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

[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 ?