Topic: BTC Price Stability - page 2. (Read 2009 times)

What does 2,500,000 stand for?

As I said before.
(b*r)/(2500000-d) = (144004*50)/( 2500000- 1777774.4820015) = 9.9694622
That should be the current price, but it is slightly off
Last Price: 7.89859 High:8.467 Low: 7.8 Volume: 21694 Weighted Avg: 8.0884
about $2 high.

I think that makes them more unstable then saying they're worth a fixed price.

This doesn't address the issue that if the market moves up, it'll turn out my 2 bitcoins were worth more then 16 usd next week, and I'll feel I paid more then my widget was worth. If for example, the BTC value for me the day my widget arrived was $10 : 1btc, I'll feel that I could have had 4 more dollars, if I waited a week. This happens gradually with any currency, but when I'm looking at BTC price histories, I'm seeing pricechanges by over a dollar a day, and not infrequently.

Bitcoins price relative to another currency cannot be disregarded that easily.
Let's say I create widgets. I have to buy the raw materials to make widgets. These materials are not sold by vendors who take BTC. I have to pay the local currency for my parts. Let's say they cost 440 Baht to make apiece.  at the time, 1 Bitcoin is worth 300 Baht. I factor in my time and overhead, and sell widgets for 2.5 BTC.  Then Bitcoin's value drops to 270  baht- Roughly a change of 1 USD, at the end of the week. I turn to exchange my BTC for Baht to pay bills, buy more parts- and my profits may have disappeared. How am I supposed to make money, or even guarantee that I can break even, with a volatile currency?

The buyers is just as at risk. If i buy a widget for 2.5 BTC, that means I value a finished widget at 750 Baht. Before my widget arrives, BTC increases to 330 baht. Great for the seller, but this means my widget effectively cost me 825 Baht- When if i had dealt with another widget seller, the price would have been 755 Baht.  Why would I want to spend BTC that may end up costing me more then I want to spend?

True. True. We need to open bitcoin up to the world and make it so easy to integrate with bitcoin and entice businesses for doing so.

Kind Regards,
Marty Lee

It seems to me like the price would be more stable if there were more commercial transactions involving buying and selling goods and services in exchange for bitcoins.  At the moment it seems the two most popular bitcoin activites are mining and speculating.

I hate how the price has dropped. I bought 5 coins at 16 bucks, and now I am stuck with them. Mining is the best way for you to get bitcoins. My opinion on the price is that it is equal to the following equation:

(b*r)/(2500000-d) in USD

b = blocks
r = reward per block
d = difficulty

Kind Regards,
Marty Lee

To stabilize the price you'd need to tie it to a real value and not just speculation. If a major corporation said their product was worth five dollars or five bitcoins, then the bitcoin would be worth one dollar.

I Agree, untill we can define BTC as own Currency it will be just a speculation. BTC it's the perfect global indipendent currency. More Exchange we have in the globe and soon we see BTC worth it as own value!

We need to stop saying BTC is worth 8 USD (or whatever the current price is for exchange).
This is why BTC is unstable.

BTC should be worth whatever the buyer/seller wants to trade them for.

After pondering BitCoin for some time, I've came to the conclusion that the price will never be stable. But I do not think it matters for the success of BitCoin. I also believe (could be wrong) that it would be impossible to come up with a CryptoCurrency that would be stable in price without sacrificing its decentralized virtue. And if one was supposedly made, it would always be open to manipulation out side the free market to the advantage of a few (in my opionion).

To understand my conclusion on BitCoin price, let's look at a currency backed by the commodity gold.
If deflation becomes a problem, the demand and price of gold goes up relative to the entire market. This lowers the threshold for gold miners to make a profit and so production is expanded accordingly. The reverse case is also true. If inflation become a problem, the threshold for gold mining profitably is increased and gold mining production is cut-back. In other words, the rate of new money injected into the economy is dictated by the free market and always adjusts accordingly making the gold currency VERY STABLE.

BitCoin on the other hand has the RATE of money injected into the market fixed in its algorithm. Weather the market needs more money or not does not matter. 50 BTC (or 25, 12.5, 6.25, etc.) is always injected into the market every 10 minutes. If the amount of non BTC money (usually Fiat currencies) comes into the system to purchase BTC at the same rate BTC is generated, then you get stable price; however, that has hardly been the characteristic of the BitCoin free market.

As stated at the beginning, this should not matter for BitCoin and the future of its success. The solution to this issue is found in the services that will most likely will spring up (if they haven't already) for merchants. Because BitCoin is SO VERY EASY to exchange, a merchant can except payment for a product or service in bitcoin and simultaneously be guaranteed the money-of-choice by an exchange service. In other words, the so called price instability weakness of BitCoin will be completely masked out by one of its many strengths.

Comments and input appreciated.