Total Bitcoin Economy : $19,120,511.48

[phelix]

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I am on board with improving it.   I'm being serious...  I need to figure a way to create a true value of the BTC economy using existing tools so individuals can update and check it in real time.

The way I came up with it appears to be valid in my opinion,  however...  objections from you guys does lead me to believe that you want more input into the variables to make it more robust...  tell me what to do and i'll do it.

The only thing I ask is that I need existing figures to input.. 

charts would be much better than single numbers

what I thought about adding to my site was a graph of bitcoin days destroyed * current market value (in a graph together with market value itself)

I am taking my time with this one and other graphs, because they do not look so good      maybe I should just go for it and try and hit the market

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[phelix]

If I had 20million USD laying around I'd probably buy out the current BTC market.

Or maybe offer an insurance backing service of some sort, insuring the value of your BTCs up to $1 each.

I think the problem is not many people have 20 million USD laying around that are involved with BTC

It's not necessary for one person to put up money to buy out the whole market...lot's of individuals with smaller amounts would do that as the price creeps lower.  The floor price is set by the demand for coins for facilitating commerce (which we know is not much right now).  Anything above that floor represents savings demand (aka speculation).

Here are some wild guess about what is needed for actual commerce today.  If you assume 10,000 people wanted to retain $100 worth in bitcoin just to have on hand for spending, then the implied price of bitcoin would be $0.13.  If 100,000 people wanted have $100 spending money, or 10,000 wanted to have $1,000 in spending money, then the implied price is $1.30.  $100 seems like a reasonable bare minimum that someone interested in using bitcoin for commerce would want to have on hand for spending.  Currently, I'd guesstimate that the fundamental value of bitcoin is definitely less than $1 and probably less than $0.25.  Everything above that reflects the savings (speculation) demand.  Of course, if actual commerce with bitcoin slows down, then the fundamental value could fall as well.  And, inflation is always eating away at the price.

One area of commerce that I've found bitcoin to be particularly convenient is paying for software related services (programming, website design, logos, graphics, etc).  I think if someone put together a nice site focused on software development related services where people could offer their talents in exchange for bitcoin, it might help get some more commerce going.

+1  really good post

I also like the glbse idea very much.

[Steve]

If I had 20million USD laying around I'd probably buy out the current BTC market.

Or maybe offer an insurance backing service of some sort, insuring the value of your BTCs up to $1 each.

I think the problem is not many people have 20 million USD laying around that are involved with BTC

Sorry for cross-posting, but I have the same idea.
   
We need a Bitcoin Foundation.

Sad to admit it, but bitcoin society need credible trusted organization, which would regulate the market of bitcoins. Some rich man could take on this responsibility, but it would be much better if it was an open non-profit organization with the Supervisory Board consisting of eminent people with a good reputation.

This organization will accept donations in fiat money and at least guarantees the minimum price on bitcoins. For example, if the organization took donations for the $ 1 million, it can guarantee a price not less than 1/7.5 = $ 0.13 per bitcoin.

I believe that it is possible to imagine a more subtle mechanisms, but they must be clear to all market participants.

It's a nice idea, but has lot's of problems.  For one, it creates a central authority...what happens when that authority is compromised (perhaps shutdown by a gov't)?  I once thought about having an option on the exchanges to place a special bid that represented the amount of dollars (or other currency) you'd be willing to spend if the price went low enough...across all exchanges, the sum total of these special bids would be divided by all bitcoins ever mined to create a floor price...all these bids would execute if the price ever reached that floor.  However, people could just cancel those bids if the price started going low enough...so in the end, such a thing would be pretty useless (and needlessly tie up peoples' money at an exchange).

Maybe better indicators would help people estimate the fundamental and speculative demand.  That in turn might give some people more confidence that there actually are real support levels for the price of a bitcoin.  I'm not sure exactly what kind of indicators would help however.

[freeminer]

I understand the reasons for backing them,  I don't understand the reasons on why anyone can do it profitably.

I'm talking about non-profit organization created for market stability. This organization will accept donations in USD. Every day they will calculate current proportion between amount they have and total amount of BTC and set their price for BTC in USD. They will ensure that they can buy all the bitcoins at this price.

[Are-you-a-wizard?]

I understand the reasons for backing them,  I don't understand the reasons on why anyone can do it profitably.

I'm talking about non-profit organization created for market stability. This organization will accept donations in USD. Every day they will calculate current proportion between amount they have and total amount of BTC and set their price for BTC in USD. They will ensure that they can buy all the bitcoins at this price.

Only somebody as retarded as Atlas would come up with something like this. So hows it going old friend?

[freeminer]

t's a nice idea, but has lot's of problems.  For one, it creates a central authority...what happens when that authority is compromised (perhaps shutdown by a gov't)?  

This organization will be absolutely legal as well as Wikipedia or Apache Software Foundation. It would be difficult to shutdown it. Also, there may be more than one such organization. For example one in USA, one in Europe, one in Russia or China.

Maybe better indicators would help people estimate the fundamental and speculative demand.  That in turn might give some people more confidence that there actually are real support levels for the price of a bitcoin.  I'm not sure exactly what kind of indicators would help however.

Yes, it's a good idea, we should think about it.

[freeminer]

I understand the reasons for backing them,  I don't understand the reasons on why anyone can do it profitably.

I'm talking about non-profit organization created for market stability. This organization will accept donations in USD. Every day they will calculate current proportion between amount they have and total amount of BTC and set their price for BTC in USD. They will ensure that they can buy all the bitcoins at this price.

Only somebody as retarded as Atlas would come up with something like this. So hows it going old friend?

I do not understand your skepticism, my young friend. Do you have a better idea?

[BitcoinPorn]

People are creating alternative chains... but so far I see none that are an improvement on Bitcoin, mainly because Bitcoin as a protocol or "set of rules" has not shown any serious flaw. It is secure and works as described.

I have heard different.

SolidCoin has highlighted another problem in the Bitcoin protocol. It it susceptible to a drop off in "mining power", which is essentially the people who process transactions switching to more profitable things such as SolidCoin. Three variants of Bitcoin, NameCoin, IXCoin and I0Coin have *ALL* failed due to this flaw. SolidCoin, featuring improved algorithms is safe from these attacks, and IXCoin and I0Coin have recently been re-released featuring SolidCoin's algorithm. Bitcoin can still collapse from this flaw in its protocol, which means if you have any significant amount invested in Bitcoin it is possible your Bitcoins may be frozen and unable to be moved for days or even weeks.

There is a lot more Bitcoin flaws listed on this page http://solidcoin.info/solidcoin-ready-for-bitcoin-collapse.php

[johnj]

People are creating alternative chains... but so far I see none that are an improvement on Bitcoin, mainly because Bitcoin as a protocol or "set of rules" has not shown any serious flaw. It is secure and works as described.

I have heard different.

SolidCoin has highlighted another problem in the Bitcoin protocol. It it susceptible to a drop off in "mining power", which is essentially the people who process transactions switching to more profitable things such as SolidCoin. Three variants of Bitcoin, NameCoin, IXCoin and I0Coin have *ALL* failed due to this flaw. SolidCoin, featuring improved algorithms is safe from these attacks, and IXCoin and I0Coin have recently been re-released featuring SolidCoin's algorithm. Bitcoin can still collapse from this flaw in its protocol, which means if you have any significant amount invested in Bitcoin it is possible your Bitcoins may be frozen and unable to be moved for days or even weeks.

There is a lot more Bitcoin flaws listed on this page http://solidcoin.info/solidcoin-ready-for-bitcoin-collapse.php

Oh gosh.  No need to redirect people to a scam.

[mpfrank]

Why reboot? You want to just negate that $18 milion people are holding?

I personally don't want to reboot it...   but you know...    if we launched a fork OR had a consenus within the BTC community to halt printing of BTC.

Moving forward the only on miners transaction fees (no more printing) you'll see the prices stablize and rise.   In other words make it the year 2140 tomorrow.   That would send BTC rising in value and most likely would attract investment again into it.

That's my opinion,   I just think Satoshi had a great idea.... a REALLY great idea,  but he grossly misgauged the adoption rate....   

We needed to stop at 6 million coins,  not 21 million coins. 

Please do create a fork with your proposed rules, then we can see what the market prefers.

My suggestion for a fork would be:  Modify the reference client so that after a certain block number, only transactions from users who agreed to abide by a certain price floor (say $1/BTC initially) would be accepted.  If the major pools adopted the new client, it would become the de facto standard.  Periodically, the community could agree by consensus in this manner to raise the price floor steadily until it reached levels high enough to allow Bitcoin to take over the world economy.

[allten]

I agree with the OP that the current money injection rate couldn't support the high prices over the last few months; however, there are two competing perspectives on this issue.

1) Centralized solution
2) Decentralized solution

Advocating that we fork the chain or create an alternate currency simply because Bitcoin does not meet someone's expectations is a mentality of centralized control. It is impossible to create a truly decentralized currency like Bitcoin and have it counter all the irrational market decisions we as individuals make. If we changed the injection rate now (by forking or new alt-currency) we would only be doing it again down the road (another fork) and this is nothing more than centralized control. The reality: few would follow or such actions would simply divide, counquor, and destory all decentralized currencies.

The Decentralized solution: trust the market to sort it self out. Those that reconize this problem should short it helping the price to acheive a value that can be sustained faster.
Those proping up the price from its fundamental value will be punished. Those that helped it acheive it fundamental price are rewarded. Why wouldn't you want it any other way than that?
That's what free markets are all about. Trying to create a currency where no one goes unpunished for irrational decisions is impossible without centralized control and a huge loss of freedom.

The money injection rate is not the problem. The problem is all the people that made the irrational decisions to pump it up and sustain it over the last few months. Let them be punished and hopefully they will have the humility to rid themselves of their greed, their fear, and learn a lesson so they do not do it again. (My self included - I've had an expensive lessen).