Will bitcoin "stabilize" at more, or less than the current price?

[BitNerd]

According to my current understanding, Bitcoin will always tend to increase its value because of being deflationary. But when BTC finally stabilizes and functions like other rare resources, such as gold, will its price be higher or lower than the current (around $250)?

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[inBitweTrust]

According to my current understanding, Bitcoin will always tend to increase its value because of being deflationary. But when BTC finally stabilizes and functions like other rare resources, such as gold, will its price be higher or lower than the current (around $250)?

Bitcoin is disinflationary not deflationary. A Subtle distinction, but an important one that reveals why we have seen capitulation during the last year despite it being a fantastic year by any other metric. We currently have ~10% inflation where almost 3600BTC have to be purchased daily to maintain price parity.

It won't stabilize anytime soon, expect massive volatility during the next 5 years, with another appreciating bubble within late 2015 till late 2016 at the latest.(If we don't see any adoption bubbles before than. ) This is because Inflation will drop to 5% in mid 2016.

Bitcoin may eventually become as stable as USD/Euro in 20 or more years with a large enough market cap.

[Beliathon]

According to my current understanding, Bitcoin will always tend to increase its value because of being deflationary. But when BTC finally stabilizes and functions like other rare resources, such as gold, will its price be higher or lower than the current (around $250)?

"There is a common fallacy which says that price stability is required in order for a currency to function as a form of money. The way people use terms like store of value and unit of account presumes stability. However, I will show that in an unstable world, a stable currency is counterproductive and furthermore that serves the traditional purposes of money, to the extent that they can be meaningfully defined in unstable conditions.

First of all, it is impossible, long-term, to expect an algorithm to maintain the stability of a currency. There will always be money to be made by predicting the algorithm’s future effect on supply, and once people have learned to do so then the algorithm necessarily ceases to achieve its desired results. For someone who gains by anticipating such an algorithm is not producing something valuable that other people want to buy, so he must be gaining off of other investors, who are losing. That means other people holding the currency, which means that the currency cannot possibly be stable—either it is dropping in price, or the supply is rapidly declining. (The outcome would depend on the details of the prescription.) This can continue until the market cap of the currency goes to zero. In order to succeed at manipulating the price to keep it stable, the prescription must never allow traders to adapt to it, and this means it must continually be smarter than everyone else. This is not something anyone can reliably guarantee, especially a Bitcoin startup, if history is any guide. This is the same reason that attempts to create crypto-equities that track the price of gold or dollars and other things through protocols like ProtoShares and Mastercoin won’t work. It is also why the federal reserve is traditionally so secretive, why the chairman tries to talk without saying anything, and why his or her every move is so deeply scrutinized.

Stability is about as real as the fountain of youth, love potions, or perpetual motion machines. It is not to be found anywhere in the universe but for some reason people act as if such a thing could somehow exist. Prices reflect the availabilities of things that we actually can have, so maybe we should all stop searching for chimera of stability and accept that if the world is unstable, than prices ought to be unstable too. Otherwise prices could not serve the function of enabling people to coordinate the allocation of scarce resources."

Source: http://nakamotoinstitute.org/mempool/bitcoin-as-a-store-of-value-unit-of-account-and-medium-of-exchange/

[BitNerd]

Thank you guys, I liked all the replies, but what I asked is will btc stabilize (at least not randomly doubling and halving its price as it does now), will it be more than the current price, or less?

About it not being deflationary, what about people losing their keys and losing their btc forever? Is that not deflation?

[a fool and his money ...]

topic needs to go to speculation section

Bitcoin isn't deflationary and all that gibberish about gold is hype right now and nothing else

[jonald_fyookball]

Let me check my crystal ball and get back to you.

[inBitweTrust]

Thank you guys, I liked all the replies, but what I asked is will btc stabilize (at least not randomly doubling and halving its price as it does now)not anytime soon, possibly in 5-20 years, will it be more than the current price, or less? Likely, increase in price due to supply and demand and future adoption trends. Likely you will see more violent appreciating bubbles followed by crashes landing on higher supports.

About it not being deflationary, what about people losing their keys and losing their btc forever? Is that not deflation?

This won't happen till ~2140-


For Bitcoin to be technically deflationary the lost coins have to exceed the minting, as BTC value goes up expect less and less people to lose them.

[BitNerd]

At least it's a low and highly predictable inflation?

[inBitweTrust]

At least it's a low and highly predictable inflation?

Depends on what you consider High?

The US has some of the lowest inflation at 5-8% a year (when you properly calculate the CPI for food /fuel/ healthcare inflation)

Venezuela has some of the highest inflation right now at over 63%.

Thus Bitcoin already has much lower inflation than many forms of fiat. Bitcoin will start to match the inflation numbers of the US in 2016 and drop to really low inflation in 2022.

Bitcoin represents an experiment with one of the first international disinflationary currencies with a fixed distribution curve. We have no idea how this will turn out and there is always a possibility that it will always remain volatile(but not expected with large market cap)

[DoubleTrouble]

The problem lyes with simple supply and demand. Every block there is 25 bitcoins and considering maybe half are dumped pretty quickly that means every ten minutes 3,000 dollars needs to be put into the newtwork to keep things stable. I think the lower the block reward goes (Still a  few years away I believe) the greater forms of stabilization we will see.

[inBitweTrust]

The problem lyes with simple supply and demand. Every block there is 25 bitcoins and considering maybe half are dumped pretty quickly that means every ten minutes 3,000 dollars needs to be put into the newtwork to keep things stable. I think the lower the block reward goes (Still a  few years away I believe) the greater forms of stabilization we will see.

The selling of 80-90% of BTC to cover electrical costs and asics places steady downward pressure upon price but not necessarily volatility. The volatility comes from the fact that the market cap is less than 4 billion and there are still around 1k bagholders with 1-10k bitcoins that can create wild swings in exchanges. Higher market cap, higher liquidity, and greater distribution (all likely to happen with time) will remove most volatility.

[wadili89]

According to my current understanding, Bitcoin will always tend to increase its value because of being deflationary. But when BTC finally stabilizes and functions like other rare resources, such as gold, will its price be higher or lower than the current (around $250)?

i think it will fall more and it will hit around 150$ and then it will rise again in future now its time to hold btc and sale them for good price in future

[sandy47bt]

If there are bitcoin mined, of course bitcoin price will be less than now
And "stabilize" won't happen if people still use bitcoin as investment (buy at low & sell at high)

Wait for next halving & you will see bitcoin price rise up

[Fernandez]

According to my current understanding, Bitcoin will always tend to increase its value because of being deflationary. But when BTC finally stabilizes and functions like other rare resources, such as gold, will its price be higher or lower than the current (around $250)?

Its certainly not deflationary now. Its the huge inflation which is contributing to the price crash.
If you're talking of when 21m coins have been mined then you need to keep in mind that Bitcoin may be a relic by then.

[Divinespark]

My guess is significantly higher than that
Let's see

[Divinespark]

Right now, forward looking inflation is at around 11-12% which makes it exponentially more inflationary than the USD
It will get more interesting after the next halving in mid 2016, but expect a rocky ride

[maurya78]

I believe that btc will either stabilise at above $20k per coin or go to zero
Completely binary play

[Kazimir]

I believe that btc will either stabilise at above $20k per coin or go to zero
Completely binary play

This. The current price is completely ridiculous for the long term. Either Bitcoin is worth way, WAY more than this, or zero.

Considering the huge possibilities and benefits of Bitcoin compared to traditional payment system, as well as the shaky foundations of fiat (they're printing USD and EUR out of thin air like there's no tomorrow), my bet is on Bitcoin going up. Or fiat going down, depending on how you look at it.

[Demille]

According to my current understanding, Bitcoin will always tend to increase its value because of being deflationary. But when BTC finally stabilizes and functions like other rare resources, such as gold, will its price be higher or lower than the current (around $250)?

It all depends on level of adoption and merchant acceptance, but I think bitcoin has a far higher potential value than what it is worth now. Bitcoin will likely have to keep rising so the miners keep mining as it won't be profitable for them to do so.

[Giggs]

If bitcoin is ever going to stabalize it'll be a lot higher than what it is now. I think we need to break away in giving value to bitcoin in fiat terms as it's always likely to remain volatile this way.

[TheWiseandUnwise]

It's going down further. Right now it's just a dead cat bounce.

[TYT]

Who knows what price bitcoin will stabilize at. It's a crazy roller coaster of ups and downs so just hold tight and enjoy the ride.

[Sharpe]

Personally I think it will stabilize somewhere in the thousands. I think it will take several years to reach this though. I hope the price goes up a little soon though as it could cause problems for the miners.

[Kazimir]

I hope the price goes up a little soon though as it could cause problems for the miners.

What's the problem, exactly? Mining will, by the very definition of how Bitcoin is set up, always remain profitable for enough miners.

If price goes down, or more people start mining, it will become too expensive for some miners, so some will stop.
If price goes up, or some people stop mining, it will become more profitable to mine, so more people will start mining.

No problem whatsoever.

[picolo]

If bitcoin is ever going to stabalize it'll be a lot higher than what it is now. I think we need to break away in giving value to bitcoin in fiat terms as it's always likely to remain volatile this way.

I think the price is likely to go up in the following months.

[Bitcoinexp]

I doubt it'll ever stabilize in the near future, much less at the current price. I think that if it ever does stabilize and is actually still being utilized, it'll probably be much higher than it is now. Mass adoption will probably be the only thing that can marginally stabilize it. By which time, the December fluctuations last year will seem as tiny as the initial 30$ price tag for one bitcoin.

[Q7]

According to my current understanding, Bitcoin will always tend to increase its value because of being deflationary. But when BTC finally stabilizes and functions like other rare resources, such as gold, will its price be higher or lower than the current (around $250)?

I presume when btc finally stabilizes that is when two more halvings already took place. So with only limited supply being introduced to the market, and if demands continues to be strong buoyed by use of btc as a currency, most likely I'm sure price will be up.

[microbial]

only psychic know for sure

[picolo]

I doubt it'll ever stabilize in the near future, much less at the current price. I think that if it ever does stabilize and is actually still being utilized, it'll probably be much higher than it is now. Mass adoption will probably be the only thing that can marginally stabilize it. By which time, the December fluctuations last year will seem as tiny as the initial 30$ price tag for one bitcoin.

The volatility is likely to go down as the adoption is bigger and the price reflects the current market and not mostly a speculation about the future market.

[Bitcoinexp]

I doubt it'll ever stabilize in the near future, much less at the current price. I think that if it ever does stabilize and is actually still being utilized, it'll probably be much higher than it is now. Mass adoption will probably be the only thing that can marginally stabilize it. By which time, the December fluctuations last year will seem as tiny as the initial 30$ price tag for one bitcoin.

The volatility is likely to go down as the adoption is bigger and the price reflects the current market and not mostly a speculation about the future market.

Just my opinion on the matter.  Basically, I'm rooting for the geminii project to stabilize the value of bitcoin besides boosting it up.

[bitcart]

It'll level off for now and rise 3 fold in 2015. There are too many large investors in the game now and 2015 looks like a big year for bitcoin so it is hard to see it decreasing in my opinion.

[Frijj]

I doubt it'll ever stabilize in the near future, much less at the current price. I think that if it ever does stabilize and is actually still being utilized, it'll probably be much higher than it is now. Mass adoption will probably be the only thing that can marginally stabilize it. By which time, the December fluctuations last year will seem as tiny as the initial 30$ price tag for one bitcoin.

I can't see it stabilizing ever. What would have to happen for it to do so? I think bitcoin is an experimental technology and as so it's going to be going up and down for the foreseeable future. I'd like to see it happen but I just can't see it.

[amaclin]

According to my current understanding, Bitcoin will always tend to increase its value because of being deflationary.

Wrong.

But when BTC finally stabilizes and functions like other rare resources, such as gold, will its price be higher or lower than the current (around $250)?

Zero

[Zendikar]

My guess is BTC will die before it sees 'stabilization' should it ever die.

[QuestionAuthority]

Bitcoin will not stabilize until more or less adoption can't move the price. The adoption rate of Bitcoin is happening very slowly compared to other technology. It may stabilize for a short time if adoption and rejection stands still. Bitcoin has a very slow adoption rate so the price is stable for now.

[Fernandez]

Right now, forward looking inflation is at around 11-12% which makes it exponentially more inflationary than the USD
It will get more interesting after the next halving in mid 2016, but expect a rocky ride

It will be 6% soon but your point still stands. Bitcoin offers no advantage in ordinary payments, and the only reason to hold is if you are a speculator and believe the price will go up. Currently, that confidence is much low.

[altcoin hitler]

According to my current understanding, Bitcoin will always tend to increase its value because of being deflationary. But when BTC finally stabilizes and functions like other rare resources, such as gold, will its price be higher or lower than the current (around $250)?

Obviously you have been 100% brainwashed and sold on the hype. How surprised will you be when it drops to 100$ and never reaches 1000$ again? Will you be surprised? Why?

[Ektra]

There's really no reason for it to stabilise at this price or to be honest any other at the moment, since the majority of buys and sells are for speculative purposes and thus highly prone to snowballing, destabilising effects.

[zimmah]

Bitcoin will not stabilize until more or less adoption can't move the price. The adoption rate of Bitcoin is happening very slowly compared to other technology. It may stabilize for a short time if adoption and rejection stands still. Bitcoin has a very slow adoption rate so the price is stable for now.

all of them started slow and exploded once they reached about 5%.

bitcoin will explode some time too, but it will take a while before that happens, probably some more years.

That's not to say the price will remain at $250 for years, I'm just saying it won't be stable for the next few years at least.

Try 2025 or so, if you're lucky.

Although, I wouldn't be surprised to see 6 or 7 digits by then.

[QuestionAuthority]

Bitcoin will not stabilize until more or less adoption can't move the price. The adoption rate of Bitcoin is happening very slowly compared to other technology. It may stabilize for a short time if adoption and rejection stands still. Bitcoin has a very slow adoption rate so the price is stable for now.

all of them started slow and exploded once they reached about 5%.

bitcoin will explode some time too, but it will take a while before that happens, probably some more years.

That's not to say the price will remain at $250 for years, I'm just saying it won't be stable for the next few years at least.

Try 2025 or so, if you're lucky.

Although, I wouldn't be surprised to see 6 or 7 digits by then.

Well, that could happen. Or this could happen...

[HarmonLi]

I think we're still quite a bit away from that happening. First, we need the block reward to go down further. As soon as we've reached maybe 16m, 17m or 18m coins, we're slowly approaching the final amount of ~21m coins. At that point we most likely will have also seen the main influx of potential investors' money in to Bitcoin. At that point we may see something of a stabilization, in my opinion.

[Auxi]

200-250 at first

[DustyRah]

Bitcoin will never stabilize though considering how the difficulty has affected the price, we may see a more stable upper and lower bounds.

http://bitcoincharts.com/charts/btceUSD#rg60ztgSzbgBza1gWMAzm1g10za2gWMAzm2g25zxzi1gCCIzi2gMACDzv