Balls of steel

[adamstgBit]

I speculate bitcoin will at one point be used by countries to conduct trade.

[sgbett]

... I am curious. Are you saying you don't think consumer demand is sufficient to drive bitcoin (price) longterm? Why?

Yes, if we start with the following premises:
  A.  The current exchange rate is the product of consumer demand, and not speculation.  By "consumers" I mean the people using Bitcoin as money, not to speculate on its long-term worth.
  B.  The demand will continue to increase.

I'm saying neither (A) nor (B) are necessarily true, (A) partially due to supply/demand being kinda misused in the case of Bitcoin.
Think about it like this:

1.  A baker bakes cakes.
2.  You like delicious cakes, they're delicious.
3.  There are others who like delicious cakes.
4.  The baker keeps raising his cake price until, when he closes up for the night, he has no leftover cakes, but just barely.*

Classic supply/demand relationship, right?

Here's the good part:  (2) above could be seen as a constant.  The cake is just as delicious (and desirable) regardless of what the baker charges.  If the baker doubles his price, you are not going to want the cake twice as much, right? 

Not so with Bitcoin.
To a speculator, 1 BTC is twice as valuable when its exchange rate doubles.  That's why it's important that most Bitcoin holders are speculators and not typical consumers like cake_eaters.
See my point?

TL;DR:  Bitcoin is not goods.  It has neither intrinsic value nor is it subject to the classic supply/demand interpretations.

...*assuming that selling out every day = max profit, not necessarily true if there are cake addicts, let's say, who'll pay anything for their pastry fix.  But that's a tangent.
edits...

It's not *that* simple, "Speculators" implies some fraction who are in it for short term fiat profits.

As the price of bitcoin rises there is a corresponding increase in the likelihood of a speculator deciding to sell.

I'd say it very much is a product of supply & demand, given there is a limited supply and variable demand.

Only fiat is not subject to supply and demand, as there is effectively an infinite supply.

[NotLambchop]

TL;DR:  Bitcoin is not goods.  It has neither intrinsic value nor is it subject to the classic supply/demand interpretations.

I would argue that the average user who is interested in buying bitcoin solely to spend, has absolutely no idea what the exchange rate of a bitcoin should be.

Really?  I haven't met anyone like that since SilkRoad got shuttered.  Most places accepting Bitcoin set their prices in dollars, so the folks you're talking about should care about the exchange rate

But that's not my point.  My point is Bitcoin exchange rate is determined by traders, which [to me] is obvious.  Those weird ones who don't care about the exchange rate, other than being ..."unusual," have little to do with exchange rate.

[NotLambchop]

...
It's not *that* simple, "Speculators" implies some fraction who are in it for short term fiat profits.

As the price of bitcoin rises there is a corresponding increase in the likelihood of a speculator deciding to sell.

It's not simple, but speculators don't need to be daytraders.  Many hodlers on this forum, the ones speculating on exchange rate going to the moon, are hoarding and holding.  They contribute to the "scarcity," but not in the same way a consumer would.

And even day traders, for the time they're in bitcoin, aren't essentially different from long-term holders.  The only difference is the timespan.
The speculators who are in it for Bitcoin, not fiat profit, simply buy BTC low and sell high, thus amassing more coin.  The unit of account is whatever you chose.

[OgNasty]

Last year no one thought it would reach 266. Then no one thought it could ever reach 1200. Now after the market is working off that exuberance and coins are being distributed from short term speculators to long term holders eventually supply will dry up once again.

How high will it go this time? Hint: most of the forum seems to be expecting it to plummet to 200-350.

I've been predicting a $4,000 BTC since 2011.  Just sayin'.

[inca]

...
It's not *that* simple, "Speculators" implies some fraction who are in it for short term fiat profits.

As the price of bitcoin rises there is a corresponding increase in the likelihood of a speculator deciding to sell.

It's not simple, but speculators don't need to be daytraders.  Many hodlers on this forum, the ones speculating on exchange rate going to the moon, are hoarding and holding.  They contribute to the "scarcity," but not in the same way a consumer would.

And even day traders, for the time they're in bitcoin, aren't essentially different from long-term holders.  The only difference is the timespan.
The speculators who are in it for Bitcoin, not fiat profit, simply buy BTC low and sell high, thus amassing more coin.  The unit of account is whatever you chose.

I disagree. Bitcoin is already becoming an extremely useful currency through utility. But the main strengths of bitcoin are its monetary properties and scarcity. People who buy and hold it do so knowing this. There is no consumer or speculator, they are one and the same. It is a happy side effect that the first 50 million people into the the bitcoin sphere will likely make significant gains on there initial investment. Whilst adoption continues the price must rise until like your baker there is an equilibrium where all the users of bitcoin are already using it, it has become distributed and the exchange price is stable. Bitcoin has no intrinsic value but is going to work exceptionally well as a future store of value with bouts of likely extreme volatility.

[NotLambchop]

... There is no consumer or speculator, they are one and the same. ...

Wait, did you miss this?  If you disagree with something, feel free to point it out.  Simply saying "there is no difference" is no better than saying NO U!1!

... I am curious. Are you saying you don't think consumer demand is sufficient to drive bitcoin (price) longterm? Why?

Yes, if we start with the following premises:
  A.  The current exchange rate is the product of consumer demand, and not speculation.  By "consumers" I mean the people using Bitcoin as money, not to speculate on its long-term worth.
  B.  The demand will continue to increase.

I'm saying neither (A) nor (B) are necessarily true, (A) partially due to supply/demand being kinda misused in the case of Bitcoin.
Think about it like this:

1.  A baker bakes cakes.
2.  You like delicious cakes, they're delicious.
3.  There are others who like delicious cakes.
4.  The baker keeps raising his cake price until, when he closes up for the night, he has no leftover cakes, but just barely.*

Classic supply/demand relationship, right?

Here's the good part:  (2) above could be seen as a constant.  The cake is just as delicious (and desirable) regardless of what the baker charges.  If the baker doubles his price, you are not going to want the cake twice as much, right?  

Not so with Bitcoin.
To a speculator, 1 BTC is twice as valuable when its exchange rate doubles.  That's why it's important that most Bitcoin holders are speculators and not typical consumers like cake_eaters.
See my point?

TL;DR:  Bitcoin is not goods.  It has neither intrinsic value nor is it subject to the classic supply/demand interpretations.

...*assuming that selling out every day = max profit, not necessarily true if there are cake addicts, let's say, who'll pay anything for their pastry fix.  But that's a tangent.
edits...

[inca]

... There is no consumer or speculator, they are one and the same. ...

Wait, did you miss this?  If you disagree with something, feel free to point it out.  Simply saying "there is no difference" is no better than saying NO U!1!

... I am curious. Are you saying you don't think consumer demand is sufficient to drive bitcoin (price) longterm? Why?

Yes, if we start with the following premises:
  A.  The current exchange rate is the product of consumer demand, and not speculation.  By "consumers" I mean the people using Bitcoin as money, not to speculate on its long-term worth.
  B.  The demand will continue to increase.

I'm saying neither (A) nor (B) are necessarily true, (A) partially due to supply/demand being kinda misused in the case of Bitcoin.
Think about it like this:

1.  A baker bakes cakes.
2.  You like delicious cakes, they're delicious.
3.  There are others who like delicious cakes.
4.  The baker keeps raising his cake price until, when he closes up for the night, he has no leftover cakes, but just barely.*

Classic supply/demand relationship, right?

Here's the good part:  (2) above could be seen as a constant.  The cake is just as delicious (and desirable) regardless of what the baker charges.  If the baker doubles his price, you are not going to want the cake twice as much, right?  

Not so with Bitcoin.
To a speculator, 1 BTC is twice as valuable when its exchange rate doubles.  That's why it's important that most Bitcoin holders are speculators and not typical consumers like cake_eaters.
See my point?

TL;DR:  Bitcoin is not goods.  It has neither intrinsic value nor is it subject to the classic supply/demand interpretations.

...*assuming that selling out every day = max profit, not necessarily true if there are cake addicts, let's say, who'll pay anything for their pastry fix.  But that's a tangent.
edits...

Explain your point more clearly please

[NotLambchop]

I try to be as clear as possible on the first pass.  What, specifically, would you like to have clarified?

[adamstgBit]

I try to be as clear as possible on the first pass.  What, specifically, would you like to have clarified?

just how tasty was the cupcake, did it have some rum in it?

[inca]

I try to be as clear as possible on the first pass.  What, specifically, would you like to have clarified?

I take your example to mean that the bitcoin price is a product of consumer/speculator demand. But that also consumer/speculator demand is also a product of the price? Unlike the baker scenario.. And that falling bitcoin prices may in fact reduce demand for bitcoins?

[NotLambchop]

I try to be as clear as possible on the first pass.  What, specifically, would you like to have clarified?

just how tasty was the cupcake, did it have some rum in it?

Pure yumolium.  As long as you don't ruin it with Mc.D coffee.  That stuff is undrinkable, and I buy those gigantic "40 Miler" styrofoam cups at exit ramp gas stations and never complain.
If you HAVE TO buy Mc.D coffee, either cut it with 1/3rd milk, or ask for a cup of ice, pour off 1/4 of the coffee, and dump the ice in.  (Mc.D ice cubes taste just like their water--awful.  But it's the same awful all across US.  I suspect it's a special additive they use to make their water boil at 200 degrees C, and make their coffee possible.

[NotLambchop]

...
I take your example to mean that the bitcoin price is a product of consumer/speculator demand. But that also consumer/speculator demand is also a product of the price? Unlike the baker scenario.. And that falling bitcoin prices may in fact reduce demand for bitcoins?

In the same sense as special relativity suggests that light is fast, yeah.

[adamstgBit]

I try to be as clear as possible on the first pass.  What, specifically, would you like to have clarified?

just how tasty was the cupcake, did it have some rum in it?

Pure yumolium.  As long as you don't ruin it with Mc.D coffee.  That stuff is undrinkable, and I buy those gigantic "40 Miler" styrofoam cups at exit ramp gas stations and never complain.
If you HAVE TO buy Mc.D coffee, either cut it with 1/3rd milk, or ask for a cup of ice, pour off 1/4 of the coffee, and dump the ice in.  (Mc.D ice cubes taste just like their water--awful.  But it's the same awful all across US.  I suspect it's a special additive they use to make their water boil at 200 degrees C, and make their coffee possible.

i drink black coffee.

 Mc.D coffee??  NEVER AGAIN!!

[inca]

...
I take your example to mean that the bitcoin price is a product of consumer/speculator demand. But that also consumer/speculator demand is also a product of the price? Unlike the baker scenario.. And that falling bitcoin prices may in fact reduce demand for bitcoins?

In the same sense as special relativity suggests that light is fast, yeah.

Alright Einstein!

[Torque]

TL;DR:  Bitcoin is not goods.  It has neither intrinsic value nor is it subject to the classic supply/demand interpretations.

I would argue that the average user who is interested in buying bitcoin solely to spend, has absolutely no idea what the exchange rate of a bitcoin should be.

Really?  I haven't met anyone like that since SilkRoad got shuttered.  Most places accepting Bitcoin set their prices in dollars, so the folks you're talking about should care about the exchange rate

But that's not my point.  My point is Bitcoin exchange rate is determined by traders, which [to me] is obvious.  Those weird ones who don't care about the exchange rate, other than being ..."unusual," have little to do with exchange rate.

I think you may have missed my meaning there.  The key phase is "should be".

I didn't say they didn't care what the exchange rate was, I said that they essentially have no way of knowing if the current exchange rate is even correct or a fair price.  It's because bitcoin is so new, lacks anything to back it, and doesn't have a multi-hundred year assessment period like say, gold or silver.  Most of the general public think that bitcoin is vastly overvalued, and could fall back to double or even single digits literally any day now.  In fact, they don't see why it wouldn't.

You're right that speculation primarily keeps the price afloat.  It's the occasional ramp ups (er bubbles, whatever) during this growth period that give the public a clue that maybe they are wrong about bitcoin being vastly overvalued.

[minerpumpkin]

Well, at this point people really need to decide what they're willing to risk, and ultimately to loose. But after they've decided what to keep in the Game, they really need to just ignore the price, and just have those said balls. Sometimes you've got to ride through the rough patch...

[Roy Badami]

What a dishonest illiterate wretched creature you are!

since most of this forum has him on ignore, if you feel the urge to converse with it, can you at least not quote it? thanks.

Apologies. 'This user is currently ignored' seems to be outnumbering real users at the moment. Free speech is important but it would be brilliant if the forum just deleted users once a certain ignore threshold is reached..

What exactly is the 'report to moderator' link for?  In any moderated forum action would have been taken long ago, but AFAICT this place is completely unmoderated...

(EDIT: despite claims that there are in fact moderators here - given the level of drivel posted here I find it hard to believe they  really  exist)

[misterpressman]

What a dishonest illiterate wretched creature you are!

since most of this forum has him on ignore, if you feel the urge to converse with it, can you at least not quote it? thanks.

Apologies. 'This user is currently ignored' seems to be outnumbering real users at the moment. Free speech is important but it would be brilliant if the forum just deleted users once a certain ignore threshold is reached..

What exactly is the 'report to moderator' link for?  In any moderated forum action would have been taken long ago, but AFAICT this place is completely unmoderated...

(EDIT: despite claims that there are in fact moderators here - given the level of drivel posted here I find it hard to believe they  really  exist)

There will be trolls wherever you go.. The thing is you just need to ignore.

[marney111]

What a dishonest illiterate wretched creature you are!

since most of this forum has him on ignore, if you feel the urge to converse with it, can you at least not quote it? thanks.

Apologies. 'This user is currently ignored' seems to be outnumbering real users at the moment. Free speech is important but it would be brilliant if the forum just deleted users once a certain ignore threshold is reached..

What exactly is the 'report to moderator' link for?  In any moderated forum action would have been taken long ago, but AFAICT this place is completely unmoderated...

(EDIT: despite claims that there are in fact moderators here - given the level of drivel posted here I find it hard to believe they  really  exist)

There will be trolls wherever you go.. The thing is you just need to ignore.

Being a troll has become a normal attitude of people.