How to make bitcoin be worth more?

[Etlase2]

Last year's "crash" was because the bubble burst. Back then, Bitcoin's value was much lower than it is now, but speculators kept on buying like crazy. An exchange got hacked, which caused a sudden mass realisation in many people's minds: "I paid too much". And when a lot of people suddenly don't want a product any more, what happens to its price?

IIRC, the price had gone from ~$32 to $15 before mt. gox got hacked. And nothing irreversible actually happened, it was only through the site, no coins were actually lost.
The bubble happened because bitcoin's scarcity was artificially increased by those with existing coins. There was hardly any volume on the way up to $30, just very few actually putting coins up for sale.
It was simply a matter of "I have X amount of coins that will make me X dollars and they're burning a hole in my pocket" that caused the "crash," and the fact that the great majority of people were not stupid enough to believe bitcoins were worth $30+.

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[JohnBigheart]

Last year's "crash" was because the bubble burst. Back then, Bitcoin's value was much lower than it is now, but speculators kept on buying like crazy. An exchange got hacked, which caused a sudden mass realisation in many people's minds: "I paid too much". And when a lot of people suddenly don't want a product any more, what happens to its price?

IIRC, the price had gone from ~$32 to $15 before mt. gox got hacked. And nothing irreversible actually happened, it was only through the site, no coins were actually lost.
The bubble happened because bitcoin's scarcity was artificially increased by those with existing coins. There was hardly any volume on the way up to $30, just very few actually putting coins up for sale.
It was simply a matter of "I have X amount of coins that will make me X dollars and they're burning a hole in my pocket" that caused the "crash," and the fact that the great majority of people were not stupid enough to believe bitcoins were worth $30+.

Bitcoins rocketed from almost nothing to $30 in between 2011 May -June.
http://bitcoincharts.com/charts/mtgoxUSD#tgCzm1g10zm2g25zv

This is when the mainstream media like Yahoo Finance picked it up and suddenly a small hobbyist niche became subject to mainstream interest. As millions of new users wanted to try demand rose against a non-changing supply -> the prices sky rocketed. As the new toy became boring most new comers stopped playing with Bitcoins and prices settled back.

[Tuxavant]

As millions of new users wanted to try

That's a pretty inflated number... as of 2012 Jan, MTGOX, with 92% of the market, registered accounts was only 122,000.

Page 3, 5: https://mtgox.com/press_release_20120201.html

But I see that as pretty F'ing fantastic... less that 122k people caused the price of a few million bitcoins to reach $30 a piece.

[dustintrammell]

Right now almost nobody is spending Bitcoin. They are trading representative mtgox credits in lieu of Bitcoin to make the price fluctuate, but that has little to do with adoption. The price is low because miners are willing to go to market with their product at near cost because they are bad businessmen. They should have a higher markup and sell to brokers who in turn move the bitcoin to whatever exchanges offer the best action.
[/quote]

I disagree.  I spend Bitcoin at least a couple times a week.  In just the last week, I've bought some DVI dummy plugs from Cablesaurus, I've bought various stocks on GLBSE, I sponsored the upcoming Bitcoin Conference in London, and I made a donation to Symphony of Science.

[dustintrammell]

It's just an exchange rate. Do you say, "How to make the USD worth more?"
[/quote]

Yes.  Answer: Stop printing more of it (:

[dustintrammell]

Teach your friends, family, and coworkers about it and grow their trust in the system. Share it with them by exchanging with them. Ask them to buy your next beer and give them some Bitcoins for it. Network effect is everything for Bitcoin.

Here in Austin, I leave a Casascius physical Bitcoin as part of my tip every time I eat out, or to give to people at parties or gatherings when the subject comes up.  The physical coins are very useful for spreading awareness.

[cbeast]

Teach your friends, family, and coworkers about it and grow their trust in the system. Share it with them by exchanging with them. Ask them to buy your next beer and give them some Bitcoins for it. Network effect is everything for Bitcoin.

Here in Austin, I leave a Casascius physical Bitcoin as part of my tip every time I eat out, or to give to people at parties or gatherings when the subject comes up.  The physical coins are very useful for spreading awareness.

Tips would be a niche economy for Bitcoin. Many resaurants now automatically charge a gratuity fee (sometimes after tax). Who knows how much of that pays for the service you've received? If server staff wore a little badge with a QR code, you could slip them that little extra when you feel they are worth it with no one the wiser.

[JohnBigheart]

As millions of new users wanted to try

That's a pretty inflated number... as of 2012 Jan, MTGOX, with 92% of the market, registered accounts was only 122,000.

I think the news coverage has literally reached millions of users. I got infected by Bitcoin when it first appeared in Yahoo Finance and suddenly everybody started to talk about it. MTGOX is 92% of the exchange traded market. I believe a super majority of transactions happens outside MTGOX or FOREX exchanges. The bulk of the supply-demand balance are coming (or at least should be coming) from goods or services sold for BTCs and OTC trades. I still do not have an MTGOX membership but earn and trade bitcoins for goods and  mostly services.

[Tuxavant]

I believe a super majority of transactions happens outside MTGOX or FOREX exchanges.

I might agree, but those transactions did not affect the exchange price. All other transactions are based on what happens inside the exchange.

[BlackPrapor]

Everyone forgets one thing - its not 21 million, but effectively 21 trillion coins, if you use all the zeros. That makes every current miner a millionaire in btc and a potential millionaire in USD as well. Depends on how widely adopted the currency will be in a future. I'd like to make a proposition on how to make BTC more popular. In fact, many people already working on it, but BTC community is not fully aware of those projects. I'll make a short review on such projects in this thread later on. 

[westkybitcoins]

Man, this is such an easy one...

Even though there is a ~33% inflation rate at the moment, Bitcoin is a limited resource. Simply increase the demand and it will go up in value. How many people do you think know about Bitcoin? A million? There's 7 billion people on the planet who have not had the pleasure of meeting Bitcoin.

Teach your friends, family, and coworkers about it and grow their trust in the system. Share it with them by exchanging with them. Ask them to buy your next beer and give them some Bitcoins for it. Network effect is everything for Bitcoin.

Exactly. Increase demand.

Now, how to increase demand? I can think of two primary ways to do that:

1) Use them more, and promote their use (advertise, even if just word-of-mouth.) NOTE: Using them for savings is a bit risky, but still counts as use and sends a signal to the market just the same.

2) Make them more valuable. You can do this by contributing ideas, $$$ or effort (code, a business, etc.) to the bitcoin economy.

[JohnBigheart]

Everyone forgets one thing - its not 21 million, but effectively 21 trillion coins, if you use all the zeros. That makes every current miner a millionaire in btc and a potential millionaire in USD as well. Depends on how widely adopted the currency will be in a future. I'd like to make a proposition on how to make BTC more popular. In fact, many people already working on it, but BTC community is not fully aware of those projects. I'll make a short review on such projects in this thread later on. 

As it turns down dollars can be subdivided into cents as well!
OMG, I am already a ¢ millionaire!

[Tuxavant]

Exactly. Increase demand.

Now, how to increase demand? I can think of two primary ways to do that:

Here's one way... Promote positive Bitcoin awareness to those around you. I publish a single page newsletter once every monday morning with the previous weeks news about Bitcoin. Print it out and post it in your workplace like your cube, mail room, or break area. Introduce yourself on it so people know who to come to with questions. If you subscribe to one of the various places I post the DL link, you'll get a reminder to print it out every monday morning.

https://bitcointalk.org/index.php?topic=78609.0

[cbeast]

Everyone forgets one thing - its not 21 million, but effectively 21 trillion coins, if you use all the zeros. That makes every current miner a millionaire in btc and a potential millionaire in USD as well. Depends on how widely adopted the currency will be in a future. I'd like to make a proposition on how to make BTC more popular. In fact, many people already working on it, but BTC community is not fully aware of those projects. I'll make a short review on such projects in this thread later on. 

As it turns down dollars can be subdivided into cents as well!
OMG, I am already a ¢ millionaire!

You're gonna eat those words when a bitcent will buy a car.

[JohnBigheart]

Everyone forgets one thing - its not 21 million, but effectively 21 trillion coins, if you use all the zeros. That makes every current miner a millionaire in btc and a potential millionaire in USD as well. Depends on how widely adopted the currency will be in a future. I'd like to make a proposition on how to make BTC more popular. In fact, many people already working on it, but BTC community is not fully aware of those projects. I'll make a short review on such projects in this thread later on.  

As it turns down dollars can be subdivided into cents as well!
OMG, I am already a ¢ millionaire!

You're gonna eat those words when a bitcent will buy a car.

Well, it is entirely possible that a bitcent will buy a mansion in future.
All I am saying is that just because something is dividable it is not necessarily valuable.

It's a ridiculous argument that I see popping up repeatedly on this forum. Divisibility does not imply value.

[Tuxavant]

Divisibility does not imply value.

Yes it does. The properties of good money are:

• Portable
• fungible
• Un-consumable
• Durable
• Scarce
• Divisible

Divisibility in money does add value to a currency because it's easy to match an amount required value for an exchange.

[JohnBigheart]

Divisibility does not imply value.

Yes it does. The properties of good money are:

• Portable
• fungible
• Un-consumable
• Durable
• Scarce
• Divisible

Divisibility in money does add value to a currency because it's easy to match an amount required value for an exchange.

Okay, this is becoming an exercise in formal logic:

imply
    verb
    °to have as a necessary consequence

Q: Does divisibility of something have the necessary consequence that this thing is valuable?
A: No. There are million things that are dividable, yet are not valuable. Horse shit being one of them.

Everything else is true. Divisibility is an enabling property of money.
Yet divisibility alone will not make something valuable.

[Tuxavant]

OMFG...

Dude, if Bitcoin did not have divisibility, i.e. there were only 21 million coins, and nothing less, they hardly would have the value they have now. People would understand that that is not enough units of currency to support a global economy.

Divisibility ADDS value. Therefore, it has value.

[JohnBigheart]

Necessity vs. Sufficiency:

A necessary condition of a statement must be satisfied for the statement to be true. In formal terms, a statement N is a necessary condition of a statement S if S implies N (S => N).
A sufficient condition is one that, if satisfied, assures the statement's truth. In formal terms, a statement S is a sufficient condition of a statement N if S implies N (S => N).

Divisibility is a necessary condition, not a sufficient condition for Bitcoin to become valuable.

[cbeast]

Okay, this is becoming an exercise in formal logic:

Somebody draw this guy a Venn Diagram.