Total Bitcoin Economy : $19,120,511.48

[the founder]

Well it's official,   we're down by millions of dollars since the most recent post.   It's a tidbit of good and bad news when brought into current context.   The entire bitcoin economy has shrunk from

June 9, 2011 the total Bitcoin economy was valued at $210,000,000,
September 28, 2011 the total Bitcoin economy was valued at $36,126,021.96
October 17th, 2011 the total Bitcoin economy is now valued at $19,000,000

This also means now that we need roughly 1/2 a million USD invested into bitcoins in terms of services / merchants as well as direct investment.  

This figure is dramatically lower than previously noted because of the same corresponding dramatic decrease in price.   It's reaching equilibrium. At current rates BTC will be trading at $1.xx to BTC by years end,  and will continue to drop until the printing rate will decrease or a sudden dramatic uptick in general public interest in BTC.   Both are related and driven by current prices.  Which most likely won't change it's current trajectory until 2012 when the high rate of BTC creation slows down to a rate that the BTC community can absorb (currently the very high printing rate is out of control compared to very low rate of new adoption levels).

At that point,  we might expect to see a modest increase of BTC to USD exchange.

Debate away and argue how hard statistics don't matter.

This doesn't apply to economics area,  because now it's reaching the point where the decreased value of Bitcoins has generally lowered innovation in the area.   There isn't as much incentive (financially) to innovate as there was when the bitcoins were valued higher.

In an Ideal World:
We'll need the lower the printing rate.
We'll need to increase adoption rate.
We'll need to have some firms adopt BTC credits rather than Microsoft Xbox Live points or Facebook Credits,  something along those lines.

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[evoorhees]

The Bitcoin economy has grown actually. The exchange rate has fallen.

Current market price X Bitcions outstanding =/= "value of bitcoin economy"

[the founder]

The Bitcoin economy has grown actually. The exchange rate has fallen.

Current market price X Bitcions outstanding =/= "value of bitcoin economy"

no man it tanked.  

http://www.flexcoin.com/calc

We printed so many of them when the value was still decreasing.    Causing hyperinflation.   Peter the formula is there as well.

Also the entire valuation of all the BTC combined dropped 200k since I hit submit 2 minutes ago.

Total Value of Entire Bitcoin Economy $18,996,192.35

This however does change by the second,   and will go up and down,  but the trend is down and will continue to be until we slow down on printing them.

[johnj]

So here's perhaps a naive question,

Is it time for a reboot?

AFAIK "Bitcoin" is just a proof of concept.  And it's shown to 'work'.  But the initial release and distribution was so narrow, we have these massive sell-offs from just a handful of individuals.  Now that the 'cryptocurrency' idea is out there and more people are aware, would it be prudent to launch a new chain with some of the lessons we've learned?

[ineededausername]

The real value of bitcoins has been increasing all along.  The speculative bubble has burst, yes.  At the height of the bubble who was talking about innovation?  The only innovation I saw was ASICs for faster mining... to make more profit, not to build an economy.  Now what do we have?  People are reaching out to OWS, to the FSP, making conferences, making businesses out of ideas, etc.  The economy is much healthier, even if the outlook is less optimistic, than it was in March or April.

[the founder]

So here's perhaps a naive question,

Is it time for a reboot?

AFAIK "Bitcoin" is just a proof of concept.  And it's shown to 'work'.  But the initial release and distribution was so narrow, we have these massive sell-offs from just a handful of individuals.  Now that the 'cryptocurrency' idea is out there and more people are aware, would it be prudent to launch a new chain with some of the lessons we've learned?

the proof of concept worked amazing.  The idea behind bitcoin is rock solid.  How it was released and how narrow the bitcoin community was is the problem.

If it was released in a fashion that widened it's appeal.. or got more bitcoins into the street with more people it would have been a very different story.    I hate to say it,  but us Geeks keep it as a community within a closed gate.     We knew how to build something, just not how to distribute it.

[phillipsjk]

Mulitplying the price by the number of bitcoins in existance is too simplistic. Stored bitcoins have no inherent value. Only Bitcoins being spent have value.

Edit: Bitcoin is still an experiment. The client is not really designed for general use. I personally think bitcoin should not be forked until we see what happens with the first drop in the block-reward.

[stryker]

anyone one of a graph that generally shows number of transactions vs btc/usd value?

just wondering what the correlation is

[the founder]

Mulitplying the price by the number of bitcoins in existance is too simplistic. Stored bitcoins have no inherent value. Only Bitcoins being spent have value.

There are no other reliable statistics to use,  plus it's assumed (and highly supported)  that people trade BTC is relation to their value.   So the method, though mathematically simplistic is the most accurate.

[evoorhees]

The Bitcoin economy has grown actually. The exchange rate has fallen.

Current market price X Bitcions outstanding =/= "value of bitcoin economy"

no man it tanked.  

http://www.flexcoin.com/calc

We printed so many of them when the value was still decreasing.    Causing hyperinflation.   Peter the formula is there as well.

Also the entire valuation of all the BTC combined dropped 200k since I hit submit 2 minutes ago.

Total Value of Entire Bitcoin Economy $18,996,192.35

This however does change by the second,   and will go up and down,  but the trend is down and will continue to be until we slow down on printing them.

Again, you are making a serious error in terminology economic reasoning. You are multiplying the market price of a bitcoin by the total bitcoins outstanding, then labelling THAT as the "value of the bitcoin economy"

Why is that an error? Because the "bitcoin economy" is far more than the sum total of Bitcoins. It is the sum total of Bitcoins + the entire ecosystem of systems, goods, services, and intangible capital that constitutes the "Bitcoin economy" + any speculative value ascribed to either of the first two parts.  As a quick example - I own and am building a handful of Bitcoin systems and companies. They have some value, call it "XX".  Now, I also have about 250 bitcoins with a current value of about $600.  Using your calculation, you're adding the $600 + "XX" and calling that equal to $600.  So the only way your calculation is valid, is if my projects have a value of exactly zero, and I promise someone would pay at least $1 for what I'm building =)

You really need to stop attributing the "bitcoin economy value" to the "aggregate market price of all bitcoins."  They are not equivalent in any sense, and you are contributing to a "de-education" of people that read your posts.

[the founder]

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. 






 

[evoorhees]

So here's perhaps a naive question,

Is it time for a reboot?

AFAIK "Bitcoin" is just a proof of concept.  And it's shown to 'work'.  But the initial release and distribution was so narrow, we have these massive sell-offs from just a handful of individuals.  Now that the 'cryptocurrency' idea is out there and more people are aware, would it be prudent to launch a new chain with some of the lessons we've learned?

I promise you a "reboot" would have an even narrower "distribution" than what Bitcoin currently has.

There is no reason for a "reboot" and doing so would shatter the entire value of Bitcoin. A currency that is "rebooted" is no currency at all, and certainly setting such a precedent would preclude any serious adoption of the subsequent currency.

The ironic thing about your statement, is that if a narrow handful of "rich early adopters" are selling off, then it is achieving precisely the more broad distribution you seek.

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. It's fast and efficient for all the transactions I've done with it. Inflation rate is known to all participants, and it has the brand recognition that no alt chain can compete with. When a -fatal flaw- in Bitcoin is discovered, then it makes sense to move to a different crypto-currency. Thus far, Bitcoin is devoid of fatal flaws and that alone is a remarkable feat.

[evoorhees]

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.

[johnj]

and you are contributing to a "de-education" of people that read your posts.

In any rational discussion, if reason to prevail, one side must end up 'in error'.  however, if that 'in error' side never speaks, there can be no discussion.

However, your post has shed some light. I would also agree that the total 'economy' of bitcoin is not simply market value x total.

But what disturbs me is that regardless of the recent 'programs' to spread bitcoin in the last few months... it's still going down vs fiat.  Hard.  I didn't even get into the scene until late August, and I've already seen a a fall of 80% (10->2). As a merchant, that means I gotta sell off my BTC right away inorder to pay for stock.  Until people can pay for stock in BTC, that'll continue.  And until people can be paid in BTC to make the stock, to be sold to the merchant... (of course, unless I'm confused about something).

I think a better way to look at things is as not the 'Bitcoin' economy, but rather the 'cryptocurrency' economy.  Things are looking bright for the blockchain concept - just not so much for the biggest one.

Edit: Ahh yes I agree perhaps a 'reboot' wasn't the best choice of words.  Perhaps I should have said 'fork'.  But perhaps 'reboot' is still a better idea.  If there were some massive global PR about a new 'Bitcoin' which everyone can 'get in on', I could see that working.  Of course these are all big 'ifs', and I admit I'm not educated in market forces at all... but that's why I ask questions

[jjiimm_64]

Why the fuck is anyone paying "TheEgomaniac" any attention?

Because he made a php script to calculate things? Jesus christ.

Shut up and go away. No one likes your bank and no one likes anyone who chooses their username "TheFounder" without even clarifying what they lay claim to founder of.

Also, you're an idiot. Bitcoin is the same as it always was, just an exchange value fluctuation. Happens to the USD all-the-fucking-time, but people still buy and sell and live happy lives because there are products to buy and sell.

Bitcoin doesn't need more fucking monetary investments, it needs more human investment-- people to give a shit about it in the first place to try and sell their products.

but Matthew,  please tell us how you really feel

[plastic.elastic]

The Bitcoin economy has grown actually. The exchange rate has fallen.

Current market price X Bitcions outstanding =/= "value of bitcoin economy"

no man it tanked.  

http://www.flexcoin.com/calc

We printed so many of them when the value was still decreasing.    Causing hyperinflation.   Peter the formula is there as well.

Also the entire valuation of all the BTC combined dropped 200k since I hit submit 2 minutes ago.

Total Value of Entire Bitcoin Economy $18,996,192.35

This however does change by the second,   and will go up and down,  but the trend is down and will continue to be until we slow down on printing them.

Again, you are making a serious error in terminology economic reasoning. You are multiplying the market price of a bitcoin by the total bitcoins outstanding, then labelling THAT as the "value of the bitcoin economy"

Why is that an error? Because the "bitcoin economy" is far more than the sum total of Bitcoins. It is the sum total of Bitcoins + the entire ecosystem of systems, goods, services, and intangible capital that constitutes the "Bitcoin economy" + any speculative value ascribed to either of the first two parts.  As a quick example - I own and am building a handful of Bitcoin systems and companies. They have some value, call it "XX".  Now, I also have about 250 bitcoins with a current value of about $600.  Using your calculation, you're adding the $600 + "XX" and calling that equal to $600.  So the only way your calculation is valid, is if my projects have a value of exactly zero, and I promise someone would pay at least $1 for what I'm building =)

You really need to stop attributing the "bitcoin economy value" to the "aggregate market price of all bitcoins."  They are not equivalent in any sense, and you are contributing to a "de-education" of people that read your posts.

I do agree with you on some points. But i think many ppl think total value of the bitcoin economy as such is because bitcoin isnt a currency.

No matter what kind of bitcoin related business you're working one, it still falls back on fiat currency. As a business owner, you cant put food on your table by using bitcoin.

[wareen]

You really need to stop attributing the "bitcoin economy value" to the "aggregate market price of all bitcoins."  They are not equivalent in any sense, and you are contributing to a "de-education" of people that read your posts.

+1

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.  

Creating a sound feedback mechanism for the coin production rate is about as hard as correctly predicting the adoption rate prior to the start of the blockchain. All of the proposed mechanisms I've seen so far had major flaws which made them unpractical and/or ineffective.

[evoorhees]

But what disturbs me is that regardless of the recent 'programs' to spread bitcoin in the last few months... it's still going down vs fiat.  Hard.  I didn't even get into the scene until lat August, and I've already seen a a fall of 80% (10->2). As a merchant, that means I gotta sell off my BTC right away inorder to pay for stock.  Until people can pay for stock in BTC, that'll continue.  And until people can be paid in BTC to make the stock, to be sold to the merchant... (of course, unless I'm confused about something).

Yeah it is kinda sucky, no argument there. But - until some stability in the exchange rate is achieved (whether at $.01 or $100), people need to not try and use Bitcoin in ways that volatility precludes. What I mean is, even a volatile currency is effective in certain situations. Consider Bit-pay's solution, wherein they allow a merchant to receive Bitcoin and "cash out" instantly upon receipt. This fully eliminates exchange rate risk, but still allows the merchant to receive payment with zero chargeback risk from any country in the world. If you're a merchant, don't try to hold bitcoins (unless you want to speculate on appreciation). Bitcoin is most useful in those situations where it can be purchased, transferred, and sold very quickly. Moving money from Japan to the US very quickly, buying something anonymously, or making a donation to a politically unpopular cause - these core uses are valid even without a stable exchange rate.

Once market use for the above payments is widespread, the volatility will subside. Then, Bitcoin can increasingly be held on to.  Bitcoin adoption will work in stages, and those who try to use it in "stage 3" type behavior before it has reached stage 3 will be disappointed.

If there were some massive global PR about a new 'Bitcoin' which everyone can 'get in on', I could see that working.  Of course these are all big 'ifs', and I admit I'm not educated in market forces at all... but that's why I ask questions

I think that plan would fail miserably, but it's always okay to speak your mind =) Remember that Bitcoin IS open to all people. Anyone can "get in on it."  But like all real commodities, it has a price, and the ability to "get in" is limited by one's funds. This is not a shortfall of Bitcoin, but simply the natural property of a scarce commodity. Creating a new chain that "everyone could get in on" would mean either that it was given away freely based on something other than a pricing mechanism ( a lottery or something), or it was unlimited in its supply (in which case it'd be worthless and impotent in the transfer of value).

Price mechanisms are our friend. Distributing valuable goods with anything other than a free market price will result in serious economic distortions. Create an alternative currency without a market price and a price will set itself in a black market, or shortages will occur.

[the founder]

Bitcoin doesn't need more fucking monetary investments, it needs more human investment-- people to give a shit about it in the first place to try and sell their products.

You're funny Matt ...  you insult me (and everyone else on this forum)  then agree with the person you're insulting.  

Keep up the good work!   Keep stating all the problems,  but never come up with any solutions.  

[plastic.elastic]

I do agree with you on some points. But i think many ppl think total value of the bitcoin economy as such is because bitcoin isnt a currency.

No matter what kind of bitcoin related business you're working one, it still falls back on fiat currency. As a business owner, you cant put food on your table by using bitcoin.

Some of us run bitcoin businesses as a hobby. Anything I earn with my business is just extra play money I pretty much do not use any fiat, just bitcoins.

You just confirmed my point then.

The best BTC can become is a way to transfer money. I dont know if corporations would ever look into BTC.

Maybe this idea has already discussed, but imagining a broker site like Alibaba that only use BTC for every transactions... As its a pain right now to do wire transfer, especially to  a country like China