Topic: Bitcoins have lost $174,108,376.60 since June 9th 2011 (Read 6806 times)

I wrote a nice post yesterday, but lost it because I had a connection fail - so this is the shorter version.  It covered the fallacy of assuming more coins would increase the value.

If you look at a company with 1000 shares at $1 each, the value of the enterprise is $1000.  It does not magically increase if there is a 2 for 1 stock split.  Same with currency, like the US printing a whole lot of new bank notes.  What do they call it - quantitative easing?

So taking a maximum capitalization of BTC at $210M, and current $5 * 7,000,000 coins, means a drop of only $145M.
Note also, that with one block mined, 50 coins could also be the same $210M - that wouldn't be taken seriously, but the argument is that there is some $210M created somewhere before it fell.

A closer value would be the weighted average going all the way back in time as it shows how much money has actually flown in to the market to get to where we are at.

For some random reason I was thinking about this again.  The argument is intrinsically flawed, as even if all of the value of a thing was done at a clearing price, the currency is relevant.

In valuing companies, the capitialisation (shares on issue times price) sets the total.  Only the most naive would think that a new share issue would somehow magically make the company worth more.  Take a company (Apple, Nike or something).  If the share price is $100 and there are 1000 shares, then the value would be $100,000.  But if they do a 2 for 1 share swap, the company does not suddenly double in value because people adjust the price per share they are prepared to trade at.  If you believe otherwise, send me all your money now to save you losing it to someone else.

Even taking the bitcoin spike of $30/BTC and 6M coins that would be $180M (I'm being generous).  Now there are some more coins (7M-ish) and the value is around $5/BTC, so $35M.  A paper loss of $145M, not $175M because the price is adjusted for the new issue of coins.

On the flip side, back on day zero, with 50 coins from the first block, at some unknown price, they represent the $180M of "value", just the price was below the value, or at $180M total, it might have been over-valued.  This difference of opinion drives a lot of trading and keeps other markets churning.  BTC is just one of those, and a small one.


I was thinking about showing the "lost" value of the USA in yen given a 20%+ change in price (exchange rate) and with all the extra dollars that have been printed to provide some context.  It will be large, but the number would also be pointless.  I also considered a place like Stockton CA where property prices fell 30% - goes to show you don't want to invest in something so volatile if you are going to worry about volatility too much - after all, if the USD and property is so bad, it's amazing USD works as a currency (read with heavy irony).

Quiet now, you'll spoil the argument.

And how much "value" has been "lost" in the last year?

I found $174,108,376.60 between the cushions of my couch. Coincidence? More like bitcoincidence! 

Very interesting thread i must admit...not because of the numbers and theories as well as the analysis, but because of the profound insights that I have acquired. I consider everyone's opinions and facts as a gateway into the thought process of that particular individual. Many of the posts have educated me in ways that I would not have perceived just by reading alone and because of that, it is very valuable. In short I have been able to "think outside of the box" based on the responses of members. This is the very reason I frequent these forums as it is a very lucrative place to harvest thoughts and ideas that I would never have considered or conceived. A special note to evoorhees - I really like your posts as you seem to craft very well thought out responses.

It has changed wildly.

Inflation is not only a function of the supply of a currency, but it is a function of the supply of a currency relative to its users, its demand.

We are currently in a far more inflationary mode than when Bitcoin was at $30+ and many new people were rushing in.

The OP is WRONG. BTC's intrinsic value has stayed the same. "Losing value" only applies when exchanging intrinsic values objects for extrinsic value objects.

Paper money is worth nothing intrinsically. It's value is extrinsic .

It sets the standard...   "hey another VC valued us at a billion,  so going public we're going to value ourselves at 1 billion, shareholders and market makers need to follow suit"

Then why don't they just have the VC's give them a billion dollars for more stock?  It's because market cap is only one measure of value, and neither the VC or the company believes the true value of the company is anywhere near that.  (The VCs are betting on the future value going above a billion dollars, but they don't think the company is worth anywhere near that much today.)

This is all quibbling.  What has happened to bitcoin since May is a tragedy.  One embarrassing disaster after another, no wonder the price has collapsed.  Thanks MtGox, thanks mybitcoin, thanks Bruce.

Your math has helped me to understand that we do not need $1 million per month to maintain the current price.

As the traders are just a fraction of the total Bitcoin market so the price can be maintained at a fraction of that cost.

I know the work of SEO all too well, wordpress theme with a logo or two thrown in full of content and coded right

With that in mind, you should do something to that /calc page if you are going to keep linking to it.  Some kind of static content or information relating to the page, just to give it some added natural value for those who are going to be looking at it.  Might as well lower the bounce rate.

Nahh... man it's what I do for a living....   I get paid by clients to sweep bad news to page 20 in Google,   or promote their stuff on page 1 ..  depends who you ask.

So does being open about all this negate the conflict of interests lol

You have no idea...    

We have about 20 media outlets,  most of them in Google News,  about 600 websites (like Tribble) that we control,   most of our clients are fortune 500 firms...  we do marketing, SEO, Advertising , Digital work for them...   

That is too damn funny.   I didn't even notice the credit on that was TheFounder, the link to Flexcoin's calculator page as the report was funny to me for whole other reasons.    Own the bank and the media, smart.

So you now just called this a 'report' , posted it to your own ad agency (?) and got it being reported as news. 

http://www.tribbleagency.com/?p=8278

It would probably be close to zero. Have you see how much volume is drying up on the exchanges?