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Author Topic: What should be the Price of Bitcoin in US$  (Read 1379 times)
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rebelinsideme
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March 04, 2014, 08:35:48 PM
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I believe US $ Bitcoin price should be that of gold for it be financially stable. This way all the traditional economists and value based fundamentals could potentially rationalize bitcoin as universal currency.

Now, The BItcoin price will then start fluctuating based on the usability of bitcoin as currency. Whenever the transaction cost of using anything as currency is absorbed by bitcoin more intrinsic value is added in bitcoin.

ofcourse the price drivers of demand and supply will always be there. for currency its how much do people exchange values in money.

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March 04, 2014, 09:34:18 PM
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God I get sick of stupid people posting stupid questions.
Yes peg it to something arbitrarily like gold. That makes a lot of sense.


The correct answer is that it will be a function of the overal value of the bitcoin economy and the velocity of bitcoins. Maybe bitcoin days destroyed works in somehow for the velocity.
And that will create deflation , which means the price will be forever rising.

Unless someone figures out how to peg a new unit of measuent to Btc on the blockchain which would auto peg the deflating Btc to some non deflating unit based on aforementioned mass x velocity metric.

Either way the price of Btc constantly deflates , just a matter of how to handle it
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March 05, 2014, 01:45:49 PM
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It is hard to talk about gold as stable when you look at this 15% drop of some times ago. Still it might be more stable then other alternatives, we are talking about price of gold in dollars, and it also has its price and... well, inflation. Because of inflation of dollars price of gold back then hit bigger drop then 15% actually. In few years bitcoin price growth would reach exactly same level as mining cost, it would create most stable alternative to hold wealth in the world. Of course it is rather hard to expect what would it be, since it is highly dependable on mining difficulty. Every time people would figure it out or amount of miners would change (not to mention speculation and popularity of bitcoin) price would change. Even though it is expected to hit perfect stability it is hard to tell when would it happen.

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March 05, 2014, 04:23:16 PM
 #4

God I get sick of stupid people posting stupid questions.
Yes peg it to something arbitrarily like gold. That makes a lot of sense.


The correct answer is that it will be a function of the overal value of the bitcoin economy and the velocity of bitcoins. Maybe bitcoin days destroyed works in somehow for the velocity.
And that will create deflation , which means the price will be forever rising.

Unless someone figures out how to peg a new unit of measuent to Btc on the blockchain which would auto peg the deflating Btc to some non deflating unit based on aforementioned mass x velocity metric.

Either way the price of Btc constantly deflates , just a matter of how to handle it

This
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March 05, 2014, 06:19:56 PM
 #5

I believe US $ Bitcoin price should be that of gold for it be financially stable. This way all the traditional economists and value based fundamentals could potentially rationalize bitcoin as universal currency.

Now, The BItcoin price will then start fluctuating based on the usability of bitcoin as currency. Whenever the transaction cost of using anything as currency is absorbed by bitcoin more intrinsic value is added in bitcoin.

ofcourse the price drivers of demand and supply will always be there. for currency its how much do people exchange values in money.



Pegging it to gold's value will ultimately kill bitcoins point to be decentralised.




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rebelinsideme
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March 07, 2014, 04:42:28 AM
 #6

Hey guys, thanks for the posts.

I am also trying to express what I think.

I don't know the answer therefore posting it on blogs to get information and perspectives Smiley
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March 07, 2014, 09:41:20 AM
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Volatility of Bitcoin price is not a problem for the ones who do not care about fiat and gold.  Wink
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March 07, 2014, 09:12:12 PM
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I believe US $ Bitcoin price should be that of gold for it be financially stable.

The "price of gold" is the price for 31.1 grams (troy ounce).

There are like 5.7 BILLION troy ounces of gold and only 12 million bitcoins. 1 bitcoin corresponds to ~15kg of gold (12mn bitcoins vs 180.000.000 kg above ground gold) in terms of scarcity.

In terms of rarity, even the 1oz gold eagle coins issued by the US Mint are more plentiful than bitcoins. And that's just one bullion coin, for a certain weight. There are tens of gold coins, weights, different countries, different years etc - making for hundreds of million of ounces in coins.

Given that:

a) As a collectible, Bitcoin is the first decentralized coin with high rarity (like saying "the first coin minted on metal" - but that's the first coin which was digitally minted so to speak)
b) Bitcoin is ahead of gold in scarcity / rarity compared to gold
c) Bitcoin is more difficult to mine than gold
d) Bitcoin provides a service of online payments which is an enormous business of over >100bn $
e) Bitcoin is ensured to increase in fiat terms due to the tremendous increase of fiat monetary supply - and that's especially true for 4/5 of the countries around the globe which have weaker currencies than the USD or EUR
f) Bitcoin, unlike gold, is not subject to paper manipulation and fractional schemes that have leverages like 1:100
g) Bitcoin can be "squeezed" to very high prices with a few hundred thousand to a million BTCs demand (because the supply is simply not there to cover such demand)

...it seems that it has all the fundamentals in its favor to reach 5-6 digit prices (yes, 6 digits as in XXX.XXX USD). Whether it will or not, is dependent on people's perception of how much it's worth.
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