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Author Topic: For Those Wondering Why The Current Rally  (Read 9417 times)
sunnankar
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July 20, 2012, 03:27:41 AM
 #41

This isn't a good comparison because BitCoin isn't a single business, it is a monetary platform that can be used by all businesses. If the United States government had to run on the market cap of Skype, it would grind to a halt. The order that these things operate in are the Trillions, not billions.

I don't think that $15,000 per bitcoin will happen within the year (barring the outside chance of some hyperinflationary event), but it is easily attainable in the long term.

Well, I see your point as currency markets are like the ocean and not the fish. But what percentage of cash balances do you think world population will keep in BTC? Why? What is your 'long term' horizon?

If Bitcoin had 663m users like Skype and if each user kept $700 in cash balances and it were 2016 with 15m bitcoins then that would result in $31,000 per bitcoin. And that does not factor in the bitcoins in circulation that have been destroyed (private keys lost, sent to unrecoverable addresses, etc.).

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July 20, 2012, 09:33:21 AM
 #42

I am slightly sceptical about the scalability issues even in the long term. Storage space or IO throughput aren't even the most crucial limits, network bandwidth is going to be the first real bottleneck Bitcoin is going to hit.
Yeah, seriously. Each node must be able to handle 8Gbps if bitcoin ever operates at VISA levels.

Every full node. Only pool operators and solo miners need to be full nodes.

Running a full node will eventually become specialized service/business.

Everyone else will be using light clients or online wallets.

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July 20, 2012, 10:40:36 AM
 #43

This isn't a good comparison because BitCoin isn't a single business, it is a monetary platform that can be used by all businesses. If the United States government had to run on the market cap of Skype, it would grind to a halt. The order that these things operate in are the Trillions, not billions.

I don't think that $15,000 per bitcoin will happen within the year (barring the outside chance of some hyperinflationary event), but it is easily attainable in the long term.

Well, I see your point as currency markets are like the ocean and not the fish. But what percentage of cash balances do you think world population will keep in BTC? Why? What is your 'long term' horizon?

If Bitcoin had 663m users like Skype and if each user kept $700 in cash balances and it were 2016 with 15m bitcoins then that would result in $31,000 per bitcoin. And that does not factor in the bitcoins in circulation that have been destroyed (private keys lost, sent to unrecoverable addresses, etc.).

I liked your idea so much I made a spreadsheet for it Smiley

https://docs.google.com/spreadsheet/ccc?key=0AknBnFOyxhcRdDBuczBWZTBaekY0N0d0cjR6X29kbEE

I guessed each user would keep maybe $100 in their wallet (very conservative).

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July 20, 2012, 11:20:46 AM
 #44

I'm with you all in this one, but I tell you I will sell all $200,000 bitcoins when it hits $10

And you'll regret it big time when it hits $100

Never sell all.

Thats a noob misstake.

When you look back half year later and they are at $40 you will not be a happy man despite all your new money.

You will be happy if price tanks.
Take a profit and keep some, you will be happy in both cases.



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July 20, 2012, 12:37:15 PM
 #45

If Bitcoin had 663m users like Skype and if each user kept $700 in cash balances

I consider myself an optimist concerning Bitcoin. But this is too optimistic even for me. You can't compare with Skype like that. It's pretty easy to create a Skype account, and most important, there's no commitment in doing so: you don't have to spend a penny.
Putting ~$700 on this "weird new technology" though, it's a whole different thing.

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July 20, 2012, 01:26:26 PM
 #46

If Bitcoin had 663m users like Skype and if each user kept $700 in cash balances

I consider myself an optimist concerning Bitcoin. But this is too optimistic even for me. You can't compare with Skype like that. It's pretty easy to create a Skype account, and most important, there's no commitment in doing so: you don't have to spend a penny.
Putting ~$700 on this "weird new technology" though, it's a whole different thing.

It would probably take more than a decade to get that kind of penetration with bitcoin, and I think that's being overly optimistic.  Also, I expect by that time the bitcoin idea will have evolved a better system.
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July 20, 2012, 02:09:16 PM
 #47

Rather then think that BTC is going to outcompete all these technologies with their advertising dollars I think you futurists should really ask yourselves what markets BTC offers a clear advantage in.

With international wire transfer fees at about $45 bucks (BOA), and currency conversion on top, BTC provides a clear advantage for small international business.  Small is where it really shines because its possible to hold foreign currency either by carrying a $1M balance in a swiss act or opening foreign bank accounts in the country whose currency you need to hold.  The BTC advantage is especially large if the business is international in both the supply and sales side.  For example, getting components made in China, adding some kind of value in Europe (even just a brand name), and then reselling to the USA.  The full money cycle in one supply cycle involves 2 currency conversions: USD->Euros (sale)  Euros->Yuan (rebuy inventory).  And of course if you are doing this via paypal, the full cycle is 2 paypal txns or 6% -- add currency conversion on top of that and I'll bet it pushes 10%!  That's a LOT of overhead compared to what BTC can offer.

Another niche is non-local purchases for people who do not qualify for debt-based instruments (i.e. paypal, credit card). 

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July 20, 2012, 06:48:30 PM
 #48

Once Bitcoin reaches VISA levels, the technology will be there - it is as easy as that.
I think that's a too simplistic attitude. Bandwidth doesn't follow Moore's law; instead it often regresses to where many people now suffer severe bandwidth limitations, peering partners start arguing about money, and powerful companies fight network neutrality. Instead of sitting back and waiting for bandwidth to become ubiquitous and limitless, Bitcoin development must be focused on scaleability.

Well before we reach VISA levels, bitcoin will hit $100 a piece and there will be much more incentive to tackle the issue.  The closer we get to the scaling problems the more resources we will have to tackle them.  I'm not worried.

Do the Dev's have an actual plan? You know -- with projected growth estimates, and various deadlines and coding milestones to achieve based on that? And where can I dig around for such info?

There is not plan of that detail that I'm aware of.  If you're so worried, make one.  That's how open source works.  We have a wiki and a mailing list.  Lay out a basic schedule and ask the bitcoin-dev list for feedback.

https://www.bitcoin.org/bitcoin.pdf
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July 20, 2012, 07:04:59 PM
 #49


It would probably take more than a decade to get that kind of penetration with bitcoin, and I think that's being overly optimistic.  Also, I expect by that time the bitcoin idea will have evolved a better system.

It will probably take a long time before a 'better' system takes over as long as the recognized primary dev team remains composed of people who are several cuts above the mid-tier user base in terms of their motivations and engineering effectiveness.  I conjecture that Bitcoin will _be capable of_ evolving to overcome most of the problems that could crop up although it will lose some of the features that were enjoyed in it's early existence.


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July 30, 2012, 07:45:53 AM
 #50

the recognized primary dev team remains composed of people who are several cuts above the mid-tier user base in terms of their motivations and engineering effectiveness.

The Bitcoin development team is awesome!

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August 01, 2012, 08:14:14 PM
 #51

I have had a few HNWIs and UHNWIs whose only reservation with moving $500k or $1m into BitCoin is the lack of liquidity and scalability of investment so they settle with puny amounts like $25k or $50k, etc.

It's funny: some types of investor won't invest into bitcoin because the market is too thin to suck up their currency. They will probably invest their millions of USD when bitcoin trades around $100 saying: "finally this market has matured enough so we can invest, even using our comfy brokerage account". Had they just invested $100,000 now and blown $900,000 on drugs and women.. they would have the same amount of coins in the end.

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August 01, 2012, 08:16:34 PM
 #52

I have had a few HNWIs and UHNWIs whose only reservation with moving $500k or $1m into BitCoin is the lack of liquidity and scalability of investment so they settle with puny amounts like $25k or $50k, etc.

It's funny: some types of investor won't invest into bitcoin because the market is too thin to suck up their currency. They will probably invest their millions of USD when bitcoin trades around $100 saying: "finally this market has matured enough so we can invest, even using our comfy brokerage account". Had they just invested $100,000 now and blown $900,000 on drugs and women.. they would have the same amount of coins in the end.

this is actually a good point.  for that however, one requires visionary thinking.  not everyone has that even when they are a UHNWI.
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August 01, 2012, 09:58:01 PM
 #53

That is probably the most deluded thing I've read around these parts. 1% of world GDP is 700 billion US dollars.

Sorry, I mistyped and put the decimal point in the wrong place. I believe .01% of GWP within a year is possible. This is still $7 Billion.

Bitcoin seems to be be one of the "stickiest" of World GDP currencies, ie, the kind that doesn't strengthen in value the more it is used (as others would expect it to). Basically, to put it in economic terms, our M3 is too high, no one trusts the currency enough to leave any significant value in it, especially the black market dealers which probably make up more of Bitcoin than we are willing to admit. I do think we could represent .01% of World GDP, but it will be with a currency that has such a high turn-over rate that we wouldn't enjoy the price we'd expect from it. Volume-wise I think the network can handle $7 billion per year's worth of transactions, though.

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August 01, 2012, 10:10:07 PM
 #54

That is probably the most deluded thing I've read around these parts. 1% of world GDP is 700 billion US dollars.

Sorry, I mistyped and put the decimal point in the wrong place. I believe .01% of GWP within a year is possible. This is still $7 Billion.

Bitcoin seems to be be one of the "stickiest" of World GDP currencies, ie, the kind that doesn't strengthen in value the more it is used (as others would expect it to). Basically, to put it in economic terms, our M3 is too high, no one trusts the currency enough to leave any significant value in it, especially the black market dealers which probably make up more of Bitcoin than we are willing to admit. I do think we could represent .01% of World GDP, but it will be with a currency that has such a high turn-over rate that we wouldn't enjoy the price we'd expect from it. Volume-wise I think the network can handle $7 billion per year's worth of transactions, though.

I am very new to Bitcoin and I am already seeing this thing as the new gold. I couldn't trust anything more than a currency backed by the internet. Ever since the 90s Dotcom bubble, I knew things were changing and money is only next in line.

So what's not to trust?

Many people my age don't trust new technology. They like things to be traditional. People should be free to go backwards but I am moving forward. Go Bitcoin!

Don't you worry about Bitcoin, let me worry about Bitcoin.

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August 02, 2012, 11:49:55 PM
 #55

Once Bitcoin reaches VISA levels, the technology will be there - it is as easy as that.
I think that's a too simplistic attitude. Bandwidth doesn't follow Moore's law; instead it often regresses to where many people now suffer severe bandwidth limitations, peering partners start arguing about money, and powerful companies fight network neutrality. Instead of sitting back and waiting for bandwidth to become ubiquitous and limitless, Bitcoin development must be focused on scaleability.

Well before we reach VISA levels, bitcoin will hit $100 a piece and there will be much more incentive to tackle the issue.  The closer we get to the scaling problems the more resources we will have to tackle them.  I'm not worried.

Do the Dev's have an actual plan? You know -- with projected growth estimates, and various deadlines and coding milestones to achieve based on that? And where can I dig around for such info?

There is not plan of that detail that I'm aware of.  If you're so worried, make one.  That's how open source works.  We have a wiki and a mailing list.  Lay out a basic schedule and ask the bitcoin-dev list for feedback.


https://bitcointalk.org/index.php?topic=80019.0   this is worth supporting.

sunnankar
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August 03, 2012, 01:08:20 AM
 #56

this is actually a good point.  for that however, one requires visionary thinking.  not everyone has that even when they are a UHNWI.

But in most cases they did not get or stay there by accident. They often have visionary thinking and willingness to take prudent risk.

Bitcoin seems to be be one of the "stickiest" of World GDP currencies, ie, the kind that doesn't strengthen in value the more it is used (as others would expect it to). Basically, to put it in economic terms, our M3 is too high

GDP is a worthless number. From Mises:

Quote
But of course putting numbers and measurements to these subjective values is nonsense. As Ludwig von Mises wrote, "The attempts to determine in money the wealth of a nation or of the whole of mankind are as childish as the mystic efforts to solve the riddles of the universe by worrying about the dimensions of the pyramid of Cheops."

I am very new to Bitcoin and I am already seeing this thing as the new gold. I couldn't trust anything more than a currency backed by the internet. Ever since the 90s Dotcom bubble, I knew things were changing and money is only next in line.

So what's not to trust?

Many people my age don't trust new technology. They like things to be traditional. People should be free to go backwards but I am moving forward. Go Bitcoin!

Mike, you seem to get it. Gold, like the FRN or Euros, is merely the blood while banks, credit cards, Paypal, etc. are the veins. Bitcoin is both the blood and the veins. This makes Bitcoin, in several ways, the ultimate offshore account.

One thing we know for sure is that the stuff we use as currency, like FRN, Euros, Yen, etc. are not going to be used as currency much longer. The system is completely FUBARed. What replaces it remains to be seen. Will it be Bitcoin? Perhaps. Perhaps not.

But you are right that monetary evolution is coming and it doesn't matter what anyone tries to do to stop it. Change is not mandatory; you can go extinct.

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August 03, 2012, 02:12:06 AM
 #57

GDP is a worthless number.

Eh, I used to think so too. And being from the Austrian school-of-thought I would agree with what Mises says, but when considering the productive output of the world, it is (at the very least) a measure of transactions. This can be handy when you have a government that provides a currency that gets inflated, but it becomes kind of useless when said government quits recording M3 so you can see its impact, so I digress.

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December 10, 2012, 06:14:13 PM
 #58

This can be handy when you have a government that provides a currency that gets inflated

Actually GDP is often just a mirror, although delayed, for the creation of new currency by the State.

sunnankar
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February 10, 2013, 02:19:59 AM
 #59

I am very new to Bitcoin and I am already seeing this thing as the new gold. I couldn't trust anything more than a currency backed by the internet. Ever since the 90s Dotcom bubble, I knew things were changing and money is only next in line.

So what's not to trust?

Many people my age don't trust new technology. They like things to be traditional. People should be free to go backwards but I am moving forward. Go Bitcoin!

Yes, not trusting new technology can be problematic because it puts one at a competitive disadvantage to those who do trust new technology. Digging holes with shovels instead of backhoes.

The wealth transfer from holders of other stuff to holders of bitcoins is accelerating.


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April 03, 2013, 07:26:23 AM
 #60

The wealth transfer from holders of other stuff to holders of bitcoins is accelerating.

Figured I would let people know that the next 2-3 months are going to be extremely exciting with the bitcoin price. You may be tempted to sell but that may not be a very good idea and you will likely be regretting that decision six months from today. There is going to be a ton of funds flowing into Bitcoin.

Currently, there are a bunch of Silicon Valley VCs and Wall Streeters, at least 5-6 I am personally aware of, who are fighting over each other to establish multi-million dollar positions. But that amount of capital is going to look tiny compared to what is scheduled in about 2-3 months. The Bitcoin market, at current prices, is simply far far too small for these amounts of fund flows and why they are melting up the price by buying anything that appears for sale.

I really hope the Bitcoin community gets to benefit from this massive upcoming wealth transfer. To do so merely (1) hold onto your bitcoins, (2) restrict supply as much as you can (this is very important) and (3) make any of these newcomers pay dearly for whatever trickle of bitcoins you do choose to sell or spend.

So, who wants to be like the Litecoin trader with seller's remorse? One guy wrote a sad tale about how in January he bought 80,000 litecoins at $0.068 and sold them at $0.20. Litecoins are selling for about $5 today. So he took a 194% return, or $10,560, but missed out on a 7,250% return, or $394,560. and is feeling seller's remorse.

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