Topic: Balls of steel - page 2. (Read 6645 times)

Pure yumolium.  As long as you don't ruin it with Mc.D coffee.  That stuff is undrinkable, and I buy those gigantic "40 Miler" styrofoam cups at exit ramp gas stations and never complain.
If you HAVE TO buy Mc.D coffee, either cut it with 1/3rd milk, or ask for a cup of ice, pour off 1/4 of the coffee, and dump the ice in.  (Mc.D ice cubes taste just like their water--awful.  But it's the same awful all across US.  I suspect it's a special additive they use to make their water boil at 200 degrees C, and make their coffee possible.

I take your example to mean that the bitcoin price is a product of consumer/speculator demand. But that also consumer/speculator demand is also a product of the price? Unlike the baker scenario.. And that falling bitcoin prices may in fact reduce demand for bitcoins?

just how tasty was the cupcake, did it have some rum in it?

I try to be as clear as possible on the first pass.  What, specifically, would you like to have clarified?

Explain your point more clearly please

Wait, did you miss this?  If you disagree with something, feel free to point it out.  Simply saying "there is no difference" is no better than saying NO U!1!

I disagree. Bitcoin is already becoming an extremely useful currency through utility. But the main strengths of bitcoin are its monetary properties and scarcity. People who buy and hold it do so knowing this. There is no consumer or speculator, they are one and the same. It is a happy side effect that the first 50 million people into the the bitcoin sphere will likely make significant gains on there initial investment. Whilst adoption continues the price must rise until like your baker there is an equilibrium where all the users of bitcoin are already using it, it has become distributed and the exchange price is stable. Bitcoin has no intrinsic value but is going to work exceptionally well as a future store of value with bouts of likely extreme volatility.

I've been predicting a $4,000 BTC since 2011.  Just sayin'.

It's not simple, but speculators don't need to be daytraders.  Many hodlers on this forum, the ones speculating on exchange rate going to the moon, are hoarding and holding.  They contribute to the "scarcity," but not in the same way a consumer would.

And even day traders, for the time they're in bitcoin, aren't essentially different from long-term holders.  The only difference is the timespan.
The speculators who are in it for Bitcoin, not fiat profit, simply buy BTC low and sell high, thus amassing more coin.  The unit of account is whatever you chose.

Really?  I haven't met anyone like that since SilkRoad got shuttered.  Most places accepting Bitcoin set their prices in dollars, so the folks you're talking about should care about the exchange rate

But that's not my point.  My point is Bitcoin exchange rate is determined by traders, which [to me] is obvious.  Those weird ones who don't care about the exchange rate, other than being ..."unusual," have little to do with exchange rate.

It's not *that* simple, "Speculators" implies some fraction who are in it for short term fiat profits.

As the price of bitcoin rises there is a corresponding increase in the likelihood of a speculator deciding to sell.

I'd say it very much is a product of supply & demand, given there is a limited supply and variable demand.

Only fiat is not subject to supply and demand, as there is effectively an infinite supply.

I speculate bitcoin will at one point be used by countries to conduct trade.

I would argue that the average user who is interested in buying bitcoin solely to spend, has absolutely no idea what the exchange rate of a bitcoin should be.  It could be $5, it could be $500, they wouldn't know the difference.  They only know that the price has gone up over time. I.E., they (will?  should?) buy at whatever the current rate is, because they assume that the market has set the price correctly.

But the problem is that their speculator friends will say, "Oh, no, you shouldn't buy now... have you see the decline lately?  Wait for a better price."  This 'waiting for a better price' of course defeats the whole purpose of buying bitcoin for its immediate use as a spending vehicle, or currency.  What constitutes a "better price"?  A 5% drop? 10% drop? 30% drop?  If no one knows what the price should be anyway, then it's really ridiculous notion.

It's like someone shopping for a gold engagement ring, and their best friend going "Oh no, you shouldn't buy a gold ring now... have you seen the decline in gold price lately? Wait for a better price."  And then the shopper is like, "Damn dude, I'm getting married here.  How long should I wait?  I can't wait forever.  In fact, I shouldn't even care what the current price is."  

Yes, if we start with the following premises:
  A.  The current exchange rate is the product of consumer demand, and not speculation.  By "consumers" I mean the people using Bitcoin as money, not to speculate on its long-term worth.
  B.  The demand will continue to increase.

I'm saying neither (A) nor (B) are necessarily true, (A) partially due to supply/demand being kinda misused in the case of Bitcoin.
Think about it like this:

1.  A baker bakes cakes.
2.  You like delicious cakes, they're delicious.
3.  There are others who like delicious cakes.
4.  The baker keeps raising his cake price until, when he closes up for the night, he has no leftover cakes, but just barely.*

Classic supply/demand relationship, right?

Here's the good part:  (2) above could be seen as a constant.  The cake is just as delicious (and desirable) regardless of what the baker charges.  If the baker doubles his price, you are not going to want the cake twice as much, right?  

Not so with Bitcoin.
To a speculator, 1 BTC is twice as valuable when its exchange rate doubles.  That's why it's important that most Bitcoin holders are speculators and not typical consumers like cake_eaters.
See my point?

TL;DR:  Bitcoin is not goods.  It has neither intrinsic value nor is it subject to the classic supply/demand interpretations.

...

---

*assuming that selling out every day = max profit, not necessarily true if there are cake addicts, let's say, who'll pay anything for their pastry fix.  But that's a tangent.
edits...

Thanks for the replies. I am curious. Are you saying you don't think consumer demand is sufficient to drive bitcoin (price) longterm? Why? For me this is still a no-brainer. If only 1 million people are actively using it then even if the project fails to go mainstream it likely will run further than this. It seems to me that infrastucture is only now beginning to blossom and develop. More on and off ramps are appearing all the time which will facilitate adoption potentially.

I am not sure of there being any real distinction between big business seeing potential profits by adopting bitcoin and big business supporting bitcoin and wanting it to succeed. Bitcoin is cheaper per transaction than a credit card, whilst delivering the actual payment within minutes. Isn't it obvious that a company will implement anything that will significantly reduce transaction costs and increase profits? What is amazing is that major companies such as dell, expedia, newegg etc have implemented bitcoin when the userbase is so incredibly tiny - really a speck on their balance sheets. That makes me think that big business actually wants bitcoin to succeed - i could be wrong.

Yes the construction of a sentiment index is a fun concept. Don't have much time to go into it further now but would probably have to be a scraping spider which analysed the threads on the front page and posts within the forum. I know someone who designed a similar tool for another market and sold it to a hedge fund so several probably exist for this forum already. Another poster speculated that could be the reason for the endless trolling accounts on here.

Not at all, but how would you interpret the answer considering that speculation is a competitive, not cooperative, game? (But it's "both," as I'm sure is the case with most people here.)
I hold less BTC than I once did, take that for what it's worth (zilch).


You would expect the volatility to increase?  Why?  It takes a much smarter trader to make money in a market with low volatility.


The problem is the supply/demand relationship is biconditional, A <-> B.  Bitcoin has little intrinsic value.  The value of 1 BTC would be close to nothing if there was no user base, no Bitcoin network.  The network effect cuts both ways--a telephone set's value grows when more people get phones, but it drops when fewer people have them.
Agreed?


If I thought so too, and was reasonably sure of it, holding BTC long-term would be a no-brainer.  It's obviously not (for me).


Big business sees potential profits in Bitcoin.  This doesn't translate into "big business wants Bitcoin to succeed" (for me).


Would be neat, any specific ideas on what sort of data you'll be looking for?  I wouldn't know where to start.

Do you mind me asking if you are holding bitcoin or sat on the sidelines in cash?

Interesting that you feel the market movements have changed in some way due to new participants, especially as volatility has reduced?

I suppose the price is ultimately determined by supply and demand. That is supply from miners, genuine sellers and speculators, versus demand from new and veteran consumer buying. The shifts in balance determine the short term price trends. In such a thinly traded market my view is also that currently sentiment is hugely important as speculation probably has a major role in price discovery*.

That said, overall mining supply and consumer demand should drive the price in the longer term which is evident in charts going back several years. Will it continue? I think so.

I am not bothered particularly by short term volatility in the price otherwise I would have sold long ago (and been considerably better off from my bitcoin holdings). The very fact that silicon valley is rapidly integrating bitcoin into everything for what is really a tiny global userbase tells me big business wants bitcoin to succeed.

* i am very busy with my day job but i have for a long time wanted to create a script to scrape the this forum and perform some sentiment analysis to generate some statistics to compare with the exchange rate and google trends etc.

I'm bearish, but I'm also not shorting.  I honestly haven't been able to read BTC market like I once could.  So if forced to TL;DR, I'd say:

The bulk of BTC users are speculators. 
BTC exchange rate is ultimately determined by their sentiment and trading strategies.<==seems self-evident to me
Over the last year, bigger, tougher, smarter kids started playing in our sandbox.
I can't compete--trading I do now amounts to little more than gambling.

Something like that.

There may be no direct causal relationship. But a hugely rising (or falling) number of users transacting in bitcoin will obviously exert pressure on the exchange price.

I think my original point was that it is pretty hard to adopt something you have never heard of. Ergo, increasing media coverage of bitcoin, seeing that little b sign at dell or (soon to be) paypal or uber will pique the interest of joe public, eventually contributing to increasing adoption.

You know all this but have a bearish position so argue against it. But that is ok

^Gotcha.  Neither one of us thinks that there is a causal relationship between user adoption and BTC exchange rates.
We agree that all arguments extrapolating higher BTC exchange rate because greater adoption are nonsense.

We're good.  Sorry about the misunderstanding.