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Author Topic: the real price of 1btc  (Read 2604 times)
kjlimo
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January 04, 2012, 03:42:17 AM
 #21

The real price of Bitcoin is the price that it is right now at this second.

Yeah that's the real price of Bitcoin... Everything else is just horsecrap..

+1

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casascius
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January 04, 2012, 03:57:52 AM
 #22

For me, the true price of 1 BTC is greatly tied to the utility of owning BTC for purposes other than speculation.

It's very similar to a casino deciding how many chips they need to make to keep themselves running.  So I am using a made-up term: "chip base", to refer to how many chips there should be.  A casino needs enough chips to keep the tables stocked and also needs to account for the fact that players will be holding some, and that some will walk away and never come back.

Right now, the biggest killer app for Bitcoin is probably Silk Road.  But there's what, 1500 listings for stuff like drugs on there?  I don't think that those 1500 listings need a "chip base" of $200 million.  In fact, a "chip base" of even $40 million is overkill.  But it's also understandable that a "chip base" of $1000 would be far too small.

Adding to Bitcoin's chip base are those who would like to hold on to bitcoins to conduct regular business, for example, the guy sending bitcoins to China.  For me, with all speculative value aside, maybe having $1000 in bitcoins is a convenient amount to have, just so I can pay with BTC to someone who accepts it.  This isn't an investment, it's more like cash in my pocket, converted to a form that's convenient.  The more people who come along with that mindset, the more demand there will be for Bitcoin.

If a popular legal gambling website starts accepting Bitcoins, that activity will also create a demand for coins, or in other words, it will make a whole bunch of new people suddenly decide that they should hold a few coins for one reason or another, for their utility value.  These bitcoins also won't get sold on a whim just to capture a few percent profit.  I believe this is the kind of demand that will come in like a tsunami: a huge force that approaches as silently as a whisper.

To me, I don't see a BTC over $20 with the goods and services available now.  But all it takes is another killer app.  That could change overnight, for example, if some major publication informs the remittance industry that Bitcoin is a good way to move money, and suddenly check cashing places and pawn shops start trying to get a few.







Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper or hardware wallets instead.
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January 04, 2012, 06:53:26 AM
 #23

Are people approaching or creating gambling sites that accept bitcoin?  That seems like a good idea given how much gamblers hate paying taxes.  The govt doesn't recognize bitcoins yet as value...

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January 04, 2012, 07:30:30 AM
 #24

Are people approaching or creating gambling sites that accept bitcoin?  That seems like a good idea given how much gamblers hate paying taxes.  The govt doesn't recognize bitcoins yet as value...

Yes, switch poker and soon infintipoker.


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January 04, 2012, 08:00:01 AM
 #25


Quite true. If a miner spends $1 creating a bitcoin and can only sell it for $0.01 it only stores $0.01 of value, ie the demand value not the production value. Thanks for pointing that out.

However if price jumped, less people would mine, difficulty would go down, the amount of electricity required would be less, and the price to create 1btc would eventually roughly even out... which makes me think that still electricity is a reasonable estimate of the minimum price of a bitcoin.

You have that backwards. The exchange rate of bitcoin divided by the production cost (mostly electricity for now) determines the total network hashing power and therefore, the difficulty, not the other way around.

If you have any doubt on that, just look ahead; the amount of coins generated through mining is cut in half every 2 years and eventually approaches zero. How will it impact the price? It wont. But unless transaction fees become much bigger by then,it will have a tremendous impact on difficulty and hash rate.

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January 04, 2012, 11:47:03 AM
 #26

Adding to Bitcoin's chip base are those who would like to hold on to bitcoins to conduct regular business, for example, the guy sending bitcoins to China.  For me, with all speculative value aside, maybe having $1000 in bitcoins is a convenient amount to have, just so I can pay with BTC to someone who accepts it.  This isn't an investment, it's more like cash in my pocket, converted to a form that's convenient.  The more people who come along with that mindset, the more demand there will be for Bitcoin.

If a popular legal gambling website starts accepting Bitcoins, that activity will also create a demand for coins, or in other words, it will make a whole bunch of new people suddenly decide that they should hold a few coins for one reason or another, for their utility value.  These bitcoins also won't get sold on a whim just to capture a few percent profit.  I believe this is the kind of demand that will come in like a tsunami: a huge force that approaches as silently as a whisper.


BTC is more appropriate and efficient than cash in any transaction involving a virtual good.  Most people tend to think gambling and porn, but then there is the huge video game market, and there are too many niches in that giant market to keep track of.  When niche fans find a quicker way to get that game they've been frothing at the mouth for for months, and be the first to have it and play it, WITHOUT using mom/dad's credit card, well this will help BTC as well.

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