I'd like to make a few points. I've been drinking, and I can't sleep. So now I will do my best to give context to the class warfare that is readily apparent in this forum.
Yes, there are quite a few of us who are cheering the decline in value, both because we are in short positions (disclaimer: me = 100%), and also because we see a re-balancing underway in the valuation of bitcoin
in the long term. There's those of us who strongly feel that a lower price point and re-balancing is critical to bitcoin success and adoption. We abhor the manipulator and his tactics, and dream of the day that an increased use of Bitcoin as a medium of exhange will come. Hopefully sooner rather than later.
Further, since we're all participating in this forum, and we all want the Bitcoin to succeed
in one form or another, we need to start to come together as a cohesive unit to understand that there are two very distinct camps, and further, two very different ways of thinking going on.
Given any forum participation, you are already familiar with the two different camps. For those who are still not indoctrinated, let me elucidate.
Store of Value camp (bulls):
You claim supreme knowledge, and obsess over the bitcoin being a store of value. You believe that higher prices mean less volatility, and claim that lower prices will mean higher volatility. Further, you think that higher prices will mean less chaos and wider adoption.
Because of this, you clamor for higher prices, and come up with semi-creative insults, twisted logic and economic theories that
sound intelligent, but are actually quite flat and are for the most part speculative and lacking in any real research.
Some of you use flat out mental gymnastics to justify your claims, and virtually no-one has bothered to cite analogous use case or examples to back up their statements. For you, Bitcoin has has become an almost purely emotionally based belief system, and even though it quacks like a duck, and looks like a duck, you are staunch in your belief that bitcoins are a Store of Value.
From what I have read, it's all guesswork, duct tape and emotion.
So, you believe that Bitcoin is a method to store value. I would suggest to those extremists here who believe such things, that you please find your way to a number of existing PM offerings, and go the proven commodities route to lose your money. Go store value in something that is both digital and backed by thousands of years of trust. You should probably move to the c-gold forums.
I'm going to demonstrate to you why Bitcoin is in fact NOT a vehicle for storage of value in a moment. First I need to address the Bears.
Method of Exchange (bears):You claim supreme knowledge, and were once bullish in regards to Bitcoin. You believe that lower prices will facilitate increased usage as a method of exchange, and you see the current price point as unsustainable. Congratulations, you're pretty much on point. In a minute I'm going to demonstrate why you're right. However, you are insensitive to the Bulls in these forums, and though your gut is right, you have very little to back up your own economic theories as to why Bitcoin is a better method of exchange than a store of value.
You clamor for lower prices, and believe that a psychological entry point of 1:1 (dollar pegged) is the right course of action. You come up with creative insults, twisted logic and economic theories that
sound intelligent, but are actually quite flat and are for the most part speculative and lacking in any real research.
Some of you use flat out mental gymnastics to justify your claims, and virtually none of you has bothered to cite analogous use case or examples to back up their statements. For you, Bitcoin hat has become an almost purely emotionally based belief system, and even though it quacks like a duck, and looks like a duck, you are staunch in your belief that bitcoins are a Method of Exchange.
In this case, I agree 100%. Sorry, Bulls.
Now for the images that back up my point!Here's a graph of current mining statistics, including network difficulty and aggregate P/L based on averages
What does this chart tell you?
1. Total miner revenue has gone down
a. When revenue goes down, weak and inefficient hands are eliminated
b. Network hash rate goes down (wag the dog.. nobody's decided yet whether there's a correlation between hash rate and price. Hint: there is one)
c. Electric costs are eating away at total network mining profits at a rate of 125%. Miners are underwater.
d. There is no profit margin
2. Transaction costs are still at a premium!
a. When you send 0.1 bitcoins, it costs roughly 2.82 to send that transaction.
b. Mining is over subscribed!
c. Total network power is currently a competition in a race to the bottom!
d. Like it or not, it's a matter of weeks before 40% of miners 1. liquidate their hoarded coins and 2. liquidate hardware
Do you see what I'm getting at? With no commerce, and with Bitcoin continuing to be a purely speculative vehicle, you Bulls are digging your own graves. Once you increase the price, you'll encourage even more miners to come into the fold and take fees for providing near DoD level security to your transactions. You know, the transactions for Poker, Alpaca socks and Mushrooms from Silk Road.
Now, if we can find a price parity where there are merchants and customers cancelling each other out in their in and out exchanges for their flavor of fiat, then we have a real economy. Currently, you're all fixated on the speculative store of value, and trying to buy your own private islands.
News Flash: Not going to happen. Sorry!
Stop believing that Bitcoin is a Store of Value, and watch what happens! Once bitcoin ceases to be used as a speculative vehicle for libertard freedum fighers durhurr! you'll see that the bad name that has been associated with it will start to wane, and that a lower price point (where miners aren't making 2.88 per transaction on average) will encourage more adoption.
$1 is reasonable. Hell, even $1.50 is reasonable. $30 is not reasonable right now. Perhaps in the future it will be, but until that time, we need to back fill the entire system with real commerce, and provide tools for entire distribution chains to use bitcoin as a method of exchange, rather than a store of value.
As long as there are those of you who are credit worthy and able to manipulate the price upward, and facilitate outright fraud and pyramid schemes using bitcoin as vehicle to your success, bitcoin will never rise to prominence. Period.
Bears: be nice to your bullish compadres! They have not seen the light yet, and they're emotionally driven to see bitcoin as a new digital gold. Soon they'll understand why economic activity is a benefit to their aspirations, but until then, be nice and give them the benefit of the doubt. Fact is, most of you were bulls at one point too.
-Jonathan
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