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Author Topic: Price stickiness at $5 USD/BTC?  (Read 9155 times)
nimnul
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June 20, 2012, 11:58:23 AM
 #81

I'm too but average people don't give a f about inflation. All that they know is that price tags are not supposed to change. This feature of bitcoin slows its adoption.

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June 20, 2012, 12:31:26 PM
 #82

The question is how a layman measures "fluctuation".

If he comes today 1 hamburger = 1 USD, and tomorrow 1 hamburger = 1 USD it means for him USD is stable. In this layman sense USD is stable against almost everything.

Is it possible to sell hamburgers today at the same price as yesterday if we use BTC? Will it be good for seller? for buyer?

Are you suggesting that we use the Big Mac index as measure of volatility? Though I still prefer Pizza Purchasing Power: how many pizzas you can buy for 10000 BTC at a given point in time. It looks like we're up a few pizzas this week. Cheesy

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mccorvic
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June 20, 2012, 12:52:05 PM
 #83

The question is how a layman measures "fluctuation".

If he comes today 1 hamburger = 1 USD, and tomorrow 1 hamburger = 1 USD it means for him USD is stable. In this layman sense USD is stable against almost everything.

Is it possible to sell hamburgers today at the same price as yesterday if we use BTC? Will it be good for seller? for buyer?

Are you suggesting that we use the Big Mac index as measure of volatility? Though I still prefer Pizza Purchasing Power: how many pizzas you can buy for 10000 BTC at a given point in time. It looks like we're up a few pizzas this week. Cheesy

He was using it as an example.  To the vast majority of people world wide, USD is very stable and BTC (to the extent they even know of BTC) is very volatile.  It's easy for people on these forums and others like it to start thinking as if everything they know is common knowledge.

You'll know that BTC is viewed as stable in the eyes of the main stream when news stories about BTC stop referring to the $30 dollar spike and subsequent crash in the first paragraph or two.

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ribuck
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June 20, 2012, 01:48:52 PM
 #84

You'll know that BTC is viewed as stable in the eyes of the main stream when news stories about BTC stop referring to the $30 dollar spike and subsequent crash in the first paragraph or two.
Well the "$30 spike" stories are only going to stop after the price has been stable above $30 for a while.
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June 20, 2012, 01:59:41 PM
 #85

You'll know that BTC is viewed as stable in the eyes of the main stream when news stories about BTC stop referring to the $30 dollar spike and subsequent crash in the first paragraph or two.
Well the "$30 spike" stories are only going to stop after the price has been stable above $30 for a while.

I'd disagree. I think that, while it might get mentioned, the spike will become sort of a side-story after the price stays stable for a good length of time.  But, since we're talking about a future situation that cannot be resolved through math/science that'll just have to rest on a matter of opinion.

But why the quotes around $30 spike? Are you suggesting that the spike didn't happen, or am I misunderstanding your use of quotes? Smiley

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June 20, 2012, 02:11:35 PM
 #86

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To the vast majority of people world wide, USD is very stable and BTC (to the extent they even know of BTC) is very volatile.

This is because USD IS very stable and BTC IS very volatile. While in a long-term monetary base sense, BTC is more stable, the current market valuation of BTC is incredibly volatile because it reflects the current BTC marketplace (small). In a long-term sense BTC are likely incredibly undervalued, but if anything that means that we should expect even more volatility in the future as the BTC 'GDP' grows and the market responds.

-bgc

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June 20, 2012, 02:32:12 PM
 #87

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To the vast majority of people world wide, USD is very stable and BTC (to the extent they even know of BTC) is very volatile.

This is because USD IS very stable and BTC IS very volatile. While in a long-term monetary base sense, BTC is more stable, the current market valuation of BTC is incredibly volatile because it reflects the current BTC marketplace (small). In a long-term sense BTC are likely incredibly undervalued, but if anything that means that we should expect even more volatility in the future as the BTC 'GDP' grows and the market responds.

-bgc

I meant the stability comment to be more for the crowd here that refuse to admit any validity to USD at all.  I, personally, view BTC as a supplement of sorts to USD and not a replacement (but that's a different conversation).

But yes, they very nature of BTC makes it volatile in these early years.  It will be very interesting to see how the markets respond to the first block reward decrease Smiley

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Sant001
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June 20, 2012, 02:46:34 PM
 #88

Inflation pushes you to buy now, deflation pushes you to save and buy later.

How big is this push/incentive? Probably depends on how big is the inflation/deflation, what products/services we're talking about..

I find it fascinating to think about these things, does anybody knows a book that discusses the implications of a deflationary economy?
nimnul
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June 20, 2012, 02:58:34 PM
 #89

USD isn't stable - it depends on how do you measure its stability. If you look at gold or oil prices USD is not that stable. It's only retail price tags which are stable. Wholesale prices (especially on exchange traded goods) vary.

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June 21, 2012, 12:14:13 AM
 #90

USD isn't stable - it depends on how do you measure its stability. If you look at gold or oil prices USD is not that stable. It's only retail price tags which are stable. Wholesale prices (especially on exchange traded goods) vary.

This is quite true, and before the Euro a great many businesses faced constant 'currency risk' of changing exchange rates between the time that a deal was struck and the time it was paid for.  The real issue is that bitcoin isn't big enough to buy the things one needs for a complete economy without said currency risks.  When I can buy gas & groceries (at a competitive cost) locally, and pay my electric bill online, with bitcoin; the voltility of the exchange rate will become irrelevent.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
BoardGameCoin
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June 21, 2012, 01:03:06 AM
 #91

I doubt the exchange rate will ever be irrelevant, but I can see it being functionally irrelevant to some individual members of the economy. Obviously there's exchange rate risk between any two stores of value, based on supply, demand, and perception. However, the USD is very stable by any relevant measure. It is stable in a way that takes efficiency gains out of the accounts of those who store their wealth in it, but it is stable.

I'm selling great Minion Games like The Manhattan Project, Kingdom of Solomon and Venture Forth at 4% off retail starting June 2012. PM me or go to my thread in the Marketplace if you're interested.

For Settlers/Dominion/Carcassone etc., I do email gift cards on Amazon for a 5% fee. PM if you're interested.
MoonShadow
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June 21, 2012, 07:12:43 AM
 #92

I doubt the exchange rate will ever be irrelevant, but I can see it being functionally irrelevant to some individual members of the economy. Obviously there's exchange rate risk between any two stores of value, based on supply, demand, and perception. However, the USD is very stable by any relevant measure. It is stable in a way that takes efficiency gains out of the accounts of those who store their wealth in it, but it is stable.

The US $ isn't stable relative to gold, oil or even the Big Mac index.  The perception of stability is relative to your base standard.  For Americans that standard is the US dollar itself, so of course most prices will appear fairly stable in a currency relative to itself, all the while the average guy blames (Bush/Obama) for the falling value of his house or the rising cost of gasoline.  Compared to gold, or even silver, the cost of a gallon of gasoline is roughly the same, if not a bit cheaper, than it was in the 1960's.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
ribuck
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June 21, 2012, 08:55:11 AM
 #93

But why the quotes around $30 spike? Are you suggesting that the spike didn't happen, or am I misunderstanding your use of quotes? Smiley
There's no special meaning, just quoting the subject of the stories.
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June 21, 2012, 04:58:11 PM
 #94

USD isn't stable - it depends on how do you measure its stability. If you look at gold or oil prices USD is not that stable. It's only retail price tags which are stable. Wholesale prices (especially on exchange traded goods) vary.

This is quite true, and before the Euro a great many businesses faced constant 'currency risk' of changing exchange rates between the time that a deal was struck and the time it was paid for.  The real issue is that bitcoin isn't big enough to buy the things one needs for a complete economy without said currency risks.  When I can buy gas & groceries (at a competitive cost) locally, and pay my electric bill online, with bitcoin; the voltility of the exchange rate will become irrelevent.

right on, moonshadow.

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June 24, 2012, 11:25:44 AM
 #95

Yes BTC in a BTC economy, don't worry so much about what the fiat does. As long as BTC is climbing in value the risk is in holding dollars as I see it.

As for the thread topic it looks like it has settled down around 6-6.6 for a while. Wouldn't be surprised if it dipped down into the 5's with the euphoria gone though.
5 is the new 4, then in 6 months its 6.

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