, CampBX and others have invested as well...  so yes it's getting better .. but still not enough at that inflation rate to increase demand.

Do you honestly think that if you had $250 million that you could buy 7 million bitcoins today?  I doubt it.

No what's I'm saying is that I could buy all the bitcoins technically at a fraction of that, 36 million.   However in real life everyone knows that if someone went on a buying spree of that magnitude of course the prices would rise ..  I might get about 25% of all the bitcoins out there however with just 36 million...   If demand increased 36 million it would most likely send bitcoins to about 9 dollars if done over the course of a few weeks..  

This is not quite correct.  The inflation rate has in fact been steadily declining.  From block 0 to block 1, the annualized inflation rate was infinitely large.  From block 1 to block 2, the annualized inflation rate was 5,256,000%.  Currently the annualized inflation rate is ~35.7%.

That is correct,  but the creation rate (not percentage) is still set at about 250 dollars every 10 minutes...  (50 BTC per 10 block) ...  as a percentage it decreases...  because the amount of bitcoins is so bloated and getting bigger. 

[evoorhees]

::sigh::

When price is rising, people complain about "deflationary spirals" and the failure of Bitcoin to not match up with demand.

When price is falling, people complain about inflation and the failure of Bitcoin to not match up with demand.

Are we so enmeshed in a centrally-planned, price-controlled economy that the first sign of true free-market price discovery simply scares us to death?

Bitcoin  is/will be the most volatile asset the world has ever seen. Set your expectations accordingly. Relax.

[the founder]

::sigh::

When price is rising, people complain about "deflationary spirals" and the failure of Bitcoin to not match up with demand.

When price is falling, people complain about inflation and the failure of Bitcoin to not match up with demand.

Are we so enmeshed in a centrally-planned, price-controlled economy that the first sign of true free-market price discovery simply scares us to death?

Bitcoin  is/will be the most volatile asset the world has ever seen. Set your expectations accordingly. Relax.

That point is right evoorhees  ...  I know that...  I think most of us know this.. (hopefully)  ... but I had to make the point that we're doing things so weird (printing when value is decreasing)  that it's never going to be a currency...  it's going to widely rocket back and fourth like a commodity...   Bitcoins officially at this stage are not a currency...   it's oil,  or natural gas, gold or silver..  some currency aspects.. but it's not a currency..

Thus, The Founder ought to stop preoccupying his concerns with the inflation rate...

It's hard to when demand is almost directly related to price... as it is a commodity.

[Steve]

That point is right evoorhees  ...  I know that...  I think most of us know this.. (hopefully)  ... but I had to make the point that we're doing things so weird (printing when value is decreasing)  that it's never going to be a currency...  it's going to widely rocket back and fourth like a commodity...   Bitcoins officially at this stage are not a currency...   it's oil,  or natural gas, gold or silver..  some currency aspects.. but it's not a currency..

I use it as a currency almost every day.  Therefore, it's a currency.

[evoorhees]

That point is right evoorhees  ...  I know that...  I think most of us know this.. (hopefully)  ... but I had to make the point that we're doing things so weird (printing when value is decreasing)  that it's never going to be a currency...  it's going to widely rocket back and fourth like a commodity...   Bitcoins officially at this stage are not a currency...   it's oil,  or natural gas, gold or silver..  some currency aspects.. but it's not a currency..
 

A good currency is a commodity - it is that commodity which is most widely desired and accepted in an economy. Currencies and commodities are not mutually exclusive, the former is simply the most widely desired latter.

Bitcoin in its current stage, and for the foreseeable future, will be in a volatile period of price discovery. The market is figuring out what these weird things are worth. We know they're worth somewhere between $0 and $1 billion each, right? Well, where exactly is the correct valuation? It will take much time, much speculation, and much correction both up and down before the volatility subsides.

The volatility of Bitcoin is not a bug, nor does it preclude ultimate adoption. It is an expected attribute of a commodity so revolutionary, uncontrolled, and new. Volatility will fall over time, with the Bitcoin being valued at $0, or something above that.

[Phinnaeus Gage]

Well using this math every time BTCUSD moves $0.01 its costing someone $73K.

Or if it moves $.01 in the other direction, someone earned $73K. Enough to buy a poker client and parlay into billions.

[P4man]

See again,  everyone combined spent 210,000,000 in coins...  either by trading, mining, selling....  so yes,  EVERYONE spent $210,000,000

Flatout wrong.
If I create a new currency, P4coins, I mine 10M then sell one for $1 to my idiot neighbor. Does that mean P4coins are worth $10M ?

[bitterness]

The market is figuring out what these weird things are worth. We know they're worth somewhere between $0 and $1 billion each, right?

I would recommend to express the value in baskets of wheat/rice/potatos, unless you know the future value of the USD. In which case i would appreciate a hint.  

[evoorhees]

The market is figuring out what these weird things are worth. We know they're worth somewhere between $0 and $1 billion each, right?

I would recommend to express the value in baskets of wheat/rice/potatos, unless you know the future value of the USD. In which case i would appreciate a hint.  

Hehehe yes I know the future value of the US dollar, and thus I'd put the exchange rate closer to $1 billion / btc ...  Of course, it may also be $1 billion/potato as well =)

[the founder]

See again,  everyone combined spent 210,000,000 in coins...  either by trading, mining, selling....  so yes,  EVERYONE spent $210,000,000

Flatout wrong.
If I create a new currency, P4coins, I mine 10M then sell one for $1 to my idiot neighbor. Does that mean P4coins are worth $10M ?

yes!  it does.. why do you think these private "wanna go public" companies try to find VC firms that will buy .01% of their firms for a million bucks... because it values them at a billion.

[zer0]

good

flush all the speculators out of bitcoin

then you get a stable trading price

[PatrickHarnett]

um, is the web calc flawed?  From the calculator:
_______________________________________________________________________________ ____________________________
This represents a net loss of $209,999,965.00 from peak to this exact moment (updated in real time) of the entire bitcoin economy.
If Bitcoins were stable at their peak of $35 on June 9, 2011 , the bitcoin economy would be worth $257,530,000.00 rather than $35,846,278.50
_______________________________________________________________________________ ____________________________

My simple math notices the 209,999,965 number doesn't change and $257,530,000.00 minus $35,846,278.50 = $221,683,721.50

Also, if the market was worth $210million and is now $35million, most people would say it is $175million lower. 

[Littleshop]

::sigh::

When price is rising, people complain about "deflationary spirals" and the failure of Bitcoin to not match up with demand.

When price is falling, people complain about inflation and the failure of Bitcoin to not match up with demand.

Are we so enmeshed in a centrally-planned, price-controlled economy that the first sign of true free-market price discovery simply scares us to death?

Bitcoin  is/will be the most volatile asset the world has ever seen. Set your expectations accordingly. Relax.

+1

It has been a wild ride and we are just starting! 

[FreeMoney]

Wow, that is a crazy stat, think of the huge loss of the early adopters, glad I wasn't one of those.

[the founder]

um, is the web calc flawed?  From the calculator:
_______________________________________________________________________________ ____________________________
This represents a net loss of $209,999,965.00 from peak to this exact moment (updated in real time) of the entire bitcoin economy.
If Bitcoins were stable at their peak of $35 on June 9, 2011 , the bitcoin economy would be worth $257,530,000.00 rather than $35,846,278.50
_______________________________________________________________________________ ____________________________

My simple math notices the 209,999,965 number doesn't change and $257,530,000.00 minus $35,846,278.50 = $221,683,721.50

Also, if the market was worth $210million and is now $35million, most people would say it is $175million lower.  

This represents a net loss of $174,108,376.60 from peak to this exact moment (updated in real time) of the entire bitcoin economy.   You did find a bug.  it had it pulling from variable A instead of B ..

So the net loss was $174,108,376.60

Now that's out of the way

[P4man]

yes!  it does.. why do you think these private "wanna go public" companies try to find VC firms that will buy .01% of their firms for a million bucks... because it values them at a billion.

Cool I just fed a horse a few million then.

[dsp]

Well using this math every time BTCUSD moves $0.01 its costing someone $73K.

Correct!!   it's costing the market $73,000 (or increasing the value of holders by an aggregate amount of $73,000)

So looking at mtgox I can move the price up a penny by buying $800 of coins right now. Makes you wonder why no one is doing this. $800 = $70K. Its like a printing press with this new math.

It's not new math,  it's how things have been done since the Egyptians and Romans measured their relative Money Supply

Yea but until you execute a trade it a unrealized gain/loss. So its not real....ized

The point being is in the short term inflation is out of hand cause if you or the market don't have the 73k per Penney to hold the price where you want it, your at the whim of the market. But even this is a lie as well as not everyone is in agreement with the current buyers/sellers or price. To further complicate this they may not show their hand and give you a hair cut until you push it far enough oooooo like lets say $35. If you buy coins at that price and did not do the simple math that satoshi put right in-front of your face. Now consider this that only what it takes to hold the price in the face of 1/3 of the coins being issued. Had the coin supply been cut off the inflation would not have choked out the parabolic move and it would have collapsed much further maybe to zero in a panic. So as a currency it is better to have a smaller run and a smaller collapse. Bulls can take a 50% short term loss if the prospects are still good. But if it droped by 95%, you would get people to cut run and never come back. And by looking at the weighted price most people paid around $10. In the short run the bears are right as we have to wait for economic activity to cause the shortage and spike the price. In the long run the bulls win out. The issue then is to figure out the growth rate so you can reasonable predict when this might happen, all i know is it wont be a linear run so in the next 24 months I bet some one will be-able to fit a log scale that can predict within +-10%.

[buttcoin1]

good

flush all the speculators out of bitcoin

then you get a stable trading price

It would probably be close to zero. Have you see how much volume is drying up on the exchanges?

[Littleshop]

So you now just called this a 'report' , posted it to your own ad agency (?) and got it being reported as news. 

http://www.tribbleagency.com/?p=8278

[BitcoinPorn]

So you now just called this a 'report' , posted it to your own ad agency (?) and got it being reported as news. 

http://www.tribbleagency.com/?p=8278

That is too damn funny.   I didn't even notice the credit on that was TheFounder, the link to Flexcoin's calculator page as the report was funny to me for whole other reasons.    Own the bank and the media, smart.

[the founder]

That is too damn funny.   I didn't even notice the credit on that was TheFounder, the link to Flexcoin's calculator page as the report was funny to me for whole other reasons.    Own the bank and the media, smart.

You have no idea...    

We have about 20 media outlets,  most of them in Google News,  about 600 websites (like Tribble) that we control,   most of our clients are fortune 500 firms...  we do marketing, SEO, Advertising , Digital work for them...   

[BitcoinPorn]

You have no idea...    

We have about 20 media outlets,  most of them in Google News,  about 600 websites (like Tribble) that we control,   most of our clients are fortune 500 firms...  we do marketing, SEO, Advertising , Digital work for them... 

So does being open about all this negate the conflict of interests lol

[the founder]

You have no idea...    

We have about 20 media outlets,  most of them in Google News,  about 600 websites (like Tribble) that we control,   most of our clients are fortune 500 firms...  we do marketing, SEO, Advertising , Digital work for them... 

So does being open about all this negate the conflict of interests lol

Nahh... man it's what I do for a living....   I get paid by clients to sweep bad news to page 20 in Google,   or promote their stuff on page 1 ..  depends who you ask.

[BitcoinPorn]

Nahh... man it's what I do for a living....   I get paid by clients to sweep bad news to page 20 in Google,   or promote their stuff on page 1 ..  depends who you ask.

I know the work of SEO all too well, wordpress theme with a logo or two thrown in full of content and coded right

With that in mind, you should do something to that /calc page if you are going to keep linking to it.  Some kind of static content or information relating to the page, just to give it some added natural value for those who are going to be looking at it.  Might as well lower the bounce rate.

[Elwar]

Your math has helped me to understand that we do not need $1 million per month to maintain the current price.

As the traders are just a fraction of the total Bitcoin market so the price can be maintained at a fraction of that cost.

[lettucebee]

This is all quibbling.  What has happened to bitcoin since May is a tragedy.  One embarrassing disaster after another, no wonder the price has collapsed.  Thanks MtGox, thanks mybitcoin, thanks Bruce.

[kgo]

See again,  everyone combined spent 210,000,000 in coins...  either by trading, mining, selling....  so yes,  EVERYONE spent $210,000,000

Flatout wrong.
If I create a new currency, P4coins, I mine 10M then sell one for $1 to my idiot neighbor. Does that mean P4coins are worth $10M ?

yes!  it does.. why do you think these private "wanna go public" companies try to find VC firms that will buy .01% of their firms for a million bucks... because it values them at a billion.

Then why don't they just have the VC's give them a billion dollars for more stock?  It's because market cap is only one measure of value, and neither the VC or the company believes the true value of the company is anywhere near that.  (The VCs are betting on the future value going above a billion dollars, but they don't think the company is worth anywhere near that much today.)

[the founder]

See again,  everyone combined spent 210,000,000 in coins...  either by trading, mining, selling....  so yes,  EVERYONE spent $210,000,000

Flatout wrong.
If I create a new currency, P4coins, I mine 10M then sell one for $1 to my idiot neighbor. Does that mean P4coins are worth $10M ?

yes!  it does.. why do you think these private "wanna go public" companies try to find VC firms that will buy .01% of their firms for a million bucks... because it values them at a billion.

Then why don't they just have the VC's give them a billion dollars for more stock?  It's because market cap is only one measure of value, and neither the VC or the company believes the true value of the company is anywhere near that.  (The VCs are betting on the future value going above a billion dollars, but they don't think the company is worth anywhere near that much today.)

It sets the standard...   "hey another VC valued us at a billion,  so going public we're going to value ourselves at 1 billion, shareholders and market makers need to follow suit"

[indio007]

The OP is WRONG. BTC's intrinsic value has stayed the same. "Losing value" only applies when exchanging intrinsic values objects for extrinsic value objects.

Paper money is worth nothing intrinsically. It's value is extrinsic .

[BitcoinRedLight]

...the inflation rate HAS NOT CHANGED at any time since Bitcoins were worth less than a penny to when they were worth $30.

It has changed wildly.

Inflation is not only a function of the supply of a currency, but it is a function of the supply of a currency relative to its users, its demand.

We are currently in a far more inflationary mode than when Bitcoin was at $30+ and many new people were rushing in.

[i dig bitcoins]

Very interesting thread i must admit...not because of the numbers and theories as well as the analysis, but because of the profound insights that I have acquired. I consider everyone's opinions and facts as a gateway into the thought process of that particular individual. Many of the posts have educated me in ways that I would not have perceived just by reading alone and because of that, it is very valuable. In short I have been able to "think outside of the box" based on the responses of members. This is the very reason I frequent these forums as it is a very lucrative place to harvest thoughts and ideas that I would never have considered or conceived. A special note to evoorhees - I really like your posts as you seem to craft very well thought out responses.

[k9quaint]

I found $174,108,376.60 between the cushions of my couch. Coincidence? More like bitcoincidence! 

[error]

And how much "value" has been "lost" in the last year?

[PatrickHarnett]

And how much "value" has been "lost" in the last year?

Quiet now, you'll spoil the argument.

[PatrickHarnett]

For some random reason I was thinking about this again.  The argument is intrinsically flawed, as even if all of the value of a thing was done at a clearing price, the currency is relevant.

In valuing companies, the capitialisation (shares on issue times price) sets the total.  Only the most naive would think that a new share issue would somehow magically make the company worth more.  Take a company (Apple, Nike or something).  If the share price is $100 and there are 1000 shares, then the value would be $100,000.  But if they do a 2 for 1 share swap, the company does not suddenly double in value because people adjust the price per share they are prepared to trade at.  If you believe otherwise, send me all your money now to save you losing it to someone else.

Even taking the bitcoin spike of $30/BTC and 6M coins that would be $180M (I'm being generous).  Now there are some more coins (7M-ish) and the value is around $5/BTC, so $35M.  A paper loss of $145M, not $175M because the price is adjusted for the new issue of coins.

On the flip side, back on day zero, with 50 coins from the first block, at some unknown price, they represent the $180M of "value", just the price was below the value, or at $180M total, it might have been over-valued.  This difference of opinion drives a lot of trading and keeps other markets churning.  BTC is just one of those, and a small one.


I was thinking about showing the "lost" value of the USA in yen given a 20%+ change in price (exchange rate) and with all the extra dollars that have been printed to provide some context.  It will be large, but the number would also be pointless.  I also considered a place like Stockton CA where property prices fell 30% - goes to show you don't want to invest in something so volatile if you are going to worry about volatility too much - after all, if the USD and property is so bad, it's amazing USD works as a currency (read with heavy irony).

[dsp]

A closer value would be the weighted average going all the way back in time as it shows how much money has actually flown in to the market to get to where we are at.

[PatrickHarnett]

I wrote a nice post yesterday, but lost it because I had a connection fail - so this is the shorter version.  It covered the fallacy of assuming more coins would increase the value.

If you look at a company with 1000 shares at $1 each, the value of the enterprise is $1000.  It does not magically increase if there is a 2 for 1 stock split.  Same with currency, like the US printing a whole lot of new bank notes.  What do they call it - quantitative easing?

So taking a maximum capitalization of BTC at $210M, and current $5 * 7,000,000 coins, means a drop of only $145M.
Note also, that with one block mined, 50 coins could also be the same $210M - that wouldn't be taken seriously, but the argument is that there is some $210M created somewhere before it fell.