[Discussion]How to decentralize the price of the bitcoin? Self-moderated.

[darklus123]

~

We can't blame people if why they are doing the HODL scheme. It is because of the loopholes that the current bitcoin system have even if it is giving benefits to most of the users.

I may agree that the percentage of bitcoin being used in illegal activities are much lesser than before, yet I am still pretty sure that the black market might be using other cryptocurrencies.

Also, your idea might be just impossible to achieve, because decentralization is possible thanks to trustlesness. So, to make your system work, you somehow have to find a way to trustlessly measure all the costs of Bitcoin mining operations.

It is actually possible as long as the developers can make something to solve this equation. Mind that all the transactions are being calculated and by collecting all the data we can actually measure the costs of every mining operations. Then possibly the devs could create a system for it. Tho this idea is like digging a hole on the rocks using your hands.

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[BTCforJoe]

I plan on writing more on topic about this, but to anyone that argues that Satoshi's vision was to create Bitcoin to be a currency and not an asset... Sorry, but that's not a valid argument to use to implicate that Bitcoin should be used solely as a currency.

Take actual fiat currency, for example. It's made (literally) as a currency. Does that mean I need to spend it all and not hold any in savings, stocks, bonds, 401k, etc.? Just because Satoshi's vision of Bitcoin was intended to operate as a currency doesn't mean that we can't HODL, and I think it's about time everyone stopped using this as an argument as to what's slowing down Bitcoin's progress.

[TheBeardedBaby]

I plan on writing more on topic about this, but to anyone that argues that Satoshi's vision was to create Bitcoin to be a currency and not an asset... Sorry, but that's not a valid argument to use to implicate that Bitcoin should be used solely as a currency.

Take actual fiat currency, for example. It's made (literally) as a currency. Does that mean I need to spend it all and not hold any in savings, stocks, bonds, 401k, etc.? Just because Satoshi's vision of Bitcoin was intended to operate as a currency doesn't mean that we can't HODL, and I think it's about time everyone stopped using this as an argument as to what's slowing down Bitcoin's progress.

That's different, you use your "paper currency" /which is a big part digital now/ for the day-life expenses.
You have savings for sure, like the saving account, pension fond etc., but all those money are in circulation too, they are not stored somewhere for a long period/of course if you don't keep them in the "jar bank" under your bed/. 

We are talking about banks now. The money in your "saving account" are not actually there, if you go one day and withdraw all the money, it's OK, the bank can handle it, but if all the customers will withdraw their money at once, the bank most likely will be bankrupted, because all those money they have on paper are not actually there, they are in circulation, the bank operate with them, even if you think they are there.

Now back to Bitcoin. If everyone is HODLing for the Moon, when the "currency" is not globally accepted yet, and we have a certain supply + you cannot "print" more just for the obvious reason, then the currency here becomes more an asset.

At the moment the global vision on bitcoin is just a tool to make you rich if you can HODL it long enough.
There always will be whales trying to crash the price to buy more and sell later so huge part of the current supply of bitcoin is blocked due to different reasons.
the main two /three/ are:
- The HODLers /including me/
- LOST keys/passwords
- Satoshi's stash /can belong to both above/

The rest in circulation is just a tiny amount of the total supply. The miners are the ones that are keeping the market alive, paying for new hardware, electricity, loans etc.

I think we have to find a way to change this trend, put a stick in the wheel to escape this closed circle.

[LeGaulois]

I plan on writing more on topic about this, but to anyone that argues that Satoshi's vision was to create Bitcoin to be a currency and not an asset... Sorry, but that's not a valid argument to use to implicate that Bitcoin should be used solely as a currency.

Take actual fiat currency, for example. It's made (literally) as a currency. Does that mean I need to spend it all and not hold any in savings, stocks, bonds, 401k, etc.? Just because Satoshi's vision of Bitcoin was intended to operate as a currency doesn't mean that we can't HODL, and I think it's about time everyone stopped using this as an argument as to what's slowing down Bitcoin's progress.

The Satoshi's vision to create Bitcoin as a currency is a valid argument. He didn't create a cryptocurrency to become an asset. This is valid for Bitcoin but not only, for all the previous digital currencies created before Bitcoin

Of course, we don't deny you can save/hold some coins like we do with a saving account in fiat but there is a difference between HODL 100% of your income and using your paycheck or coins for your daily needs and save what you can save at the end of the month.

If people are hoping to get a cryptocurrency and its advantages to be able to use it in their investment portfolio and don't really care about the purpose of it then it's not going to work as it's supposed to be


"I don't like to eat a fish from the ocean I prefer to eat a fish from the sea, but I have no problem to take a fish from the ocean and throw it away in the sea to it later"
 

[CryptoBry714]

The exchanges cannot control the price of bitcoin; in fact; nobody can. Mining bitcoin is expensive and its hashrate is increasing day by day. Hardware prices and electricity costs vary from country to country. Demand and supply will always affect the price of bitcoin. This has been the case for all assets.

[Samarkand]

...
the main two /three/ are:
- The HODLers /including me/
- LOST keys/passwords
- Satoshi's stash /can belong to both above/
...

I assume that you included the large investors that use a custodial solution like
Coinbase Custody or Xapo in the bolded category as well?

The coins that are stored by these custodial services are also not available for the price discovery.
Obviously, these services also store a much bigger BTC amount than the casual holders. According to
this Bloomberg article Xapo alone is storing nearly the BTC equivalent of 10 billion $ for their clients.

Probably there are also a non-negligible amount of BTC in time-locked transactions, which
can´t be sold even if the market drops 95 % tomorrow.

[d5000]

huge part of the current supply of bitcoin is blocked due to different reasons.
the main two /three/ are:
- The HODLers /including me/
- LOST keys/passwords
- Satoshi's stash /can belong to both above/

The rest in circulation is just a tiny amount of the total supply. The miners are the ones that are keeping the market alive, paying for new hardware, electricity, loans etc.

I think we have to find a way to change this trend, put a stick in the wheel to escape this closed circle.

I agree. The problem being that if Bitcoin was used massively for "circulation" in the current development state, transaction fees would skyrocket again. The only exception being to use centralized exchanges/trading even more. Then we had more money for "price discovery", but also more risky deposits at centralized "single points of failure".

And I will always sustain the opinion that for true price discovery Bitcoin must be traded more against goods and services, not only against other (fiat and crypto-) currencies. A factor contributing to the stability of fiat currencies is that people associate products with concrete prices. For example, if we reached the point that "a bread must cost between 0.0001 and 0.0002 BTC and a car between 1 and 3 BTC" then we'd done a step ahead in this sense.

But first we probably need a scalability solution, like LN or (or better: and) sidechains.

[coinpedia240]

Trades don't control the cost of bitcoin; individuals do. A trade is only a facilitator for the purchasing and offering of bitcoin. You can't make the cost mirroring the assets expected to mine or to help the system. How might you do it when we have an alternate power cost around the world; distinctive machines and even machines with similar specs at an alternate cost?

[BTCforJoe]

The exchanges cannot control the price of bitcoin; in fact; nobody can.

This is not particularly true. While not practical, anyone or any organization that is in control of a large amount of Bitcoin can create a sell wall on multiple large exchanges (or a single large exchange) with more volume than all the current sell orders that are at a higher cost. If they continue to do this, they effectively "controlled" the cost of Bitcion, albeit temporarily until the price can neutralize itself according to supply and demand.

A classic example of this is back in May when the Mt. Gox trustees (irresponsibly) sold off 8,000 bitcoin on live exchanges (like idiots), which is suspected to have dumped the overall price of Bitcoin (from over $9,200 to less than $8,500 within hours), as you can see in the historical data below:



I just wanted to address the misconception that the price of Bitcoin cannot be influenced by a single entity, because it absolutely can.

[d5000]

But first we probably need a scalability solution, like LN or (or better: and) sidechains.

We already have the solutions, but it's far from ready/stable/user-friendly yet.

Yep, that's what I meant - LN is very much experimental, not to talk about channel factories ...

But current Bitcoin community only interested on LN along with channel factories and Eltoo. Other sidechain/off-chain such as nimblewimble are ignored and the developer eventually make their own cryptocurrency for the development.

I think it would be better to base the scalability solution on many pillars, not only on LN. LN is definitively a cool technology, but a LN transaction hasn't all properties of an on-chain transaction. Sidechain transactions are closer to mainchain transactions. Ideally, they could be used for larger tx and LN for micropayments, being the main chain reserved for the really big and settlement operations.

The good thing, however, is that if the sidechain tech/MimbleWimble works, then nobody can hinder people to use it. However, if we concentrate too much on LN, and a critical vulnerability or limitation appears, this could seriously affect Bitcoin's value proposal. Most hodlers have big hopes on LN - me included - but if we had some serious research on other, competing technologies then in the case of failure we always have a fallback. If not, then Bitcoin would be viewed only as "digital gold", and I have problems with this vision, because I think a digital gold will be extremely volatile forever.

DEX are a nice technology to prevent price manipulation - here I fully agree. The missing piece being a "stable" currency which could be bought at such an exchange, to be able to move to it in volatile times.

[Samarkand]

...
If not, then Bitcoin would be viewed only as "digital gold", and I have problems with this vision, because I think a digital gold will be extremely volatile forever.
...

Would high volatility also be a problem if the high volatility is heavily skewed to the upside? You can´t
underestimate the importance of the continuous block reward halvings. These events should always put upward
pressure on the BTC price and therefore in the long-term Bitcoin should always go up.
Other developments like the continuous loss of BTC that are lost/inaccessible forever, also
decreases the available supply even further.

I concede that high volatility is probably bad for BTC adoption, because it scares many people and
not everyone is comfortable with investing a decent percentage of their net worth into an asset like this.
But at a certain price point (e.g. when BTC goes up another 20x from here) people will be forced
to reconsider their fear of a volatile asset out of simple self-interest. You can´t ignore it when
all your peers are getting more wealthy due to BTC forever.

The possibility of "crazy gains", "easy Lambo", "moon", is just a bait to get people into Bitcoin
if you ask me. Many people initially buy their first BTC for exactly these objectionable reasons,
but later realize that it actually works pretty well and ideally they also get more interested in the technology
and the economics of Bitcoin as a result.

[TheQuin]

Would't be better if the price reflects the real effort to "create" (mine) the bitcoin, or the effort to support the network like the electricity costs + hardware investments etc.

It actually works the other way around. The price of Bitcoin decides how much it costs to mine. When the cost of mining is lower than the current market price everyone goes crazy buying more equipment and the push they network difficulty up. When the price falls, unprofitable miners stop and the network difficulty goes down.

Supply and demand is what drives the whole thing, not mining.

I concede that high volatility is probably bad for BTC adoption, because it scares many people and
not everyone is comfortable with investing a decent percentage of their net worth into an asset like this.
But at a certain price point (e.g. when BTC goes up another 20x from here) people will be forced
to reconsider their fear of a volatile asset out of simple self-interest. You can´t ignore it when
all your peers are getting more wealthy due to BTC forever.

When the price is 20x what it is now it will take 20x as much money to move the price as well. It will naturally become less volatile as it matures and has a higher value.

[OneyZ]

I think the reason is we can't ensure the same environment; resources and cost for everyone and every country. These factors will always defer from one place to another. So; it is not only about the demand or supply; which has been there in the economic model for a long time; rather it is about how cost effectively you can mine coins and sell them on market. That is why we can't see people settling for a single price worldwide.

[Este]

According to me you cannot really depend and count the price based on electricity bills; labor costs and other things required for mining as they vary from country to country. So; it will be unfair for people who have to pay a lot of money as electricity bills to compete with other miners who have access to cheaper electricity. Moreover; demand and supply will always decide the price of any tangible or intangible assets and that's the law of economics.

[d5000]

Would high volatility also be a problem if the high volatility is heavily skewed to the upside? You can´t
underestimate the importance of the continuous block reward halvings. These events should always put upward
pressure on the BTC price and therefore in the long-term Bitcoin should always go up.
Other developments like the continuous loss of BTC that are lost/inaccessible forever, also
decreases the available supply even further.

That would only be true if Bitcoin had no competitors - not only cryptocurrencies, but also gold and other "real world" assets, and if all Bitcoiners were hodlers (and nobody would sell sometimes to take profits).

And I think people are over-estimating the influence of block halvings. Block halvings only reduce supply inflation by the half, the impact on total supply available on exchanges is much more limited (because miners are, by far, not the only people selling BTC). But inflation is already pretty low.

The long-term bull market we're still in (despite the last bearish months) is mainly caused by the fact that Bitcoin is still a new asset, and only in 2017 it achieved a significant "market cap". I believe that there's still potential to the upside, but the phenomenal gains from the last years will not be possible anymore. The curve will be flatter and flatter, and bearish/sideways phases will tend to be longer.

But at a certain price point (e.g. when BTC goes up another 20x from here) people will be forced
to reconsider their fear of a volatile asset out of simple self-interest. You can´t ignore it when
all your peers are getting more wealthy due to BTC forever.

If Bitcoin goes up other 20x then it will be probably a bad moment to buy. The price increases do not "come out of thin air", you must always take into account that if you want to profit from simple hodling, then after a certain time you'll want to sell (for other currencies or goods/services) them for significantly more to another person who also thinks he/she will make profit, and so on. That cannot go on infinitely, so there will always be crashes, and at some moment the long term bull market will transform into a sideways market, but still with crazy swings. The only way to fix that is to use it more like a currency.

[crazybtclover]

Bitcoin is being famous around the world day by day and new miners are staring to mine bitcoin. So we do need a revolutionary change in bitcoin pricing. But it is simply not possible to make the price based on ones cost. It will vary too much from place to place which will eventually be a serious problem. So selecting one standard is the only way to stop a chaos to spread around the bitcoin world. There is nothing to be done. Sometimes centralization is necessary for proper management. It will be better if we don't mess with the price of bitcoin.

[EmmyWork]

There is only one major force that will affect the price of the coins; that is the demand and supply of the coin the people holds for it. Other then that; no other factors can be responsible to manipulate the price level.

[OrlickThunder]

The price levels are not hampered or affected by the exchanges. It is the demand among the people that they hold for the coins. If the coin has higher demand; the price will be high and vice versa.

[Symproverse]

Generally; I do not agree with the statement that price of bitcoin is controlled by the others. I believe that price of crypto currency in the market is determined by the supply and demand. There can be manipulation of such demand but I think bitcoin is not involved in that.

[Heisenberg_Hunter]

As the quote reads "Bitcoin market is highly speculative and largely unregulated. Invest in them which you can afford to lose". This wasn't the one satoshi thought and investing in btc ain't an investment. Does anyone consider having money in their fiat raise in future? For instance, one has $10000 this year and has kept them in secret shelf for 10 years. Once after 10 yrs, this would be the same $10000. Bitcoin is meant to be used as a payment tool and a digital alternative to the fiat money rather than investing and Holding them for future profits. Bitcoin was not created to be used as an alternative to Gold/Silver which would appreciate in future. Limitation in total supply is another factor which is why Bitcoin is being compared to Gold.

Hence there should be adequate adoption of btc in the daily lives of people. For this to happen there needs to be a large portion of the coins to be circulated among the people rather than whales holding them in wallets. Moreover the cryptocurrency has become more of a holding stock rather than a using them as a digital money.

Above all, mining also consumes huge volume of electricity and money and price of the coin is also somehow based on the value to create a new one. Hence unless there isn't a larger adoption by the population,global acceptance and holders holding the btc, we won't see the speculation to end and the price will pump and dump always. There may be a larger adoption and global acceptance in future, but holders liquidating their btc would never happen and hence the rich gets richer. Also, btc is becoming more of a centralized currency with bitmain dominating the mining part. These doesn't seem to be a good road for btc dominating the fiat money.