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Author Topic: BitCoin Death Knell?  (Read 3900 times)
wb3
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May 23, 2011, 03:25:16 PM
 #1

The light bulb is burning bright. Maybe, a little to bright.

   There have been many analysis on the current price by people in the industry and why it shouldn't be there. There is a complex and incalculable effect as to the current price. Sure, fundamentals apply as they should but they do not include the "human factor." One key to the imminent fall in the BTC values is as price goes up overall volume goes down. What is happening is that BTC is breaking away from the mainstream and being supported by a sub-group. This sub-group will eventually be replaced by yet another sub-group, and on and on until only a relative small group of people use it.


   Not wanting to see the BTC reduced to history, we need to bring prices down to where people will want to take a chance. No realistic person is going to rely on data from one exchange (MTGOX). Whom, by the way, should be congratulated as one of the first winners in the BTC community, even though generally very little is known about him. Almost mystic in nature. Another problem for most.

  As volume decreases expect greater swings in price. There is over 6 Million BTC and around less than 1% of that is traded and setting the price for the vast majority.

  But irrespective of that, ask some basic questions. Are enough people currently using BTC? If a new person wants to get into BTC, is it easy to acquire and exchange to the BTC? Is the cost of doing so on par with their own currency or out of balance? Once converted, are their converted funds relatively stable until they use the BTC?


Net Worth = 0.10    Hah, "Net" worth Smiley
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May 23, 2011, 03:32:54 PM
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   There have been many analysis on the current price by people in the industry and why it shouldn't be there.

Links please?

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May 23, 2011, 03:41:56 PM
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The amount of goods and services being traded for Bitcoin is an unknown. Due to the nature of the currency, it is likely to always remain so. I suspect, but can't prove, of course, there's quite a lot of illegal goods being traded, drugs being a prime candidate. You'll never get a good picture of how much that drives BTC prices.

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May 23, 2011, 03:46:54 PM
 #4

   There have been many analysis on the current price by people in the industry and why it shouldn't be there.

Links please?



Regardless of what the current USD to BTC exchange rate is, the fact is that people can buy goods and services in BTC for prices that reflect their value is USD.  This is what give BTC its value.

"We will not find a solution to political problems in cryptography, but we can win a major battle in the arms race and gain a new territory of freedom for several years.

Governments are good at cutting off the heads of a centrally controlled networks, but pure P2P networks are holding their own."
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May 23, 2011, 04:12:15 PM
 #5

Regardless of what the current USD to BTC exchange rate is, the fact is that people can buy goods and services in BTC for prices that reflect their value is USD.  This is what give BTC its value.


The OP claimed there were analysts who claimed that bitcoin should have the value of zero, or at least less than the $7 for which you can buy it now. 

I have never seen anybody with any half-rational arguments who claimed that it should be valued at $1 or $0.01 or whatever, and if those predictions exist it would be very interesting to see them.

 
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May 23, 2011, 04:47:49 PM
 #6

90%+ of these Ops are just bitter.

If you are excited by Bitcoin the technology and can understand the value behind it, i.e. fast, frictionless, semi-anonymous transfers of money without involving third parties, then you would probably see $7/btc as dirt cheap. If you don't see the value in it, look a little harder at the current choices of bank checks/wires, western union, paypal, snail mail, etc. See it now?

but haters gonna hate.

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wb3
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May 23, 2011, 05:01:47 PM
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90%+ of these Ops are just bitter.

If you are excited by Bitcoin the technology and can understand the value behind it, i.e. fast, frictionless, semi-anonymous transfers of money without involving third parties, then you would probably see $7/btc as dirt cheap. If you don't see the value in it, look a little harder at the current choices of bank checks/wires, western union, paypal, snail mail, etc. See it now?

but haters gonna hate.

Oh Contraire, not bitter, nor hateful, but fearful. Fearful of a rapid and successive decline that could destroy any and all credibility. I don't subscribe to the Labor Theory, although Labor is a factor in cost, it most certainly isn't the driving factor. A simple example is all it takes to show a fallacy in the Labor Theory. It might cost you $1 Million Dollars to produce an Apple, so the people will eat Oranges instead.

One must be realistic when looking at BTC, does the value = $7 ? Should it?  I am not doubting that a BTC could equal $7, it just shouldn't be there now, for the greater good of BTC. However, if the groups keep sub-dividing into their smaller groups, then let the best man win. At the cost of the whole.

Net Worth = 0.10    Hah, "Net" worth Smiley
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May 23, 2011, 05:09:17 PM
 #8

Is this a classic "bubble, it's gonna pop, run away" thread?

btcarmory.com
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May 23, 2011, 05:12:08 PM
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Net Worth = 0.10    Hah, "Net" worth

Nice sig, OP.

Variance is a bitch!
wb3
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May 23, 2011, 05:34:09 PM
 #10

Interesting perspective and rational. Game Theory works good in groups, until you apply the Prisoner's Dilemma. Once a better deal is offered to a specific group or individual, Game Theory goes out the window with the birds. People will work in "their own" best interests and destroy the whole when it is beneficial to them, even though it is detrimental to the group. The big test in value will be the next best competing Exchange Market.

Net Worth = 0.10    Hah, "Net" worth Smiley
kiba
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May 23, 2011, 06:04:09 PM
 #11

Is this a classic "bubble, it's gonna pop, run away" thread?

I heard "Bitcoin Bubble!"  Cheesy

http://www.bitcoinweekly.com/articles/comic-reaction-after-dramatic-rise-of-bitcoin-s-value

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May 23, 2011, 06:10:55 PM
 #12

90%+ of these Ops are just bitter.

If you are excited by Bitcoin the technology and can understand the value behind it, i.e. fast, frictionless, semi-anonymous transfers of money without involving third parties, then you would probably see $7/btc as dirt cheap. If you don't see the value in it, look a little harder at the current choices of bank checks/wires, western union, paypal, snail mail, etc. See it now?

but haters gonna hate.

Oh Contraire, not bitter, nor hateful, but fearful. Fearful of a rapid and successive decline that could destroy any and all credibility. I don't subscribe to the Labor Theory, although Labor is a factor in cost, it most certainly isn't the driving factor. A simple example is all it takes to show a fallacy in the Labor Theory. It might cost you $1 Million Dollars to produce an Apple, so the people will eat Oranges instead.

One must be realistic when looking at BTC, does the value = $7 ? Should it?  I am not doubting that a BTC could equal $7, it just shouldn't be there now, for the greater good of BTC. However, if the groups keep sub-dividing into their smaller groups, then let the best man win. At the cost of the whole.

you're more than welcome to go and dump a few 100k btc on the markets to depress the price to bring it to where you think it should be. go, do in now! my bids are waiting! Smiley

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May 23, 2011, 06:16:16 PM
 #13

you're more than welcome to go and dump a few 100k btc on the markets to depress the price to bring it to where you think it should be. go, do in now! my bids are waiting! Smiley

Gottach love the people who screams Bitcoin Bubble, providing me a reason to post my Bitcoin Bubble Comic. Cheesy

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May 23, 2011, 06:22:45 PM
 #14

Interesting perspective and rational. Game Theory works good in groups, until you apply the Prisoner's Dilemma.

This is assumed to be true, but the prisoner's dilemma was recently put to the test and the results were mixed.  Not all users will only do what is in their own best interests, even if they don't know the others and they are forever anonymous.  Game theory is just what it says, it's a theory.

"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'
wb3
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May 23, 2011, 06:25:10 PM
 #15

Rather than argue the merits, and since we all like Open Source and Freedom of Information. I will endeavor to post information that Inquiring Minds want to know, to more appropriately add to information. I will list first, the information, and then ask whether this information should be made public, then I might post.

1. Will the Real Slim Shady Please Stand Up?  Identity of MagicalTux and location.
2. LLC information for MTGOX dealing with Bank Accounts in the U.S.
3. How many Accounts are on MTGOX?
4. Volume of New Money on MTGOX after subtracting volume from old accounts. Rate of growth.
5. The DarkPool price Points added to depth charts. Want to know where the DarkBids are? Hmm...
6. Any other questions you might want answered?

Nanotube,

  I would never dump 100K BTC onto the market to depress the price, I would slowly trickle it in between the bids and asks to reap the greatest reward. Smiley  

So place your bids.

Just because I think the price is overall bad for BTC, doesn't mean I don't take advantage of it.

Net Worth = 0.10    Hah, "Net" worth Smiley
em3rgentOrdr
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May 23, 2011, 07:36:11 PM
 #16

Is this a classic "bubble, it's gonna pop, run away" thread?

Smiley

And I the titles are always in the form of a FUD (Fear, Uncertainty, and Doubt) question.

"We will not find a solution to political problems in cryptography, but we can win a major battle in the arms race and gain a new territory of freedom for several years.

Governments are good at cutting off the heads of a centrally controlled networks, but pure P2P networks are holding their own."
wb3
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May 23, 2011, 09:26:40 PM
 #17

Interesting perspective and rational. Game Theory works good in groups, until you apply the Prisoner's Dilemma.

This is assumed to be true, but the prisoner's dilemma was recently put to the test and the results were mixed.  Not all users will only do what is in their own best interests, even if they don't know the others and they are forever anonymous.  Game theory is just what it says, it's a theory.

Even in the worst case scenario for a high exchange rate (all members of a cartel defect) there will still be a variety of views on what the future exchange rate will be and those members will continually bet against each other, providing a nice bubbly marketplace where traders can arbitrage.

Your Cartel scenario might not be far off. Right now there is basically ONE. But lets look a little south and see what happens when multiple Cartel's deal in the same product, they will tear each other apart at the cost of the community. This is happening with miners, it will start to happen with Exchange's as soon as there isn't a basic monopoly. However, collusion usually comes into play at first but then degrades into straight up competition as users move away.

To be frank, currently the competition is for the USD BTC. Without the USD volume, BTC is not worth much. Much like drugs, hmm...

Net Worth = 0.10    Hah, "Net" worth Smiley
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May 23, 2011, 09:27:01 PM
 #18

I think prices need to go up significantly or else the total amount of bitcoin in circulation won't have a high enough value for them to be used in a significant amount of trade.

If there is only $43 million worth of bitcoin, then millions of people cannot possibly have enough to use in trade. If the value increases to $2 or $3 billion, then what we consider a low value amount of bitcoin now, e.g. 0.01 BTC, will be enough for a substantial trade, and there are enough bitcoins for a large number of people to have at least that much.
wb3
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May 23, 2011, 09:35:24 PM
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I think prices need to go up significantly or else the total amount of bitcoin in circulation won't have a high enough value for them to be used in a significant amount of trade.

If there is only $43 million worth of bitcoin, then millions of people cannot possibly have enough to use in trade. If the value increases to $2 or $3 billion, then what we consider a low value amount of bitcoin now, e.g. 0.01 BTC, will be enough for a substantial trade, and there are enough bitcoins for a large number of people to have at least that much.

Not quite, there will be about 21 Million but that is 1.00 BTC's. The base unit of BTC is 0.00000001. So comparatively, there are 21 Quadrillion base units.  Like a $1 is just a 100 pennies, or $10 a 1000 pennies, $100 is 10,000 pennies.

You must look at it from its base unit.

If there was for lack of better words a "stock split" or move the decimal place one place to the right to reduce the price to new comers, I would feel better. But that would reward early adopters by increasing their holding by a factor of 10. However, with the exchange, it might not be that big of an increase.


Net Worth = 0.10    Hah, "Net" worth Smiley
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May 23, 2011, 09:53:16 PM
 #20

That's exactly what I'm saying. If smaller units are to be used, the value of a bitcoin needs to increase significantly so that units like 0.01 bitcoins, or a bitcent, have substantial value.
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