Elasticity and inelasticity of bitcoin's supply and demand - page 2.

odolvlobo

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Quote from: jaysabi on October 21, 2015, 12:26:34 PM

Quote from: odolvlobo on October 21, 2015, 02:41:09 AM

Quote from: jaysabi on October 20, 2015, 11:28:15 PM

Quote from: odolvlobo on October 17, 2015, 03:40:56 PM

Quote from: jaysabi on October 17, 2015, 12:42:48 PM

This is correct, and a great example. The FED printing all that money after 2008 hasn't resulted in massive inflation because that money hasn't made it all the way to the money supply. If it did, you would see the inflation you would expect, but it's not part of supply right now, even though it exists. Perfect analogy to coins being held off exchanges.

Money supply is a number -- all the money that can be circulated. Market supply is not. It is a curve that shows price vs. quantity. A market depth graph is the supply/demand graph for that particular market at that particular time.

Money supply is a number that has no effect on price. Price is determined where market supply meets demand. That's why when a major seller comes into the market, it depresses prices. That total supply was there prior to being on the market, but it doesn't have an effect until it's brought in to trade.

We both know that multiplying the money supply by a factor of 100,000,000 would have an effect on the value of a bitcoin, so saying that the money supply has no effect on the price can't be correct.

Multiplying the USD supply by 5x since 2008 hasn't, so your point about multiplying money supply by a factor of 100 million (something nobody is talking about) isn't relevant. You're not even having the same conversation anymore. You brought up the difference between market supply and money supply, and then when I agreed with you and distinguished the point further, you started talking about 100,000,000x increase in the money supply. That doesn't even follow logically, and again is refuted by the fact that a 5x increase in the USD supply has not lead to inflation because money supply increase is still not market supply increase. Even if you want to argue the ridiculous point of 100,000,000x increase in money supply, it's still not going to impact the price unless it's part of the market supply.

Ok, I guess I was being too picky. The money supply does not directly affect the price, but it does affect it indirectly because it affects the market supply. However, you can't say that the price hasn't been affected (indirectly) by increase in the money supply simply because the price has gone down instead of up. There are other factors, specifically demand.

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Quote from: odolvlobo on October 21, 2015, 02:41:09 AM

Quote from: jaysabi on October 20, 2015, 11:28:15 PM

Quote from: odolvlobo on October 17, 2015, 03:40:56 PM

Quote from: jaysabi on October 17, 2015, 12:42:48 PM

This is correct, and a great example. The FED printing all that money after 2008 hasn't resulted in massive inflation because that money hasn't made it all the way to the money supply. If it did, you would see the inflation you would expect, but it's not part of supply right now, even though it exists. Perfect analogy to coins being held off exchanges.

Money supply is a number -- all the money that can be circulated. Market supply is not. It is a curve that shows price vs. quantity. A market depth graph is the supply/demand graph for that particular market at that particular time.

Money supply is a number that has no effect on price. Price is determined where market supply meets demand. That's why when a major seller comes into the market, it depresses prices. That total supply was there prior to being on the market, but it doesn't have an effect until it's brought in to trade.

We both know that multiplying the money supply by a factor of 100,000,000 would have an effect on the value of a bitcoin, so saying that the money supply has no effect on the price can't be correct.

Multiplying the USD supply by 5x since 2008 hasn't, so your point about multiplying money supply by a factor of 100 million (something nobody is talking about) isn't relevant. You're not even having the same conversation anymore. You brought up the difference between market supply and money supply, and then when I agreed with you and distinguished the point further, you started talking about 100,000,000x increase in the money supply. That doesn't even follow logically, and again is refuted by the fact that a 5x increase in the USD supply has not lead to inflation because money supply increase is still not market supply increase. Even if you want to argue the ridiculous point of 100,000,000x increase in money supply, it's still not going to impact the price unless it's part of the market supply.

odolvlobo

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Quote from: jaysabi on October 20, 2015, 11:28:15 PM

Quote from: odolvlobo on October 17, 2015, 03:40:56 PM

Quote from: jaysabi on October 17, 2015, 12:42:48 PM

This is correct, and a great example. The FED printing all that money after 2008 hasn't resulted in massive inflation because that money hasn't made it all the way to the money supply. If it did, you would see the inflation you would expect, but it's not part of supply right now, even though it exists. Perfect analogy to coins being held off exchanges.

Money supply is a number -- all the money that can be circulated. Market supply is not. It is a curve that shows price vs. quantity. A market depth graph is the supply/demand graph for that particular market at that particular time.

Money supply is a number that has no effect on price. Price is determined where market supply meets demand. That's why when a major seller comes into the market, it depresses prices. That total supply was there prior to being on the market, but it doesn't have an effect until it's brought in to trade.

We both know that multiplying the money supply by a factor of 100,000,000 would have an effect on the value of a bitcoin, so saying that the money supply has no effect on the price can't be correct.

jaysabi

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Quote from: odolvlobo on October 17, 2015, 03:40:56 PM

Quote from: jaysabi on October 17, 2015, 12:42:48 PM

This is correct, and a great example. The FED printing all that money after 2008 hasn't resulted in massive inflation because that money hasn't made it all the way to the money supply. If it did, you would see the inflation you would expect, but it's not part of supply right now, even though it exists. Perfect analogy to coins being held off exchanges.

Money supply is a number -- all the money that can be circulated. Market supply is not. It is a curve that shows price vs. quantity. A market depth graph is the supply/demand graph for that particular market at that particular time.

Money supply is a number that has no effect on price. Price is determined where market supply meets demand. That's why when a major seller comes into the market, it depresses prices. That total supply was there prior to being on the market, but it doesn't have an effect until it's brought in to trade.

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when we are going to use bitcoin, then we see whether bitcoin has now become a medium of exchange trade in the world, I suppose not entirely, due to the infrastructure and policies of the countries of the world are different, as long as it is not fulfilled, then to the current bitcoin only used as investment goods such as gold, lands and properties, although the actual value of the investment is not as good as gold, lands and properties

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Most of us we see bitcoin as investment ,others as savings,the big reason behind the interest is its volatility that is amazing,being able to make 20% in a week doing nothing.New coins will keep being moved and price should grow as the interest to own bitcoin,if the same people at bitcoin well we will see it around 200,300 dollars .

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Quote from: bitmarket.net on October 20, 2015, 06:48:40 AM

Interesting discussion.

I think that the demand for bitcoins depends on what people need these bitcoins for - will they hold them as an investment or they are just using them to pay for goods / services or as a quick and inexpensive way to move cash around the world.
In my view, currently there is much more upside in the latter category, although these two are definitevly linked.

Even when people use bitcoin to pay for goods, they will keep bitcoin for certain period before they spend it. It can be regarded as a kind of holding (investment).

bitmarket.net

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Interesting discussion.

I think that the demand for bitcoins depends on what people need these bitcoins for - will they hold them as an investment or they are just using them to pay for goods / services or as a quick and inexpensive way to move cash around the world.
In my view, currently there is much more upside in the latter category, although these two are definitevly linked.

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Quote from: odolvlobo on October 17, 2015, 12:07:18 AM

Quote from: johnyj on October 15, 2015, 10:31:26 PM

If you buy 100 coins and hold it for 10 years, they will disappear from market for 10 years, thus make the supply decrease by 100 bitcoins

That is simply not true. Neither the money supply nor the market supply decreases when someone holds coins. If someone offered you $100 thousand or $100 million for those coins, would you sell them? Yes, so they are still counted as supply. Only if you destroy the coins would they be removed from the the market supply and the money supply because could never be sold or circulated.

The supply is simply fixed, I don't see how people don't get this. Just look at the halving graphs, that's the inflation %. Then consider the lost Bitcoins, and you subtract that to the total supply. Pragmatically, by about 2025 the inflation (new Bitcoin released into the market) will be way lower than it is now. In fact lost bitcoin rate will be higher, therefore it will just feel deflationary. If the demand has been increasing price should be way higher than we can imagine as a sane prediction now.

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Quote from: johnyj on October 18, 2015, 07:42:53 PM

Quote from: knowhow on October 18, 2015, 02:06:07 PM

Bitcoin demand and supply currently means nothing to the price,there is new coins to be mined and all days bitcoins being traded,soo all days the supply is decreasing slowly at the fees,because the big ammount of bitcoin and the fact no one have a list ot holders of bitcoin.The worse thing is we dont know the bitcoins trades the real volume ,how many of them are new coins how much are waiting in cold wallets .... we dont know and will never know it.

Same thing can be said for fiat money, you never know how much money is in circulation and how much money will suddenly enter the interbank market and crash the foreign currency exchange rate, only large banks have an idea. For example, Swiss central bank just crashed some foreign currency dealer and hedge funds by suddenly giving up the peg to Euro. Bitcoin exchanges are similar to those large banks, they have some kind of first hand information about the money flow

The fiat is controled by banks and they control their currency value,injecting milions making the currency get more value very easy.Its interesting to know and to think they do what they wanna and usually is banks against banks,and no one of them loose money on forex.Bitcoin besides being decentralized we know that anyone or whales cant pump bitcoin price,that is fact.
In the end who pays the bill is we that wanna travel and need to exchange our fiat into other,since bitcoin hasnt reach mainstream.

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Quote from: knowhow on October 18, 2015, 02:06:07 PM

Bitcoin demand and supply currently means nothing to the price,there is new coins to be mined and all days bitcoins being traded,soo all days the supply is decreasing slowly at the fees,because the big ammount of bitcoin and the fact no one have a list ot holders of bitcoin.The worse thing is we dont know the bitcoins trades the real volume ,how many of them are new coins how much are waiting in cold wallets .... we dont know and will never know it.

Same thing can be said for fiat money, you never know how much money is in circulation and how much money will suddenly enter the interbank market and crash the foreign currency exchange rate, only large banks have an idea. For example, Swiss central bank just crashed some foreign currency dealer and hedge funds by suddenly giving up the peg to Euro. Bitcoin exchanges are similar to those large banks, they have some kind of first hand information about the money flow

knowhow

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Quote from: johnyj on October 17, 2015, 07:53:40 PM

Quote from: odolvlobo on October 17, 2015, 03:29:19 PM

There is no requirement that something be listed for sale to be part of the supply. That's one of the reasons why it is so difficult to determine the actual supply and demand curves. If you are considering only the market depth graphs on major exchanges as the supply and demand, then you are missing most of the actual supply and demand.

Quote from: johnyj on October 17, 2015, 10:00:14 AM

Coin holder decide how much money supply there will be in the market, not the bidder. FED has printed 5x more money since 2008, and you never notice anything's price going up by 5x, because banks hold majority of those money and never move them, so they are not entering circulation and will not cause inflation

But they would move them at the right price. That's why they are part of the money supply and part of the market supply.

Quote from: johnyj on October 17, 2015, 10:00:14 AM

If I have 100 bitcoin and someone offered me $100 million for 100 coins, I would maximum sell 5 bitcoin ...

So, 5 of those coins are part of the supply. And you would sell the remaining 95 at some price, so they are also part of the supply.

Supply and demand theory only works in economy books, in reality unless the money reach exchange, it will not have the ability to affect exchange rate. The exchange operator can clearly observe the different reserve level of different currencies, thus roughly make an estimation of the bear/bull market and take actions before every other trader, but even that is not always precise

Notice that when price goes even higher, for example one bitcoin reach 10 million, then I would only need to sell 0.5 bitcoin to get the required fiat money to spend. So, a higher price caused the supply to shrink. Supply demand theory usually applies to products/services, it does not apply to money, because money can be regarded as having unlimited demand. The demand to hold bitcoin can be larger than fiat money when bitcoin price is constantly rising

Bitcoin demand and supply currently means nothing to the price,there is new coins to be mined and all days bitcoins being traded,soo all days the supply is decreasing slowly at the fees,because the big ammount of bitcoin and the fact no one have a list ot holders of bitcoin.The worse thing is we dont know the bitcoins trades the real volume ,how many of them are new coins how much are waiting in cold wallets .... we dont know and will never know it.

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Quote from: jehst on October 13, 2015, 02:00:28 PM

Demand:

1) My experience as a seller on localbitcoins.com tells me that there is a baseline daily demand of bitcoin coming from people who are price-agnostic such as Joe Schmoe who is buying $2000 worth of bitcoin per day for.. something. Maybe remittances. I never ask. But I will tell you that every day he needs $2000 worth of bitcoin no matter what the price is. He doesn't care what the price is. This component of total demand, measured in USD, is inelastic.

Yes, there is a number of people (and this number is increasing on daily basis) who buy Bitcoins without bothering about the price bacause they spend them the same day. If their demand exceeds the current supply the price of BTC will rocket up.

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Quote from: odolvlobo on October 17, 2015, 03:29:19 PM

There is no requirement that something be listed for sale to be part of the supply. That's one of the reasons why it is so difficult to determine the actual supply and demand curves. If you are considering only the market depth graphs on major exchanges as the supply and demand, then you are missing most of the actual supply and demand.

Quote from: johnyj on October 17, 2015, 10:00:14 AM

Coin holder decide how much money supply there will be in the market, not the bidder. FED has printed 5x more money since 2008, and you never notice anything's price going up by 5x, because banks hold majority of those money and never move them, so they are not entering circulation and will not cause inflation

But they would move them at the right price. That's why they are part of the money supply and part of the market supply.

Quote from: johnyj on October 17, 2015, 10:00:14 AM

If I have 100 bitcoin and someone offered me $100 million for 100 coins, I would maximum sell 5 bitcoin ...

So, 5 of those coins are part of the supply. And you would sell the remaining 95 at some price, so they are also part of the supply.

Supply and demand theory only works in economy books, in reality unless the money reach exchange, it will not have the ability to affect exchange rate. The exchange operator can clearly observe the different reserve level of different currencies, thus roughly make an estimation of the bear/bull market and take actions before every other trader, but even that is not always precise

Notice that when price goes even higher, for example one bitcoin reach 10 million, then I would only need to sell 0.5 bitcoin to get the required fiat money to spend. So, a higher price caused the supply to shrink. Supply demand theory usually applies to products/services, it does not apply to money, because money can be regarded as having unlimited demand. The demand to hold bitcoin can be larger than fiat money when bitcoin price is constantly rising

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Quote from: RyanX on October 17, 2015, 04:03:23 PM

The effect of remittance is zero if one buys Bitcoin in the U.S. And sell in Philippines

Not quite. The bitcoins are unavailable during the remittance process and that affects the supply.

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The effect of remittance is zero if one buys Bitcoin in the U.S. And sell in Philippines

odolvlobo

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Quote from: jaysabi on October 17, 2015, 12:42:48 PM

This is correct, and a great example. The FED printing all that money after 2008 hasn't resulted in massive inflation because that money hasn't made it all the way to the money supply. If it did, you would see the inflation you would expect, but it's not part of supply right now, even though it exists. Perfect analogy to coins being held off exchanges.

Money supply is a number -- all the money that can be circulated. Market supply is not. It is a curve that shows price vs. quantity. A market depth graph is the supply/demand graph for that particular market at that particular time.

odolvlobo

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Quote from: jaysabi on October 17, 2015, 12:41:09 PM

Quote from: odolvlobo on October 17, 2015, 12:07:18 AM

Quote from: johnyj on October 15, 2015, 10:31:26 PM

If you buy 100 coins and hold it for 10 years, they will disappear from market for 10 years, thus make the supply decrease by 100 bitcoins

That is simply not true. Neither the money supply nor the market supply decreases when someone holds coins. If someone offered you $100 thousand or $100 million for those coins, would you sell them? Yes, so they are still counted as supply. Only if you destroy the coins would they be removed from the the market supply and the money supply because could never be sold or circulated.

This is not true. The "market" is whatever is trading on the exchanges.

There is no requirement that something be listed for sale to be part of the supply. That's one of the reasons why it is so difficult to determine the actual supply and demand curves. If you are considering only the market depth graphs on major exchanges as the supply and demand, then you are missing most of the actual supply and demand.

Quote from: johnyj on October 17, 2015, 10:00:14 AM

Coin holder decide how much money supply there will be in the market, not the bidder. FED has printed 5x more money since 2008, and you never notice anything's price going up by 5x, because banks hold majority of those money and never move them, so they are not entering circulation and will not cause inflation

But they would move them at the right price. That's why they are part of the money supply and part of the market supply.

Quote from: johnyj on October 17, 2015, 10:00:14 AM

If I have 100 bitcoin and someone offered me $100 million for 100 coins, I would maximum sell 5 bitcoin ...

So, 5 of those coins are part of the supply. And you would sell the remaining 95 at some price, so they are also part of the supply.

Topic: Elasticity and inelasticity of bitcoin's supply and demand - page 2. (Read 4716 times)