Best Time To Sell In Over A Year

[cypherdoc]

What's the economic model for gold?

I thought earlier today about the question: "What if bitcoin was exclusively used as a store of wealth? Would it still be valuable?". This question came up because I realized that the actual need for currency to make transactions is a lot lower than I had previously thought. At current prices, only about 30,000 BTC are needed to support the silkroad, which is arguably one of the more sizeable parts of the economy. Let's assume a high number (in dollar-terms) of transaction volume done in bitcoin each day: 2,500,000 USD (37 times silkroad). This would justify a price of roughly 2.5e5 / 1e7 = 0.25 USD/BTC! Ergo bitcoins value is already almost exclusively derived from its function as a store of wealth ("hope that price will go up").

If above conclusion is correct, we don't have to worry about an economic model for bitcoin if all we want is higher value.

i haven't checked your math but i have been intuitively making this argument from the beginning about Bitcoin.

[MPOE-PR]

Or maybe the best time to buy PUT options in a year...

[ElectricMucus]

Or maybe the best time to buy PUT options in a year...

do it faggot

[bitcon]

Or maybe the best time to buy PUT options in a year...

do it faggot

-1

wow, you sound like a really nice AND intelligent guy.

[ElectricMucus]

Or maybe the best time to buy PUT options in a year...

do it faggot

-1

wow, you sound like a really nice AND intelligent guy.

says the guy with the gangster avatar

[Roger_Murdock]

What's the economic model for gold?

I thought earlier today about the question: "What if bitcoin was exclusively used as a store of wealth? Would it still be valuable?". This question came up because I realized that the actual need for currency to make transactions is a lot lower than I had previously thought. At current prices, only about 30,000 BTC are needed to support the silkroad, which is arguably one of the more sizeable parts of the economy. Let's assume a high number (in dollar-terms) of transaction volume done in bitcoin each day: 2,500,000 USD (37 times silkroad). This would justify a price of roughly 2.5e5 / 1e7 = 0.25 USD/BTC! Ergo bitcoins value is already almost exclusively derived from its function as a store of wealth ("hope that price will go up").

If above conclusion is correct, we don't have to worry about an economic model for bitcoin if all we want is higher value.

I think this is exactly right.  I believe that Bitcoin could succeed if it were "merely" successful as a store of value (like gold) rather than a medium of exchange.  But I don't think that's likely because unlike gold, Bitcoin has tremendous potential to be more than just a reliable store of value.  It's just that it's much harder to become a successful medium of exchange than it is to become a successful store of value because the former relies more heavily on network effects. In other words, it's going to take longer!  But Bitcoin is already succeeding as a medium of exchange for certain niche markets (e.g., illicit drugs and gambling) where its advantages make it really shine.  These early successes are planting the seeds for larger successes down the road.  But there's no shortcut.  I see a lot of people hoping for some huge player (e.g., Amazon) to start accepting Bitcoins. But that's unrealistic in the near future, and it's also unnecessary.  Here's a good article from a few months back by Amir Taaki that speculates about the adoption pattern we'll likely see in the years ahead.

http://bitcoinmedia.com/roadmap-for-the-revolution-the-future/

Here are some excerpts that I think sum up the key idea well:

It is a pyramid of dependency. Growth in bottom layers feeds into growth at higher layers. Trying to effect growth in a later layer is immature without building the foundational infrastructure necessary first.
...
Right now we are seeing a premature realisation of classical markets. Six months ago, people were rushing in a desperate land grab to duplicate the most popular sites like Kickstarter or eBay in the bitcoin ecosystem. But they didn’t draw on bitcoin’s strengths in any meaningful way and failed to do anything new or creative. Ultimately these sites always fail as it is too early in bitcoin’s life for these sites to exist and be sustainable.

[FreeMoney]

Store of value and means of transfer are completely intertwined. A bitcoin you can't ever send doesn't store any wealth.

Every merchant that starts accepting has a tiny direct effect (the people who want to use that particular merchant hold a few coins for a little while) and a broader indirect effect ("Well, it seems like a lot of merchants are accepting it so lots of people will want these so it is safe to store more wealth as coins").

SR (for example) users don't constitute much demand, but the fact that there is a relatively large drug retailer operating in the open for a long time is a part of many people's evaluation of the future utility of bitcoin and influences (to a large extent I think) their willingness to hold coins.

[Roger_Murdock]

Store of value and means of transfer are completely intertwined. A bitcoin you can't ever send doesn't store any wealth.

Sure, but while many people store wealth in gold, very few spend gold directly on goods and services without going through the intermediary of fiat currency.  They buy gold with fiat to try to step outside inflation for a period of time.  Then (perhaps years later) when they need that value, they sell the gold for fiat currency and spend that on goods and services.  That's what I mean when I say that gold is more of a store of value than it is a medium of exchange.  Bitcoin can function in the exact same way but it ALSO has the potential to be a superior medium of exchange.  We just need a greater network effect for it to really take off (which should come in time).  Do you disagree?

[cypherdoc]

Store of value and means of transfer are completely intertwined. A bitcoin you can't ever send doesn't store any wealth.

Sure, but while many people store wealth in gold, very few spend gold directly on goods and services without going through the intermediary of fiat currency.  They buy gold with fiat to try to step outside inflation for a period of time.  Then (perhaps years later) when they need that value, they sell the gold for fiat currency and spend that on goods and services.  That's what I mean when I say that gold is more of a store of value than it is a medium of exchange.  Bitcoin can function in the exact same way but it ALSO has the potential to be a superior medium of exchange.  We just need a greater network effect for it to really take off (which should come in time).  Do you disagree?

this is why their prices are going to invert.

[Roger_Murdock]

Store of value and means of transfer are completely intertwined. A bitcoin you can't ever send doesn't store any wealth.

Sure, but while many people store wealth in gold, very few spend gold directly on goods and services without going through the intermediary of fiat currency.  They buy gold with fiat to try to step outside inflation for a period of time.  Then (perhaps years later) when they need that value, they sell the gold for fiat currency and spend that on goods and services.  That's what I mean when I say that gold is more of a store of value than it is a medium of exchange.  Bitcoin can function in the exact same way but it ALSO has the potential to be a superior medium of exchange.  We just need a greater network effect for it to really take off (which should come in time).  Do you disagree?

this is why their prices are going to invert.

From your lips to God's ears. But if you're holding both gold and Bitcoin (which I'd advise), you shouldn't worry about Bitcoin "stealing market share" from gold (and that's so even if you hold a huge amount of gold and just a tiny amount of Bitcoin).  The current "market cap" of gold alone is about $8 Trillion.  The current market cap of gold plus Bitcoin is $8.0001 Trillion.  If Bitcoin takes 10% of gold's market share, well maybe your gold's value takes a corresponding 10% hit, but your Bitcoins will be worth about 8,000 times as much.  So in the (hopefully-not-too) distant future, yes, bitcoin and gold may become "competitors." But right now they complement each other nicely.

[smoothie]

Store of value and means of transfer are completely intertwined. A bitcoin you can't ever send doesn't store any wealth.

Sure, but while many people store wealth in gold, very few spend gold directly on goods and services without going through the intermediary of fiat currency.  They buy gold with fiat to try to step outside inflation for a period of time.  Then (perhaps years later) when they need that value, they sell the gold for fiat currency and spend that on goods and services.  That's what I mean when I say that gold is more of a store of value than it is a medium of exchange.  Bitcoin can function in the exact same way but it ALSO has the potential to be a superior medium of exchange.  We just need a greater network effect for it to really take off (which should come in time).  Do you disagree?

Who says you can't trade a house for 40 ounces of gold?

I wouldn't want to convert to fiat at some point.

[Roger_Murdock]

Who says you can't trade a house for 40 ounces of gold?

I wouldn't want to convert to fiat at some point.

No one says you can't.  But my impression is that in the vast majority of cases (at least when weighted by value), when people "spend" their gold to purchase goods and services, they do in fact first convert it to fiat.  (I wouldn't want to convert to fiat either, but I'm a Bitcoin-obsessed libertarian weirdo. So I'm not sure that tells us much.)

[smoothie]

Who says you can't trade a house for 40 ounces of gold?

I wouldn't want to convert to fiat at some point.

No one says you can't.  But my impression is that in the vast majority of cases (at least when weighted by value), when people "spend" their gold to purchase goods and services, they do in fact first convert it to fiat.  (I wouldn't want to convert to fiat either, but I'm a Bitcoin-obsessed libertarian weirdo. So I'm not sure that tells us much.)

Well gold/silver....for me would be investment to purchase real estate when the prices diverge. Trade it over for cheap real estate. CASH FLOW REAL ESTATE!

[fcmatt]

I heard in vietnam using gold as part of the payment for a house is common. But then it is also a way to prob avoid some tax and stay under some radar.

[RodeoX]

Should we just bump this thread every morning? Because today is the best time to sell in over a year, until tomorrow.

[zhalox]

Should we just bump this thread every morning? Because today is the best time to sell in over a year, until tomorrow.

Interesting point, but you could also look at it this way - it could also be the best time to buy (unless you can time travel back in time with your fiat currency to buy bitcoins cheaply), because the next day/week it is likely to go up again 

[SkRRJyTC]

Should we just bump this thread every morning? Because today is the best time to sell in over a year, until tomorrow.

Interesting point, but you could also look at it this way - it could also be the best time to buy (unless you can time travel back in time with your fiat currency to buy bitcoins cheaply), because the next day/week it is likely to go up again 

lol mania...

[RodeoX]

Should we just bump this thread every morning? Because today is the best time to sell in over a year, until tomorrow.

Interesting point, but you could also look at it this way - it could also be the best time to buy (unless you can time travel back in time with your fiat currency to buy bitcoins cheaply), because the next day/week it is likely to go up again 

Hmm. also true. Please do not start another thread. lol