I would say bitcoin's value is based on pure speculation at the moment. Some people point to the number of transactions and cite that as people "using" bitcoins for something useful, but the vast majority of those are group mining payouts. When I was mining I would get half a dozen payouts a day, yet I have never purchased anything.
Whether bitcoins are valued at 10c or $10 doesn't impact on their usefulness. The price should be determined by the value of goods that need to be paid for. Obviously if people want to trade $1M of goods every day then bitcoins valued at 10c aren't going to suffice as there just wouldn't be enough non hoarded bitcoins around to facilitate the payments.
Some people are betting that bitcoins will be incredibly useful in the future, therefore the price per bitcoin will rise. However that's pure speculation based on predictions rather than fundamentals. I hope not too many people are in denial about this.
Topic: 14$ last month... because of supply and demand? or Speculation? (Read 779 times)
September 15, 2011, 10:27:09 PM
There is no revenue associated with the bitcoin ecosystem (yet). We're running at a burn rate of $1000/hour or so to maintain the network, but income is $0. All current and previous $ valuation came from people speculating expecting a higher future exchange rate.
Since our market cap comes completely through speculation your answer is "yes." Speculation caused the demand, and at some point the supply. And when the two met -- the pricing action.
Since our market cap comes completely through speculation your answer is "yes." Speculation caused the demand, and at some point the supply. And when the two met -- the pricing action.
September 15, 2011, 10:21:14 PM
supply and demand. Simply, it is such a small market for all the new coins coming into the market.
September 15, 2011, 10:20:07 PM
is it really supply and demand or dose it more have to do with Speculation!
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