Topic: Anyone keeping track of merchant profits? - page 2. (Read 3149 times)

The whole point you are missing that renders all of your points invalid is because were not talking about 1 miner vs. 1,000,000 miners...it's about 0 miners vs. any # of miners.  It addresses each of your points except the first in the following ways:

(The first point you mentioned about pickaxes is irrelevant.  There is only one way to produce Bitcoins, and that's cpu/gpu mining.  Not only are there multiple ways of getting gold without pick axes, but the gold is already there.  There's no 'creation' involved, only gathering.  Gold is like oil wells that haven't been drilled yet. That oil has value because it can be recovered and used.  Without ANY miners mining Bitcoins, no quantity is produced).

1.)  There are no 50 BTC created every 10 minutes if there are 0 miners.  (Not an issue of 1 or 1 billion as you suggested).
2.)  The creation rate is 0 if there are no miners.
3.)  0 miners ever = 0 BTC = no value..................any # of miners = some # of BTC = value

Miners give RISE to value. 

Digging gold requires pickaxes. That doesnt mean pickaxes have an influence on the price of gold.
Unless pick axes would be so expensive that it would influence how much gold is being dug up, but there is no such analogy for bitcoin, as no matter the amount miners or their hashrate, the creation rate remains the same. Mining is a zero sum game.


Thats where you are wrong. No matter if I mine alone or 1 billion people mine with 6990s, there is only 50 BTC produced per 10 minutes.



But it doesnt matter how many ppl mine. The creation rate is constant.


Yes,clearly, that doesnt mean it influences the price of bitcoins. Its the opposite, with simple math you can calculate approximately how many miners, or more correctly, how many MH/s  there will be for a given BTC value (and a given electricity/hardware cost per MH). In the other direction there is no relationship. None.


Now you confuse mining for the  creation of coins and mining to confirm transactions. Can we agree today no one is mining for the transactions fees? Im only talking about mining for those blocks of 50 BTC, and even if no one did that, BTC wouldnt lose its value. THe opposite is true, if BTC loses its value, no one would mine. It is a direct but one directional relationship that I can put in a simple formula.

I think that trade has a little more than 1% value: You assume less than 350.000$ of trade value, and considering a velocity of 1 and calculating that all the trades was made in the last 5 month that's 1600$/day of trades. There are over 350 web sites that accept bitcoins for almost every thing plus some physical shop/restaurant. That's makes some 4$/day for shop. I think that with this numbers we are at least 5-10% of value for trade and 85-90% for speculation.
Silk Road had probably a lot of high value trades (100's or 1000's of BTC) due to the nature of their products.

Speculations are still to high in bitcoins but things are moving (slowly) toward trades.

Mining influences price simply because mining generates BTC.  Before any BTC were created, someone had to mine them to create them which gives rise to them having value.  To say mining doesn't influence BTC value is wrong because you can't even have BTC were it not for the first miners.  Additionally, mining influences price because of the total amount of BTC available.  That's what fuels the inflation we're seeing right now.  Miners generate more BTC but the economy is not growing as quick as the supply of BTC.  

Your last point seems to concede to the point I was trying to make?  Miners mine because the product of their work has value.  Why did Satoshi mine the genesis block?  There was no reason to mine the genesis block if value only influences mining and not vice versa.  The value of BTC at this point was zero.  He mined the genesis block because mining led to something of value.

Edit:  To put it another way, if mining gives rise to BTC which gives rise to BTC's value, then it's axiomatic that if you take all miners away , Bitcoin's won't have value.  This can be shown to be the case since you need network confirmations to approve transactions, and you cant confirm these transactions if it weren't for miners solving blocks.  If there were 0 miners, BTC value would be 0 because you can't use them...they lose all utility.

Thats nonsense, think about it, when "all BTC are mined", you say BTC value will be zero?


Obviously true. Doesnt prove that mining influences price, its the other way around.


Rational miners mine because the product of their work is at least marginally more valuable than their cost. Which is the case now, and which will on average always be the case, no matter if bitcoins are worth $0.01 or $10.000. All that will change is the number of miners distributing those 300BTC/hour.

Mining precludes BTC generation and its value.  Without mining, there is no potential for BTC to have any value whatsoever because you wouldn't have BTC.

If BTC was valued at zero, nobody would mine.  People mine because they assume the product of the work will be valuable.

I don't believe it's a 1-way street.

Not even that. The cost of mining is not a factor, its a direct result of the price of bitcoins.
Assuming miners act rationally, the total hashrate will level out at a point where mining is marginally cost efficient. Cost being determined by electricity and costs hardware per MH,  and revenue the value those 300 bitcoins /hr are worth. There is no effect the other way round.

True, Silk Road helps.

I would argue though that the cost of mining has a psychological impact on the value of BTC.  You have the direct electrical cost, the cost of time, and the cost of hardware.  If the cost of mining had nothing to do with it, then the $/mhash ratio wouldn't mean a thing.

I keep as much as possible in BTC but do have to occasionally exchange some for USD in order to cover expenses. Unfortunately, I don't make enough at my "day job" to keep BitBrew going out of my own pocket and FedEx doesn't accept bitcoins, yet.

I wish I had a regular rate at which I exchange to report, but I really only trade BTC when I'm so short on cash that it becomes necessary, so it's erratic, at best. I do support other bitcoin merchants when I can, too.

I would guess bitcoin value today is 99% speculation and 1% trade. There are a few sites that do actual trade, the alpaca socks, bitbrew and a few others, but if you compare that with the valuation of all bitcoins of $35M that has to be (no offense guys) peanuts. 
For now at least, the real question is perhaps how much trade is happening on Silk Road. I have no clue, but its likely more substantial but probably still no where near enough to explain the current valuation.

BTW, the cost of mining has nothing to do with it. THe cost is variable and adjusts to the price of bitcoin.

Question: do you keep your sales in BTC or do you convert them to cash?

BitBrew sales are definitely better each month than the month before. Looks like September will be up about 400% over August, but I really spent a lot on advertising over the same period.

The reason I ask is because I'm wondering how close we are to a legitimate value of BTC.  Obviously there's the electrical/time cost of producing BTC, and there is an economy (kind of) behind it, but to what extent is it truly growing?  This would be valuable knowledge to have while trading and considering future BTC value.  How is the economy doing?