Topic: Bitcoin is a commodity market ? - page 2. (Read 607 times)

You dont understand anything and make wild assumptions based on not much more than bitcoin price. You should Google a bit more instead of listenning to the wrong person or the wrong voice in your head.

Making ad hominem argument is easy. Making real argument much harder.

I never participated in any ico or being advocate for pos.

The bitcoin econmic model is as a paiment system. Either its 1$ market cap or 3 billion doesnt change anything. Making it only based on bubble roller coaster for that peope can get rich out nothing but techno babbling and hoarding is not going to lead anywhere.

What i would like it to be is a functional paiment system as it was intended to be not a get rich quick scheme based on empty promises, bubble, and techno babble fomo and so on.

Otherwise it has zero interest for me but have fun selling your bitcoin bubble scam to relieve yourself from your frustration, looks like someone needs to compensate for something ?

 

The Bitcoin node software (and generally: all digital wallet software solutions) hides a lot of complexity. There is also Lightning software with a similar usability. I don't consider that a problem for adoption.

I don't say it can directly "solve the problem", but it can lead to more acceptance by merchants and users, and thus lead to the virtuous cycle I described in the last post, where Bitcoin can stabilize and slowly become more usable as a currency, and thus "sustain its value" over time. Not only because it's instant, but also because it saves lots of transaction fees (there are still fee peaks where you pay >$5 if you want an 1-day confirmation, and this problem will probably increase in the future).

Even worse: without LN or other scaling solutions like sidechains and statechains (which are still in prototype/idea stage) Bitcoin won't support an increase of more than 50% in terms of transaction density compared with now. Layer-1-TPS, even if it could be increased to let's say 20 or 30, is simply too little for worldwide adoption as a currency. (And no, I don't want the 1 MB/4 MB block size rule to be removed. It is important to keep the network safe and open imo, but that's a completely different discussion).

I'm not an unconditional Lightning supporter, for example I support also Paul Sztorc's sidechain ideas, but I think it is a big piece in the puzzle leading to Bitcoin adoption as a currency.

you seem to not grasp the value window vs the price..

but then again. in this topic you also failed to grasp
what a pyramid is
what a commodity is
what an asset is

so its either best you go spend some time using google to research economics. or just take some time to re-read things over again, because you either missed some crucial things.. or just unwilling to learn.

if you want to know why miners increase their asics

countries like russia/iceland which have cheap electric and are at the bottom end of the window of $30k can afford to increase hashpower and still profit because the price is above the bottom.

this extra hashpower then means other miners get less reward for their work. meaning their costs increase.
meaning for instance japan/germany at 32cent/kwh have a increase of their cost per coin that would extend above $70k current window top.

also for instance europe/usa have a increase of their cost per coin due to the hash competition that would extend above their $41k cost meaning they are more inclined to buy at $43k if their costs surpassed the price.

some euro-americans already do prefer to buy at $43k now instead of mine at $41k because the effort in buying an asic, setup and having a noisy, warm home 24/7 is not worth it so they would rather pay a slight extra to get coin now rather than mine slowly
you may have noticed with the prices why there is some support stopping it dropping below $40k to head to bottom $30k. and why there is resistance of topping more then $45k to head back to $70k
this is because alot of american miners/traders are hopping in and out of the mine-to-sell vs buy-to-hold threshold of american cost of acquisition support in this price area

also while those in japan/germany($70k cost) are already more interested in buying at $43k rather then mining at $70k+
they are adding to the buy support to keep prices up

and with the bottomline value regions who can sell. as they increase their asics they are less willing to sell and instead hoard for the price to move up due to the value window adjustment

and so the buy support offsets any sell push. and the price moves up.

this then when the price moves up, makes those at the bottom value that can afford to mine no matter what market conditions are, can increase their asics again.. and so the value window adjusts up. and the price within the window moves up/down depending on the individual emotions of different regions

..
i do understand your anger.
its obvious that your jealous, upset, resentful that you didnt get rich from PoS ICO scams, and though that experience set your narrative for what you think crypto economics is like. you now turn to an actual working economic model of bitcoin, but seem to not like the fact that bitcoin has a proper economic structure, or not understand bitcoins economic structure.. and so want to flame war silly stories of how bitcoin must be pyramid, commodity, useless. purely out of spite that you cant get rich for low cents per day cost like you were promised on PoS ICO scam promotions

sorry but bitcoin is nothing like ICO's or PoS coins

It would make no sense for miners to expand more energy per block than someone is willing to pay thinking it would increase the value. Bitcoin price will not double if miner decide to buy twice more asics. But the hashrate will surely decrease if bitcoin price fall down.

what you actually find is that. the price is affected by hashrate and also blockhalving(that affect miners costs)

in 2013 when asics first came online the price went __/ shifting the 'value window' up to levels where people thought its worth buying bitcoin at higher prices before previous due to the new higher costs of mining are more expensive/inconvenient to mine.

when hashrate drops and cheaper to mine because less people share bigger parts of the reward the price goes down
in 2021 when china banned mining the hashrate went down from 165exa to 90exa. and the price ^---\

..
yes in some expensive hobby mining scenarios of little guys they choose to switch miners off after a price dip(react to price within window). but for the large mining farms. they continue to mine and they affect the window.

all of which fit into the relationship between the speculative price and the value window.
the price within the value window speculates up and down between the min and max value depending on the emotion of individuals. but the value window itself(currently $30k-$70k) is set by the mining cost/cost of acquisition

cheapest mining at 4cent/kwh is $30k bottom value. and most expensive(germany/japan) at 32cent/kwh is $70k

all emotional speculation of price volatility sit within this value window

But its the network value who is driving the hashrate up not the otherway around. Bitcoin could work perfectly with a total market cap of 1$ and 3 raspberry pi mining it. You would have exactly the same amount of bitcoin being mined at the same rate.

and gold in the times of the egyptians, romans and even upto the american wild west, were done via pickaxes finding gold nuggets the size of potato's

but now its more gold dust requiring shifting tonnes of dirt per ounce using excavators

someone with a pickaxe today will not get the same reward as someone with a excavator and sluice machine today.

there is actually minimal work. its called the difficulty.
you have to processes trillions of hashes to find a block solution.

at todays cost
a raspberry pi will take decades to get lucky.
a mining farm of 500 asics will find 1 a day.

a pool(gold quarry) could combine loads of workers and combine efforts, but a single worker doesnt get the whole reward... its shared based on work done. (division of labour) so a small worker will only get a few sats for his few penny electric work

i know your stuck in the PoS narative that the only sole user that signs a block gets the reward, but bitcoins PoW is nothing like PoS solo signing

The first bitcoins were mined at higher rate than today with 3 cpus. there is no minimum amount of work to pull out to mine a bitcoin, it's only relative to the network economic worth.

so much wrong again..
sorry but someone with 55petahash and someone with 110terra hash is not going to get the same bitcoin reward amount.

you are not going to earn 6.25bitcoin using a raspberry pi for 3 cent a month.
you are going to get a couple sats.
and you will calculate the cost:reward as such. where by someone with 55peta is going to get more based on his work

EG with gold
if you had 2 people in the same quarry digging for gold. the guy with the expensive excavator and sluice machine will earn more gold, than a guy with a pickaxe and a sifting dish.


..
im starting to think you entered this crypto sector via PoS crapcoins and that set your narrative of crypto when you didnt get your promised "get rich quick" . and now angered and jealous you are now trying to say crapcoin PoW low hashrate but bubble inflated value.. and PoS zero cost/loss reward income narrative, applies to bitcoin too.

sorry but crapcoins have a whole different valuation,. utility, cost economic model
(oh look, your first forum post, is you doing a scammy ICO for a PoS crapcoin.. not surprised)

In theory, I will not complain about this, because consciously or unconsciously it can be justified. On the other hand, they can now be said to be a useful medium of exchange in several countries, including those who have adopted it.
actually for the commodity itself it is a tiny fraction of bitcoin now.

Well lightning network is different than bitcoin its not to put a coin in the franky box, but its much more complicated than bitcoin, bitcoin is fundementally simple, 3 people in the world can install a node, and they will be able to run the network, have an address, mine it and make paiment in a secure manner. Nobody needs to be tech savy, have any preeixisting fund, nothing needs to be locked or anything. And you could have roughly the same functionality with an spv wallet or such.

Plus LN wouldnt change much to the problem of volatlity and speculation games.

And i dont think the "scaling problem" is the issue at least for e commerce a delay of even 1h is still mangeable, even paypal can have similar delay. Its not likely the order is going to be processed in the minute on an online platform and some internal token can be used with bulk paiment if you really want to attract compulsive buyers. I dont think its really the deal breaker here.

For real shops maybe more and still there is also an old thread where satoshi talked about the soda machine where this kind of problem is issued. The vendor could check on the main's mining pool to see if the transaction is in their memory pool, in theory there should be relatively safe way to prevent double spend and work around confirmation time, especially for small paiments.

The main difference i see between bitcoin and a regular commodity is that a regular commodity's price is aligned around production cost, whereas bitcoin is the other way around which is the production cost gravitate around the demand's price.
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The main difference between bitcoin and commodity is bitcoin is. a virtual currency while commodity involves buying, selling and trading of raw products.

But pow is not a production cost, you can mine exactly the same amount of bitcoin at the exact same rate with two rasperry pi for 3 cents a month. Its a proof of work used to solve the byzantine général problem, fondamently bitcoin cost nothing to produce. Therefore it has no bottom value.

The pow adjust with the economic value of the network to avoid 51% attacks not the other way around. That's where you reasoning is fondementally flawed.

Currently clearly its more like a cheap pop star or flacky art rather than gold that has been used a store of value since antiquity.

I agree with some of your points, OP, but not with your pessimism.

The primary reason people originally hoarded Bitcoin is because of the estimated worldwide adoption as an international currency; if you got BTCs for a low price as an early adopter, you could be always sure to make a huge profit if this happened. This has changed a bit since then, now there is a significant part of Bitcoin investors who simply speculate on "catching the best moment" to buy and sell.

At the same time, there are some indicators that seem to show that Bitcoin is now even less used as a currency than, let's say, in 2015-2017. For example, in some countries there are less merchants accepting it, and there were also events like the failure of OpenBazaar's dev team OB1.

I also agree that this tendency, if it should continue, is bearish for Bitcoin, because of the reasons already explained by you and various people here, particularly odolvlobo here. As an asset which generates no cashflows, and with an "intrinsic value" very difficult to grasp, the best fundamental indicator we have is the Quantity Theory of Money; i.e. adoption in terms of the number of transactions. So if this indicator is not clearly rising and thus indicating an adoption "as a currency", Bitcoin will continue to be a speculative "collectible" with pretty clueless investors guiding themselves primarily by superficial technical analysis (and such "fundamentals" like Elon Musk's tweets), and there is always the danger that at some moment nobody wants to be the greater fool.

But still, nothing is lost - at the contrary there are reasons to be optimistic.

One of the biggest indicators that the "currency" usage could come back eventually is the adoption of the Lightning Network. It grew very steeply in 2021, now it grows slower but still steadily and much more pronounced than before 2021.

Lightning adoption is bullish for two reasons. First because the main use case is trading goods and services, and not hoarding (for hoarding, on-chain txs are better/safer), and second, because value is frozen in LN channels. These Bitcoins can of course be unfrozen but they will probably stay there longer than in a "normal" UTXO and thus unavailable to "hoard and sell" speculation.

Then there is the movement of states adopting it as legal tender, with El Salvador, which also should boost "currency" usage.

There is also no reason to "not" spend Bitcoins if you think it will go up more. Simply spend it and re-buy, you will be strengthening its ecosystem and network effect.

The best case scenario would be that Lightning/currency usage would continue to rise and eventually (most likely in a couple of years, not in 2022) become the main use case for Bitcoin again. Speculation will always exist, but if currency usage increases, this should result in a more stable price, even more so if eventually "fixed prices in Bitcoin" become a thing so you can anchor the value of a BTC to certain goods or services.

So a virtuous cycle could evolve: Bitcoin becomes more stable but still attractive as an investment, and as it stabilizes, it becomes also gradually more usable as a currency.

this is where again value and price need to be realised as different measures.

golds bottom line value is ~$900. no one wants to sell below this because the cost of mining gold is higher then this. and years of buying gold has raised its current owners acquisition costs to also be over $900

same with bitcoin its bottomline support value is about $30k.

the premium (point no one wants to buy above) is gold:$2.5k and bitcoin $70k

the PRICE. of gold sits somewhere in the middle of $0.9k-$2.5k.. and yea the volatility of the ups and downs within this window where the price bounces up and down is the market sway of emotion.
but thats not to say gold has no underlying value either economic value or utility value

the PRICE. of bitcoin sits somewhere in the middle of $30k-$70k.. and yea the volatility of the ups and downs within this window where the PRICE bounces up and down is the market sway of emotion.
but thats not to say bitcoin has no underlying value either economic value or utility value

bitcoin has more utility than many crapcoins(utility) and also because its PoW instead of PoS, bitcoin has economic value.

i would agree your assertions of pure emotional sway of markets and things going to zero apply more to crap-PoS coins. but bitcoin is different to those. for many many reasons

what you need to realise is.. the store of VALUE (value) is not the current $43k. its store of VALUE (value) is $30k+
where at the moment the extra $13k is yes speculative emotional premium, speculating the store of VALUE(value) will eventually reach more then their early purchase of $43k

stop imagining the PRICE as an equal VALUE line. and realise there are differences.

EG milk, each week it can go up and down in price at a retail store.. in the UK we have it going from £1-£1.50($1.37-$2.06)
what is deemed as value to an end users is when its near to the £1($1.37). and when its premium its nearer the £1.50($2.06)
this by itself, this swing in current retail prices regularly is not enough to call milk a pyramid, your thinking: because a farmer sold it for £0.40 to a pasteurising factory, who sold it for £0.47 to a distribution centre/wholesaler who sold it for £0.57 to a retailer. who sold it to a customer for £1-£1.50

a pyramid is where when things are sold at the bottom the money moves up the levels.
EG customer pays retailer who then pays wholesaler who then pays pasteuriser who then pays farmer(in backward reward)
a pyramid is also from top down. 1 recruit 3 who recruits 9 who recruits 27
there is no 1 3 9 27 split of different people who benefit from a sale.


with anything sold in retail. its just money between buyer to seller.
and also, art is an asset..
art is not a commodity. nor a pyramid

seems. you are not yet willing to consider things.
you want to call bitcoin a pyramid (backward paying reward program scam)
you want to call bitcoin a ponzi (share investment treasury scam)
you want to call bitcoin a commodity (raw material used to make products)
you want to call bitcoin flaky art (asset)

can you atleast make your mind up on one?

Well its satoshi who said its like a commodity for many reasons, he must know something about it, he made it no ?

I can try to pull all the substance of the several 20+ pages thread ive read that contain discussion with satoshi hal finney and other people at the origin of bitcoin.

The global conclusion is that either its supposed to be used as a currency, either its just a bullshit scheme for pseudo investors to scam each others in a null sum game out of empty promises.

And sound monney is aligned with gdp, commodity stream. Its not an asset class store of value, gold reserve or whatever. At best like some flacky art piece sold anywhere from 1$ to 100$ depending on the mood and amount of monney to launder.



Yeah you are right its what is called a pyramid scheme, but what meant is more like greater fool scheme, where the same things is sold over and over again at higher price each time someone being ripped off a bit more.


If its a one time thing ok, then if everyone is only buying it to hoard it and only wait for the best time to buy / sell all the time waiting for some hype campaign to make insane profits of course its going to have an impact on the price. And it can only ends in constant price rouler coaster, while people start to hoard then play greater fool scheme 2, 3 , 4 ,5 times until the price crash and here we go again, its the same loop for 10 years. With almost zero legit use in commerce as a currency, while its this same thing sold each time as the future source of profit, that its going to be world currency, replacing fiat etc etc

Fear greed in crypto.plot

https://www.carnfieldwebdesign.co.uk/category/bitcoin-fear-and-greed-index/


A market mostly driven by emotion in a constant roller coster cannot be told to be a good asset / store of value.

bitcoin and golds value is not just 'its a currency or jewellery'. its value is also from its cost of acquisition
if you could mine gold or pick up rocks for just $1 in your back yard. and anyone could do the same. no one would pay $2000 a ounce for it. the most they would pay is $2 premuim to avoid the sweat, dirt of getting their hands messy.

because gold costs over $900 to mine. thats why people pay atleast $900. and no one is foolish to sell gold for less than $900.
the reason why gold cant escape above a $2.5k ATH at the moment and bitcoin cant escape above a $69k ATH at the moment is because everyone on the planet can mine for less than a certain premium and so would stop buying at a certain peak because its cheaper/more convenient to mine.
gold has a value window based on acquisition cost of $900-$2.5k, bitcoin has a value window of $30k-$70k

yes if bitcoin becomes useless as a currency then the desire to maintain bitcoin will  drop. miners will want to maintain(mine) something else. and slowly with only a few miners left getting high% of the reward for less effort. the costs come down and thus the value comes down. which is why having utility is important. but its the secondary to its underlying value(cost of acquisition). there is a relationship between utility (desire) and mining(supply). but the value(price) is more linked to the acquisition value range.


again you say "commodity"
a commodity is a raw material used to create other products
oil=fuel/plastic, beef=burgers/steak, wheat=bread/cereal

gold is yes a commodity but its also an asset. gold sits on 2 markets.
dont confuse golds mining/currency reserve/investment (asset class) with its jewellery/electronics(commodity class)
bitcoin fits similarly to golds asset definition.. but bitcoin no way fits into golds commodity definition

as for saying its a pyramid scheme(facepalm) well your listening to the wrong 2 people. whichever one calls it a pyramid scheme. stop listening. and instead learn:
no one gets recurring income from the sell of bitcoin.
there is no bunch of investors all depositing into a central pot that paying out monthly interest/dividends
there is no 'team' of downstream or upstream lineage of investors getting paid by a downstream seller
its not like when someone sells coin. he then has to pay 10% to his supervisor, and 8% to their supervisor

who ever owns the coin and sells the coin keeps the funds for the sell. there is no pyramid 'sharing' of revenue structure in bitcoin.

early adopters/hoarders (not selling) have no impact on the price because they are not the ones making offers.
bitcoins price is only from those selling at the price they want to sell at and only they get the income of that sale

An investement in the sense something that grow in value can only happen if some value is created along the way. Hoarding them on an exchange with hit and run strategy doesnt add any value to it. On the contrary.

And it can never be recognized as legal tender by anyone a little bit serious as long as this tendancy dominate the market.

Giving hope ok look like make-believe fairy tales if it doesnt add a value in a buisness or another.

Nobody wants to use it if they needs to loose sleep and spend their life monitoring trading chart fearfully watching every move. Its the perfect definition of a very bad currency.

Merchants are not going to make their accounting on a daily basis, maybe every month or mostly every year when they fill their tax declaration. For the vast majority they wont spend their life on a trading chart to know if the last transactions is going to make them rich or bankrupted.

That was the first impression of the creator and also the people around but, it changes a lot this time, people are now considering Bitcoin as a huge investment and a moneymaker like stocks in the market. Even though it wasn't the purpose of this creation but that is now how it was meant to be. Whether it can be a commodity or not, people are giving hope for this, and eventually, it is.

It can be somehow a very important thing to the people and can be part of their life. And it can be more valuable in the future when it happens that it was officially considered as legal tender.

This logic is always moot, its like if i say i will start to hoard rocks, supply and demand the value is subjective someone is going to buy it at 100k. My rocks are like no other rocks. Does it looks like a sound logic to you ?

The fact that this behavior was anticipated this the very beginning, seen by satoshi hal finney and other since the very beginning show that its no different from any other market that existed before since market exists.

Either it takes off as a currency spent to buy good or it dies in the long run, or just become a niche for gamblers and crazy speculators spending their day on trading chart trying to figure when to enter and leave at the expanse of others in a null sum game.



And historically all currencies arose from some kind of commodity backing. Its not even the way its used but how its supposed to behave as a market.

The two kind of people i saw saying this model is ok are :

1. People seeing the pyramid scheme potential rubbing their hand seeing they are going to make millions as eraly adopter. As of today most of the post i see on this board are people still behaving as early investors in a pyramid scheme.

2. People who are more sound and rational saying that it doesnt make sense in the long run to use it this way, that early adopter can behave like this and it was more or less on purpose to give an incencitive to early adopters but the only way that make sense in the long term is the adoption as a currency with a dynamic roughly appraoching a commodity market.


Otherwise its only people playing hit and run with enter/exit strategy to extract a quick profit out of it which cannot last for ever and makes unusable as a currency which is the only way forward in the long run.