Topic: ASICMINER: Entering the Future of ASIC Mining by Inventing It - page 735. (Read 3917468 times)

That was a big sell. Back up to 2.0 now.

Bitfunder AM @ BTC1.8 

Oh god why. Hopefully this isn't true.

The true buyer choose to remain anonymous
(Although there are rumors on whodunit Mtgox was one EH seeing it as a cash cow and own buying etc.)

Sorry, what? Gox bought SatoshiDice?!?

Right. The value embodied by a company is a distinct quantity, and is not bound to any particular currency. In a sense, shares of a company are their own currency, and the price of those shares is actually their exchange rate to other currencies.

If the price of BTC doubles, AM shareprice is (theoretically) unaffected, since both their shares and their revenue streams are denominated in BTC. In the real world, we have factors such as relative USD expenditures decreasing (electricity, rent, boards, chips), market irrationality, and people cashing out on the higher BTC/USD rate that influence share price.

Frankly, attempting to predict AM price movements based on the BTC/USD ratio is foolhardy - it is what I would call a technical movement. The only thing you have any hope of figuring out is the true value of the underlying company - everything else in the markets is white noise and, in my experience, trying to profit from technicals will get you burned. And, even then, regardless of the validity of your valuation, the market may take an indefinite amount of time to correct to fair value.

Wrong; this is only true if that stock issues dividends also based on the BTCUSD rate.
If that stock issues BTC dividends not affected by the BTCUSD rate, than its value should be unaffected too.

Your assertions are totally incorrect. Perhaps you need to read more Mises and Rothbard.

Savers, in a deflationary currency, do something extremely important which you incorrectly interpret as nothing. They are choosing to allocate capital into the currency instead of into some other venture which, in their subjective view, does not have as good a prospect of generating a decent return. This speaks to the demand for money which is rarely talked about outside of the Austrian school of economics. And as Bitcoin gets more developed with deeper capital pools and more sophisticated financial products then it will get a better pricing mechanism for the cost of money or Bitcoin's interest rate; just like gold has an interest rate.

All a deflationary currency does, compared to our current system of fiat currency and fractional reserve banking, is reveal with greater accuracy and transparency the risk individuals are taking when allocating their capital to be used by others instead of just sitting safely in their Bitcoin wallet.

The deflation juggernaut ends based on subjective value theory as applied to the interest rate, demand for money, counter-party risk assessment, expectation of profitable investments and several other factors. Sure, it does not 'speed up capital' like the current system that does which encourages destruction and dissipation of capital, like with bailouts, etc. by privatizing the gains and socializing the losses. But a deflationary system will be much more effective at helping individuals generate and accumulate savings. And those savings will provide a foundation of capital that will result in wealth creation and generation like never before seen in history.

Thus, a deflationary currency will result in the vast bulk of humanity much better off than the current financial and monetary system.

SDICE was traded on exchanges, but the shares got pulled when MtGox bought them. Are bitpay and coinbase US Companies?  If so, we're more likely to see them publicly traded on real exchanges then virtual ones. There's no reason bitcoin companies can't be listed on traditional, fiat exchanges in the future if they're mature enough and large enough.

Those that come to mind:

Coinbase
Bitpay
SatoshiDice

Public securities come with market maturity. EVERY Bitcoin company is currently a startup, so why would you expect them to be publicly traded?

Both assertions are accepted as correct. I would suggest that as the market matures and grows it should more closely resemble a rational market. There are certainly many opportunities for short-term profits by exploiting that irrationality today. A year from now, probably not quite so much. As far as AM is concerned, I feel confident enough in the abilities of FC that his company will be capable of overcoming the deflationary pressures of the currency as well as the increasing global hash. For those reasons I continue to accumulate shares, only time will tell if my guess is correct. If AM fails to be a viable investment vehicle in a deflationary currency, I have serious doubts that anyone else will ever be able to be one.

A) This market has clearly demonstrated a variety of characteristics not present in a rational market.

B) You are then needlessly assuming counterparty risk for no benefit over counterparty risk-free BTC.

Assuming it pays no dividends, then yes, you are correct. You will make the same amount as if you had bought and held btc. It would be a reflection that the value of the equity had increased at the same rate that the value of bitcoins did. (in a rational market)

If the price per share is in BTC, then all it has to do is stay fixed in order to make money when the price of bitcoin goes up.

It was pointed out in a PM that an equity could avoid the fate of being taken out in the yard and shot if consistent increases in price per share accompanied the dividend in such a way that it compensated for the increase in btc value. I stand corrected.

I disagree with the bolded part. While your reasoning makes perfect sense to me, I don't think it applies to an equity that pays dividends that are only in BTC, coming from revenues that are only in BTC.

Bitcoin is in an inflationary phase, dumbass.

Also, because mining shares pay out the same amount of bitcoin no matter the the exchange rate, the value, in bitcoin is constant with regard to the exchange rate.  Only the block reward, and hashrate share matters

The models for a deflationary currency are really not as established as inflationary, so people tend to not really understand the differences.  When the value of a unit of currency is continually rising, one of the best investments will always be buy the currency and hold. This is because the prices of everything as priced in the defationary currency will continuously drop, as opposed to always rising as in an inflationary currency. You can get more for the same unit of currency next week than you can by spending it this week. Savers get wealthier every day by doing nothing.

In an inflationary currency the opposite is true. The only way that your currency can be out there working for you is if you exchange it for something else. You must hold an asset, such as land, commodities, equities, bonds, anything that will generate an additional cash flow to at least compensate for the lost value of holding the currency. Infaltionary currency was designed to be spent, and deflationary currency is designed to be held.

Equities are not immune to this fundamental feature of a deflationary currency. If a stock costs 1 btc and the value of btc doubles, all things being equal the stock price should move to 0.5 btc. This is a simple concept that everyone should agree upon. The problem once again, is that you went nowhere. Had you held btc your wealth would have doubled. But since you are holding an asset, you gained nothing. This is fundamentally true in a deflationary currency system. You see this problem every day when people purchase asic miners, although it is magnified and masked by difficulty increases.

The deflation is like and endless juggernaut, it never stops, and the base prices of everything priced in it must by definition drop and drop and drop. Market fluctuations and speculation can mask it for a time, but in the end it is relentless as gravity and it will reign supreme in the end.

Equities can certainly counteract this effect, by the inherent creation of value by the underlying company. A company may for example cost 1btc per share, and return 0.01 btc per week. This is enough to account for a 1% per week increase in the value of btc. If you purchase this stock for 1btc, hold it for a week, get your dividend, and the value of btc increases by 1% you are exactly where you would have been if you had just held btc, because the value of the stock should have decreased in a rational market by 1%.

Rumors, announcements, FUD, competition, momentum, perception,these things can also affect price. They can cause big moves and make everything look crazy to an analyst trying to sort it out. But working steadily and continuously in the background the gravity that is deflation will eat the value from any held asset. Even an asset such as ASICminer. In infaltionary currency, any asset that is not increasing in value is dead money. In a deflationary currency, an asset that that is not decreasing in value is a win, and if it rises at all you have really really really done well.

So, in conclusion, any equity that can consistently provide dividends to the shareholder at at rate that exceeds the rate of increase in the currency is better than just buying coins and holding. If it cannot, it needs to be taken out in the yard and shot because you are losing value every day you hold it.

I was skeptical too, but if you look at charts, from last month it would seem AM price is negatively correlated to BTC/USD, but from March to June AM's price grew totally unaffected by the BTC/USD bubble

Well the markup of way over 1000% on the hardware he's been selling he should be able to ...
My guess the tiny USBs are finally now only in the range of 200%-500% markup at 0.17 BTC ...