2014-09-19 CCN: Bitcoin Price Goes Down? Good!

[hacknoid]

http://www.cryptocoinsnews.com/bitcoin-price-goes-down-good/

If my analysis is correct, we are beginning to see a structural downward trend, and this trend is good, because it shows that the Bitcoin economy is becoming real, with less speculation and more use as a currency for every day’s life. This is the first phase of the real Bitcoin economy.

I like the points made in this piece - in my opinion, this is the first thing I have read in a while that really helps to point out why we are having the recent price drops, and counts them as actually being good indicators.  Maybe I am just looking to hear something positive, but this makes sense for me.  The argument is that we have been mainly using Bitcoin as a speculative medium for the past while (which I believe), but as people start to use it to actually conduct business the price will go down because people are using coins rather than holding.

As we start to see more businesses and suppliers accepting Bitcoin, we will eventually move into a phase where the need to convert back to fiat in the process disappears entirely, at which point price starts to rise again.

My only issue with this article:

Everyone and his dog are worried about the ongoing decline in the value of Bitcoin, but I am here to tell you that 1) This is good, and 2) The trend will eventually reverse.

Bitcoin's value has not been going down - it's price has.  Value is different than price, and value is increasing.  It increases with user base, merchant base, acceptance, new tools and applications, etc.  There is so much going on in the ecosystem right now that I think the value is stronger than ever.  It simply is not reflected by the price.

[lyth0s]

Yes Bitcoin value has gone way up over the past few months as its usability has greatly increased. Unfortunately it's just its price that has gone in the other direction.

[bitcool]

Good read, too bad it's not from CNN 

[chennan]

But most of the bitcoin holders are sensitive to the price movement, which means loss or profit from their investment. They will be scared to buy in bitcoin. The merchants accepting bitcoin payment won't be willing to keep bitcoin payment and transfer to fiat right away. This will destroy the bitcoin ecosystem.

[cr1776]

Makes sense.  I think wealth preservation and speculation are also valuable uses for bitcoin though.  In short, bitcoin's uses are not just a binary proposition and includes speculation.   Just like other currencies hedging currency risk is a valuable use.  Perhaps a better way to think about it is that speculative uses were dominating use for a while at the end of 2013 whereas things are now shifting to a more balanced use model.  :-)

You are right about the value, reminds me of some people:  they know the price of everything and the value of nothing.

[gmx95]

Everything is true, but the reverse trend can take several months or years. If this article is correct in what it says, it means there probably would be less large scale price movements like we saw last year, instead it would be more like holding stocks - if you hold it for a few years, you will see the price growing steadily. I maybe  wrong and we will see a huge rally before the end of this year. Who knows?