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Author Topic: Everything except the price trend is going fantastic  (Read 9431 times)
Erdogan
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November 28, 2014, 10:31:02 PM
 #41

If you look at other metrics you see, that the BTC-economy is growing.

That's what I say and that what feels weird because if the btc-economy grows and the btc supply is the sameone then the price should go up, or at least that's my opinion (I realised I don't understand economy at all).


This is partly a good thing though, because people were bitching and moaning about stability a lot before
Yes, I think so. Anyway, more volume (more buy/sell transactions) sounds as bigger market (more capital) and provably a bigger demand.  

It will be interesting to see what happens during the stock market crash that is inevitably going to happen.
Do you have a link to read about that? Or could you explain yourself a bit more, please?



The supply is not the newly minted coins, it is the coins that people decide they do not want to hold, miners and normal beings alike.


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1563954694
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dinofelis
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November 29, 2014, 08:37:42 AM
 #42

The supply is not the newly minted coins, it is the coins that people decide they do not want to hold, miners and normal beings alike.

Indeed.  At a certain point, most coins should become "liquid" again.  A store of value which is never claimed doesn't make sense.
Everybody storing value for a purpose, needs to use that value some day, otherwise it doesn't make sense.
Keeping forever is the same as loosing the stored value.  It would be equivalent to "hide" gold on the bottom of the Atlantic ocean by throwing it overboard, by burning fiat, or by erasing your private keys.
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November 29, 2014, 06:09:02 PM
 #43

I don't understand why the price is still in the same range, although more people starts to use bitcoin and more merchants accept it. Is this due to exchanges or people with lots of bitcoins making profit on the small rise and then dump it etc?

If someone could explain it shortly, would be great!
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November 29, 2014, 07:02:34 PM
 #44

The supply is not the newly minted coins, it is the coins that people decide they do not want to hold, miners and normal beings alike.

Indeed.  At a certain point, most coins should become "liquid" again.  A store of value which is never claimed doesn't make sense.
Everybody storing value for a purpose, needs to use that value some day, otherwise it doesn't make sense.
Keeping forever is the same as loosing the stored value.  It would be equivalent to "hide" gold on the bottom of the Atlantic ocean by throwing it overboard, by burning fiat, or by erasing your private keys.

It is perfectly reasonable for someone to hold for a long period of time when you consider the possibility that the value stored appreciates over time.

No one here is suggesting people will hoard their money infinitely

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November 29, 2014, 07:24:54 PM
 #45

I don't understand why the price is still in the same range, although more people starts to use bitcoin and more merchants accept it. Is this due to exchanges or people with lots of bitcoins making profit on the small rise and then dump it etc?

If someone could explain it shortly, would be great!

Let us not forget that there is an inflation of 10% going on.  That means that the bitcoin holdings must grow at a 10% rate at the current price.

The market cap is a wrong indication of "how much value" there is stored in bitcoin.  In reality, the amount of value people have put into bitcoin is much less.  Many coins have been sold and are still held since they were a few dollars or a few tens of dollars.  So in order to sustain an inflation at 10% at the current price, means actually that the real value flowing into bitcoin is very big as compared to the past. 
As a simplistic example, suppose that most coins have been bought at an average price of $100.-
That means that the actual "value flown into bitcoin" would be rather $1.5 billion.  At the current price, say, $350 per coin, and an inflation rate of 10%, this comes actually down to a growth of the value flowing into bitcoin of 35% per year.
In other words, even to sustain the current price, per year, one third of the total value that has flown into bitcoin since 5 years, must flow again in bitcoin even to sustain the current price.
A growth of 35% a year is HUGE, and is needed to sustain the current price, simply due to inflation.
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November 29, 2014, 07:26:07 PM
 #46


It is perfectly reasonable for someone to hold for a long period of time when you consider the possibility that the value stored appreciates over time.

No one here is suggesting people will hoard their money infinitely

Of course.  But at a certain point, the number of new holders must come into equilibrium with the number of holders not holding anymore.
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November 29, 2014, 08:01:51 PM
 #47

The overall 2-year trend resumed in May:
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November 29, 2014, 08:02:29 PM
 #48

I don't understand why the price is still in the same range, although more people starts to use bitcoin and more merchants accept it. Is this due to exchanges or people with lots of bitcoins making profit on the small rise and then dump it etc?

If someone could explain it shortly, would be great!

Let us not forget that there is an inflation of 10% going on.  That means that the bitcoin holdings must grow at a 10% rate at the current price.

The market cap is a wrong indication of "how much value" there is stored in bitcoin.  In reality, the amount of value people have put into bitcoin is much less.  Many coins have been sold and are still held since they were a few dollars or a few tens of dollars.  So in order to sustain an inflation at 10% at the current price, means actually that the real value flowing into bitcoin is very big as compared to the past. 
As a simplistic example, suppose that most coins have been bought at an average price of $100.-
That means that the actual "value flown into bitcoin" would be rather $1.5 billion.  At the current price, say, $350 per coin, and an inflation rate of 10%, this comes actually down to a growth of the value flowing into bitcoin of 35% per year.
In other words, even to sustain the current price, per year, one third of the total value that has flown into bitcoin since 5 years, must flow again in bitcoin even to sustain the current price.
A growth of 35% a year is HUGE, and is needed to sustain the current price, simply due to inflation.


So when do we get out of this price range and it starts to rise?
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November 29, 2014, 08:18:33 PM
 #49

The overall 2-year trend resumed in May:


Much better overall view

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November 30, 2014, 01:39:12 AM
 #50

Let me explain this for once. I am drunk after a great night out so let me be condescending about it.
The fact is, theire is a bunch of people out there that exchange bitcoins on-chain no matter what the USD price of a bitcoin is. They make the estimated USD transaction volume.
Now, you can speculate about their motives. They clearly don't care as much as this forum does about volatility. Be it the drugs markets, be it remittances, we don't know fur sure. We don't care either. What we care about is that the on-chain transaction volume is growing steadily.
That means that the price of a bitcoin, sooner or later, will have to catch up with that information, because bitcoins are a finite resource with predictable supply, and because money velocity.

Ignore this post at your own risk.

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November 30, 2014, 01:20:05 PM
 #51

I don't understand why the price is still in the same range, although more people starts to use bitcoin and more merchants accept it. Is this due to exchanges or people with lots of bitcoins making profit on the small rise and then dump it etc?

If someone could explain it shortly, would be great!

Let us not forget that there is an inflation of 10% going on.  That means that the bitcoin holdings must grow at a 10% rate at the current price.

The market cap is a wrong indication of "how much value" there is stored in bitcoin.  In reality, the amount of value people have put into bitcoin is much less.  Many coins have been sold and are still held since they were a few dollars or a few tens of dollars.  So in order to sustain an inflation at 10% at the current price, means actually that the real value flowing into bitcoin is very big as compared to the past. 
As a simplistic example, suppose that most coins have been bought at an average price of $100.-
That means that the actual "value flown into bitcoin" would be rather $1.5 billion.  At the current price, say, $350 per coin, and an inflation rate of 10%, this comes actually down to a growth of the value flowing into bitcoin of 35% per year.
In other words, even to sustain the current price, per year, one third of the total value that has flown into bitcoin since 5 years, must flow again in bitcoin even to sustain the current price.
A growth of 35% a year is HUGE, and is needed to sustain the current price, simply due to inflation.

USD has a inflation of 10%?

https://forum.bitcoin.com/
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November 30, 2014, 01:52:47 PM
 #52

...
USD has a inflation of 10%?

No.  Bitcoin has an inflation rate of 10%

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November 30, 2014, 02:29:16 PM
 #53

...
USD has a inflation of 10%?

No.  Bitcoin has an inflation rate of 10%


Ok, you mean that in a year there will be 10% more bitcoins.
That is not really inflation. That is nothing someone who bough Bitcoin really bothers.
But I see, you like to play with numbers, and make stupid conclusion. It is the same as taking some numbers from the bible, play with them and than telling everybody that the world ends at a certain date.

Edit:
Just to show, how stupid your assumption is. "value flown into bitcoin" is definitly not, what people paid on exchanges for Bitcoins. You have to take mining equipment and electricity into account.

https://forum.bitcoin.com/
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November 30, 2014, 02:46:27 PM
 #54

...
USD has a inflation of 10%?

No.  Bitcoin has an inflation rate of 10%


Ok, you mean that in a year there will be 10% more bitcoins.
That is not really inflation. That is nothing someone who bough Bitcoin really bothers.
But I see, you like to play with numbers, and make stupid conclusion. It is the same as taking some numbers from the bible, play with them and than telling everybody that the world ends at a certain date.

You asked about the 10%.  I answered:  It is Bitcoin's monetary base inflation.
If you are interested in the rate at which the general level of Bitcoin prices for goods and services is rising, this number is ~65%.*  That's how much Bitcoin BTC $ price has fallen YTD.
Hope this helped.

*This assumes that USD had 0 (zero) inflation.  If we factor in USD inflation, the number becomes even moar hilarious.


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November 30, 2014, 02:58:33 PM
 #55

I expect that the Bitcoin ETF will trigger the next rally phase.

I wouldn't expect any rally of significance any more.  People got burned by the MtGox bubble.  Tullips don't rally twice.  Moreover, there are now a lot of trading options.  Speculation and trading usually make large excursions harder to come by.  A fully speculated and traded market usually only has large excursions as a function of unexpected events.

I would expect the price now, on the longer term, to evolve more slowly as a function of the expectation of the future fundamentals of bitcoin.  Bitcoin came to some form of maturity after the MtGox bubble I would think.


Good thing these aren't tulips (or even "Tullips").
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November 30, 2014, 02:59:16 PM
 #56

...
USD has a inflation of 10%?

No.  Bitcoin has an inflation rate of 10%


Ok, you mean that in a year there will be 10% more bitcoins.
That is not really inflation. That is nothing someone who bough Bitcoin really bothers.
But I see, you like to play with numbers, and make stupid conclusion. It is the same as taking some numbers from the bible, play with them and than telling everybody that the world ends at a certain date.

You asked about the 10%.  I answered:  It is Bitcoin's monetary base inflation.
If you are interested in the rate at which the general level of Bitcoin prices for goods and services is rising, this number is ~65%.*  That's how much Bitcoin BTC $ price has fallen YTD.
Hope this helped.

*This assumes that USD had 0 (zero) inflation.  If we factor in USD inflation, the number becomes even moar hilarious.



At least someone who knows the term "monetary base inflation", but that is still not the kind of inflation, that really matters to a consumer, so I don't get, why people are referencing it all the time.

But anyways, your calculation still doesn't make much sense.
In case you just didn't see my Edit:
Quote
"value flown into bitcoin" is definitly not, what people paid on exchanges for Bitcoins. You have to take mining equipment and electricity into account.

https://forum.bitcoin.com/
New censorship-free forum by Roger Ver. Try it out.
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November 30, 2014, 03:09:45 PM
 #57

...
At least someone who knows the term "monetary base inflation", but that is still not the kind of inflation, that really matters to a consumer, so I don't get, why people are referencing it all the time.

But anyways, your calculation still doesn't make much sense.
In case you just didn't see my Edit:
Quote
"value flown into bitcoin" is definitly not, what people paid on exchanges for Bitcoins. You have to take mining equipment and electricity into account.

I'm not certain you understand what inflation is, so I'll give you an abridged definition from Investopedia:

"DEFINITION OF 'INFLATION'
The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling."


Note that "value flown [sic] into [currency]" is conspicuously absent.  That's because it has nothing to do with inflation.

To offer an example:
If the US FED started spending trillions of dollars a day on printing presses, and paying its employees trillions of dollars an hour, USD inflation rate would not be any lower Undecided
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November 30, 2014, 03:23:20 PM
 #58


The overall 2-year trend resumed in May:


For a dose of reality check this one out.

https://blockchain.info/charts/estimated-transaction-volume?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

unchanged for 2.5 years


Those who hold and those who are without property have ever formed distinct interests in society
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November 30, 2014, 03:43:50 PM
 #59

...
At least someone who knows the term "monetary base inflation", but that is still not the kind of inflation, that really matters to a consumer, so I don't get, why people are referencing it all the time.

But anyways, your calculation still doesn't make much sense.
In case you just didn't see my Edit:
Quote
"value flown into bitcoin" is definitly not, what people paid on exchanges for Bitcoins. You have to take mining equipment and electricity into account.

I'm not certain you understand what inflation is, so I'll give you an abridged definition from Investopedia:

"DEFINITION OF 'INFLATION'
The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling."


Note that "value flown [sic] into [currency]" is conspicuously absent.  That's because it has nothing to do with inflation.

To offer an example:
If the US FED started spending trillions of dollars a day on printing presses, and paying its employees trillions of dollars an hour, USD inflation rate would not be any lower Undecided
There is monetary base inflation, which means, that someone made more money(print or mine) and there for according to supply/demand one unit of money has less value.
And there is Price inflation, which means you can buy less with the same amount of money.
When you talk about inflation with someone outside of the Bitcoin-community they mostly mean the second. People in the Bitcoin-community mostly mean the first one, like dinofelis did, stating that inflation is 10%.

Sorry, I just mixed you up with dinofelis. He said:
Quote
As a simplistic example, suppose that most coins have been bought at an average price of $100.-
That means that the actual "value flown into bitcoin" would be rather $1.5 billion.

https://forum.bitcoin.com/
New censorship-free forum by Roger Ver. Try it out.
NotLambchop
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November 30, 2014, 03:48:43 PM
 #60

^
TLDR:
Bitcoin monetary base inflation = ~10% YTD
Bitcoin price inflation               = ~65% YTD
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