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Author Topic: When does adoption begin to push up BTC price?  (Read 2067 times)
BittBurger
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March 18, 2014, 12:50:47 AM
 #1

We all saw China frantically purchasing all at once, thereby shoving the price from $300 to $1200 practically overnight.

Now all that nonsense is gone, Gox failed, etc.

I just read an article today stating:

"The number of business accepting Bitcoin as a currency has grown sharply in the last year.  They now number in the thousands."

At some point adoption levels need to start "latching into" the market price, and begin "dragging it upwards". At some point, speculation value will be replaced by demand, right? Its just strange to me that we aren't seeing that yet.  I often wonder what the "true value" of a Bitcoin is, if you were to eliminate speculation.

By true value, I mean its value supported 100% by adoption, commerce, and demand for more.  We must still be in the lower hundreds.  Because despite thousands of new merchants, the price doesn't seem to have begun nudging upwards permanently.

-B-

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WillemStelen
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March 18, 2014, 01:05:15 AM
 #2

We all saw China frantically purchasing all at once, thereby shoving the price from $300 to $1200 practically overnight.

Now all that nonsense is gone, Gox failed, etc.

I just read an article today stating:

"The number of business accepting Bitcoin as a currency has grown sharply in the last year.  They now number in the thousands."

At some point adoption levels need to start "latching into" the market price, and begin "dragging it upwards". At some point, speculation value will be replaced by demand, right? Its just strange to me that we aren't seeing that yet.  I often wonder what the "true value" of a Bitcoin is, if you were to eliminate speculation.

By true value, I mean its value supported 100% by adoption, commerce, and demand for more.  We must still be in the lower hundreds.  Because despite thousands of new merchants, the price doesn't seem to have begun nudging upwards permanently.

-B-

Permanently is a hard word. Stable is also a hard word in the bitcoin world so dont expect too much reasonable things to happen
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March 18, 2014, 01:08:01 AM
 #3

The recent adoption has been priced-in already. Question is when will regular Joes notice it and start pouring money in?
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March 18, 2014, 01:10:19 AM
 #4

Actually I think the current dynamic is actually one of coins moving from the hands of very early adopters to overstock and tigerdirect for example, who then sell for fiat.

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March 18, 2014, 01:34:29 AM
 #5

overstock isn't selling to the market.

Give a man a fish and he eats for a day.  Give a man a Poisson distribution and he eats at random times independent of one another, at a constant known rate.
BittBurger
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March 18, 2014, 01:59:47 AM
 #6

Ok.

I still feel like there's a bubbling "number" for the real value of Bitcoin, which is "bubbling" around at ... say .... $320 .... and everything above that is speculation value.  So next month that number bubbles to $340 .... then $410 in a few months ....

Eventually at some point, that "real value" matches the "current market value" .... and from that point the numbers start to rise ... being dragged upwards by actual adoption and supply/demand.

Versus speculation.

-B-

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March 18, 2014, 02:02:57 AM
 #7

It's all speculation. When you buy bitcoin with the purpose of immediately selling them again for a product or service you are speculating that the money you pay for them will turn out to be worth the desired product or service. There is no such thing as not speculating in finances. Not even if you are not aware that that is what you are doing.

Look inside yourself, and you will see that you are the bubble.
BittBurger
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March 18, 2014, 02:04:20 AM
 #8

There are still two sets of numbers.

1)  The real value of bitcoin based on adoption and supply/demand for commerce
2)  The value of bitcoin motivated by speculation.

I don't believe its all speculation.  I believe there are two levels that make up the current price.

At some point, adoption/supply/demand for commerce will begin to push up the market price.  There may always be a buffer of speculation on top of it, but we should see a continually increasing value overall once this starts to happen.  Right now all we see are high values that "dont crash as far".  That tells me the "real value" is slowly increasing ... as a subset of the current market value.

-B-

Bitcoin's true purpose defined in Satoshi's message on the Genesis Block:
"The Times 03/Jan/2009 Chancellor on brink of second bailout for banks"
View it on the Blockchain | Genesis Block Newspaper Copies
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March 18, 2014, 02:07:48 AM
 #9

The real value is always whatever the immediate going rate is. Which is also pure speculation. You can't separate the two, they are the same.

Look inside yourself, and you will see that you are the bubble.
BittBurger
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March 18, 2014, 02:24:19 AM
 #10

You know what I am getting at.  

There is absolutely a speculation price, and a more realistic price moved by adoption/commerce demand.

There have been countless threads on the topic, usually titled with:  "Whats the real value of Bitcoin".

Countless articles.  you know what I mean.

It is not all the same thing.

This is sort of taking the conversation off track.


Bitcoin's true purpose defined in Satoshi's message on the Genesis Block:
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March 18, 2014, 02:26:38 AM
 #11

I remember reading somewhere that if bitcoin currently was merely used as a payment system and not an investment vehicle the price would be about $60. I think it was Marc Andreessen who recently said this.


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BittBurger
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March 18, 2014, 02:28:02 AM
 #12

Yes and other articles that state if BTC were to take over the market currently serviced by Western Union and Amazon.com alone, the price would be forced upwards to $40,000 per BTC.

This is what I am referring to.

That isn't "speculation".   That is a value moved by demand/supply/commerce.

As I said there may always be a "buffer" of speculation on top of the 'real' value ... but at some point the 'real' supply/demand/commerce is going to start pushing the price upwards without stopping.  Even if it only pushes it slowly.   

Im wondering when that will begin.

-B-

Bitcoin's true purpose defined in Satoshi's message on the Genesis Block:
"The Times 03/Jan/2009 Chancellor on brink of second bailout for banks"
View it on the Blockchain | Genesis Block Newspaper Copies
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March 18, 2014, 02:41:00 AM
 #13

Threads like this remind me why it's fine that I don't know what the price will be tomorrow or an hour from now. The price is whatever the total market dictates it to be, whatever the current majority motivation. I don't worry about it. Mostly because it doesn't much matter but also because it is pointless without a way to get solid numbers.

Look inside yourself, and you will see that you are the bubble.
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March 18, 2014, 02:44:28 AM
 #14


By true value, I mean its value supported 100% by adoption, commerce, and demand for more.  We must still be in the lower hundreds.  Because despite thousands of new merchants, the price doesn't seem to have begun nudging upwards permanently.


For Bitcoin to find its 'true' value, a long slow deflationary (price) period is required, signified by a lack of new speculative capital coming into Bitcoin and holders of Bitcoin gradually cashing out for USD. In short, Bitcoin will never find its 'true value' so long as the market is infested with almost purely speculative capital. The volatility that Bitcoin has experienced for much of its short life renders it totally unsuitable for being used as a reliable means of exchange or store of wealth. The speculators need to be scared away and the best way for that to happen is for a prolonged low volatility stagnant bearish period, discouraging holding, encouraging Bitcoins to be actually spent, all while hundreds and hundreds of Businesses adopt Bitcoin as a payment option.

The true value of Bitcoin could grow to be massive, but for that to come to any long lasting fruition, I stress again that the speculators chasing fast bucks need to be shaken out.

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March 18, 2014, 02:59:58 AM
 #15

Yes and other articles that state if BTC were to take over the market currently serviced by Western Union and Amazon.com alone, the price would be forced upwards to $40,000 per BTC.

This is what I am referring to.

That isn't "speculation".   That is a value moved by demand/supply/commerce.

As I said there may always be a "buffer" of speculation on top of the 'real' value ... but at some point the 'real' supply/demand/commerce is going to start pushing the price upwards without stopping.  Even if it only pushes it slowly.   

Im wondering when that will begin.

-B-

You would also need to know and account for the future velocity of the bitcoin in the system.  This is a big unknown, and made all the more so by the fact that bitcoin was designed to be capable of a very, very high velocity.

The faster the bitcoin moves, the less of it would be needed to conduct a given daily transaction volume.  Tools could be developed to keep bitcoin moving at a very high velocity.

I don't know how velocity is expressed mathematically, but it is pretty easy to imagine that in a perfectly efficient bitcoin system, bitcoins can transfer every block, so the fastest possible cycle time would be 10 minutes.

If every coin transacted every 10 minutes, currently that would be $48 Billion per hour, $1.1 Trillion per day, or $400 Trillion per year.  Coins could move even faster with off-chain transactions that settle in seconds.  But if people keep savings in bitcoin, and considering permanently frozen bitcoins that add zeros when calculating the average velocity, it could be much lower as well.

I think forecasting what the velocity will be is the tricky part of answering your question.  It would be very sensitive to technological, social, and economic factors.  Speculative behavior itself would even impact the velocity.
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March 19, 2014, 08:15:49 PM
 #16

It's all speculation. When you buy bitcoin with the purpose of immediately selling them again for a product or service you are speculating that the money you pay for them will turn out to be worth the desired product or service. There is no such thing as not speculating in finances. Not even if you are not aware that that is what you are doing.

yes it is all speculation. but speculation plays really big role in our crypto-world.
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March 19, 2014, 08:30:17 PM
 #17

It is speculation which drives the whole crypto environment. We are holding because we speculate on its value in the future, otherwise we would sell them right away.
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March 19, 2014, 08:36:43 PM
 #18

overstock isn't selling to the market.

Yeah they are, they use Coinbase as payment provider.

Overstocks CEO however, is a Bitcoin-believer and has invested a considerable amount of his personal funds in Bitcoin. But since the company has all its expenses in fiat, it would be hard for them to keep their Bitcoin income as Bitcoin instead of converting it back to fiat.
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March 19, 2014, 08:43:46 PM
 #19

It is speculation which drives the whole crypto environment. (...)

True, there is no such thing as a true value in bitcoin besides its speculative value. If there would be no exchanges, but only merchants and customers, they would have to argue (speculate) about the price for a product/service.

Merchants and customers would then look at other (bigger) merchants and customers, to which price they agreed to.

Merchants and customers would do the work of the exchanges, that is all. Problem with the value of bitcoin is, that it is highly volatile because noone can assure you, that it will be there tomorrow.
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March 19, 2014, 08:51:21 PM
 #20

At most times, speculation is 95% of the price and adoption is 5% of the price. Sometimes during the 'bear markets', adoption reaches as much as 10-15% of the price but speculation is still 80-85% of the price.
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