Topic: Bitcoin is a commodity market ? - page 4. (Read 607 times)

if everyone bought at say $6 in 2012. and just hoarded. all them 11mill coins in circulation at the time. never changing hands.
and the market only moved due to fresh mind coins. at mining cost of $200 in 2013 $2000 in 2017  $20,000 in 2021
then there would be 11million coins that would happily sell for anything from $20k all the way down to $6.20 and still feel they have profited.

however if those having 11mill coins colectively in 2012. sold 2mill in 2013
if then the 9m coin($6v) and 2m coin($200) then sold 4mill in 2015($400)
if then the 7m coin($6v) and 4m coin($400) then sold 6mill in 2017($2000)
if then the 5m coin($6v) and 6m coin($400) then sold 6mill in 2017($2000)

its now a market with instead of 11mill able to sell down to $6.20
there is now in 2017 a 6mill support that refuses to sell for less than $2k
so if the price was $2.1k and no one of the 6m2017 wanted to sell yet. then only the 5m 2012($6v) are on offer
and slowly there are less people willing to sell down to low numbers. and more people bringing up the base value

in short letting coins switch hands where the new owner sets new value, helps set new value

i personally use 2 metrics.
mining cost(lowest and highest costs).. and UTXO value at creation(price value when a transaction value last moved)

Yes its a bit the point if everyone just sit on their coin waiting for the value to rise it very likely nothing is going to happen and the price is just going to crash.

there is a point where something has to have a use/purpose/function/desire. yes if bitcoin had no function and was just a bunch of locked assets held forever in a trust owned by a company thats only value was the investment. then prices could go to $0. because no one would have to mine something that never has to move, and has no reward for trying to move the unmovable

but because bitcoin does something (medium of exchange/buy goods & services with it) transferable. and then there is costs of that transfer and security of the asset(mining cost). then no one would sell if too cheap.

EG if mining was $1 a coin. people wont sell it for 99c but no one would buy it for premiums above $2, as they could just mine it themselves(with a little effort)

but because mining is over $30k now in every region of the planet. no one can mine it for less. so everyone would buy it if it ever went down to $31k. preventing it going to $29k because people would refuse selling it for less.

but yes bitcoin needs to have a function/use/reason for people to mine or want bitcoin.
which is why i am a very loud advocate that bitcoin should remain a 'digital cash' and not be pushed into being just a 'reserve/treasury' for custodial services.

(keeping a good reason to mine. and having a reason for users to hold, spend, transfer, invest, buy things. makes bitcoin have utility worth securing).

altcoins on the other hand. that have no real life purpose(cant buy goods) and are mined without cost(pos) can drop to zero.
and many have.
inshort dont hoard PoS coins. there is absolutely nothing supporting a bottomline value of non-zero. PoS can go to zero. PoS is no underlying value and 100% speculative emotion

Already bitcoin price is highly manipulated due to the limited supply and we call them whales, until now bitcoin is used as an asset or atleast 99% of them so yes its like a collectible item but in future the things will change when we use it as medium of exchange because by that time the distribution of bitcoin is more diluted so it may not be easy to accumulate all of them and collapse it.

This logic make sense but still needs to ask why would people would buy it to begin with. If its only to expect a future profit by holding it, i have hard time to see how it would make sense in the long term.

If you just think you are going to sell it back at roughly the same price you bought it the logic holds.

If you just buy it to sell it back at significantly higher price should really wonder what would really move the market enough from the moment you buy to the future moment you want to sell. If not some form of market cornering that cannot be sustainable in a free market.

And it doesnt account for people who would spend it to buy something which would not directly translate to an euro/dollar valuation. In a bitcoin utopia you would expect a whole economic network around it in sort that it doesnt even hit an exchange with fiat.

And its more like this that bitcoin should develop with the demand as a paiment system with the demand as bitcoin being superior to competitor system.

I dont see any other way that it can develop long term.

Bitcoin can be one of two things effectively, when it had low adoption levels it worked well as a currency because the market was so liquid and people were not intent on hoarding it. It's primary usage at that point was still open as a tool to exchange value, as the volatility was more stable and we saw very companies opening up to accept it slowly. As it has gotten much more popular it has morphed, or tipped the scales towards, becoming simply a commodity. Like gold, people are hoping that it will hold its value and slowly increase over time. It still has a very useful purpose of being a decentralized unit of exchange that is not subject to unnecessarily high or arbitrary fees, but that only works at higher amounts. It has much less purpose, due to fees and time taken to validate, as a more instantaneous exchange of value.

and one more thing, decentralized Bitcoin is not regulated by anyone. Bitcoins are very unique. become a pioneer of cryptocurrency digital currency that is integrated with the blockchain and every transaction made will not be deleted by anyone.

hoarding does not cause any merit for value rise

highschoolers think its a supply-demand thing. whereby there are 19mill coins. but billions of people with fiat wanting it.

actually the 19mill coins hoarded on private keys is not the supply.. . the markets price is not based on 19mill coins. its based on just a few hundred thousand coin deposited into an exchange, whereby the market price is based on which of those few hundred thousand coin are actually on market orders.
(your not part of the market if your not on the market)

even more depth
the market orders are not based on there being hundreds of people buying hundreds of coins right this second. instead if you look at the market orders you will see small orders of 0.1 and less being 'taken'  and affecting the price

yep you dont need to buy a whole coin to set/make a market price.
if you just spend $42 buying 0.001btc you then set the price at $42,000 per btc

you dont need to sell all 19mill coins all at $42k each to then make the market value $42k

what actually sets the value. is peoples willingness to not sell if the price dips too much.
this happens when people look at the price they acquired their coin for.

if a person acquired a coin in 2011 for 10c. he wont sell it for 9c
if another person sold another coin for 20c. the first person might try selling his for 20c too

now the new acquirer has 2 coin at 20c and wont sell it for 19c each. but might sell it for 26c each.
and so as time goes by. the price rises due to not wanting to sell at a loss. and not wanting to sell unless their is a gain.
and these gains add up

so passing coin around where the next person to get it will have a higher acquisition cost to refuse to sell below.
..
another metric of value is mining cost.
if it cost just $1 to mine an ounce of gold in your back yard. using just a spoon and coffee filter. then everyone would be selling it for $1.01-$3 as the ''spot price range' of value(NOT the $1k-$2k range)

the reason gold's spot price remains over $1k-$2k is because mining costs are over $900.
no one on the planet is silly enough to sell gold for under $900

98% will refuse to sell for under $1100. and less % the higher the price
what you find is those willing to sell below $1600. if they did sell at $1600 that new acquirer will try to avoid to sell it for less than $1650+,  thus the movement of assets sets a new % of acquirers desire to not sell below a certain value

..
heres an interesting thing.
it wont matter how many coins are on a market deposit balance sheet
it wont matter how much dollar are on a market deposit balance sheet

ever all the btc sellers all communicated that as of this minute everyone should refuse to sell their coin for less than $67k.
even if only one person with $6.70 was to buy coin (0.0001btc).. thats the price the market puts as the price for btc. $67k for 1btc.

ther could be 5milion coins wanting to be sold. and 5 trillion dollars ready to buy(or make up any number of any side)
but if there is only 1 order being placed. and that order was 0.0001btc for $6.70.   then that order makes btc $67k

There is no direct incentivie to it, but as i understand it from the original discussion it seem to me the only way bitcoin can really gain long term value is using it as a medium of exchange, if everyone just hoard their coin in a wallet without motion, the long term value is limited.

found another interesting post related to the topic

https://bitcointalksearch.org/topic/m.415




I need to read more, but already as much as i see reference to merchent, transaction, and regular thing, i never see a mention of the merit of hoarding it as something that would really add long term value to bitcoin.

Commodity asset, asset of storage, etc. all of those are not most important things about Bitcoin.

The most important thing are
- Bitcoin is Bitcoin
- It is unique
- It has only 21M Bitcoin in total supply that is unchanged.
- More than 90% Bitcoin has been mined so far
- Only less than 10% Bitcoin is left for mining until 2140
- Bitcoin gives you your own bank.
- No one can steal your Bitcoin if you don't lose private keys.

Strange how Satoshi described Bitcoin as "peer-to-peer electronic cash", but in the post mentioned in OP called it a commodity.


Who said that coins are supposed to be frequently moved instead of sitting there for years? There's nothing in Bitcoin's protocol that could incentivize that. The only reason to move coins to new address is if there's a protocol upgrade featuring new address format, which doesn't happen often.

The idea of supply and demand ok, but to me it seems more and more to be some kind of sophism more than anything. Look like some form of sollipism like i make the reality how i want it to be. But in reality you will rarely find some instance when this logic apply in real life. There is always a reasonable price to expect for something at a particular time. Then the price can vary following different factors etc but it's the thing i really fail to see with bitcoin. I mean whyt bitcoin worth 100x more now than 5 years ago ?

https://saylordotorg.github.io/text_microeconomics-theory-through-applications/s13-03-asset-markets-and-asset-prices.html

Bitcoin is assets and that is why is valuables and people is using it as a currency, commodity of bitcoin is determine by market standard but i will not believe such that many people have another definition of assets and commodity, asset in bitcoin is talking of investment while commodity is also talking of production and productivity of a product, so their is interchanges of them in bitcoin what really prominent is investment which is the asset you have in bitcoin

It's not just production but at the same time there are other things as well, one cannot just strike aside things like :
- economic situation of the country
- the world's probelms like the pandemic
- the availability of goods or resources in that particular place
There are so many things! How you evaluate bitcoins is actually not something that simple, bitcoins is very different that traditional things, plus it depends on person to person. For me it's more like an asset than an actual commodity. It's better as a store of value. That again depends from person to person as well. Value is entirely personal as well.

IMO Bitcoin is a Digital Asset or Commodity similar to Domain Names.

You are buying ownership of a piece of the Blockchain.

a commodity is a raw material used in the production of a secondary product

gold-> jewellery and circuits
beef-> burgers and mincemeat
wheat-> bread and cereal
oil-> fuel and plastics

gold has 2 markets. the commodity (produce demand) and asset market(investment/store of wealth)

bitcoin more aligns to an asset market. not a commodity market

For me bitcoins are a currency that is very similar to all the major currencies traded around the world like Euro, Dollar, etc. Both crypto and fiat don't pay any dividends, and both rely on investor confidence. Fiat money has a country and their economy behind it to guarantee some value, but investors look more at the future. The only difference is that there is a central bank behind fiat money that guarantee me to use that money to buy goods on my country. What they don't guarantee is a certain value for the money, since the gold standard was demolished the value fluctuates. So both cryptos and fiat money fluctuates freely. For me the guarantee that I can actually use my bitcoins comes from the large number of investors. As long as people are interest in the coin will there be value and an active market.
So I would say bitcoins are more than just a commodity market.

Well, most governments define Bitcoin and Crypto currencies as Commodities, because they want to protect their Fiat currencies from disruption. All other Fiat currencies can be traded as Commodities (Forex Currency markets) and the same goes for Bitcoin... so it is a Currency and it can be traded as a Commodity. 

Satoshi just showed the world what will happen if it is only traded as a Commodity... which is not the route most of us wants this experiment to go. (It will be much better if it is a currency, because it will generate miners fees and that is the oil of the whole Bitcoin eco system) 

Well if you can call USD, CNY, GBP, TRY,.... and the rest of more than a hundred fiat currencies being traded in Forex markets commodities then you can also call bitcoin a commodity.

The only thing that sets bitcoin apart (which is a temporary characteristic) is that its price is being decided in a rather small market that has caused a lot of volatility. Otherwise in the future when bitcoin reaches mass adoption and the market is not so small to be manipulated by the overly excited traders, its price will be stable too. By that time it becomes easier to see that the price depends solely on supply and demand, both of which will have reached a fixed and balanced state.

The main difference between Bitcoin and a commodity is that a commodity consumed.


The price is always determined by supply and demand.

However, the quantity theory of money states that MV=PQ, so the value of the money supply is PQ/V. The supply comes from MV and the demand comes from PQ.

The theoretical price can also be thought of as the risk-adjusted discounted future price.

Whether or not it is overpriced depends on how you think it compares to these metrics.


Hoarding temporarily affects the supply. The price rises as coins are hoarded and likewise it falls as hoarded coins are sold.