Topic: [Merits again] Discuss the velocity of Bitcoin - page 2. (Read 1067 times)

I think the impact of bitcoin price movements which is very difficult for all of us to describe is indeed a problem in the world of cryptocurrency.
to become a global currency with movements like now maybe many new people will definitely not believe.
for my country still not too good at the present time, its development began to be abandoned because the way of thinking is different maybe
but I hope one day bitcoin can still compete with legitimate currencies.

I had not realized the Copernicus connection, and I suppose that sometimes little facts like that could be tests about how much of an expert someone is on a topic.  I am merely familiar with the general principle that people tend to be incentivized to spend their most shitty money first and to HODL their money that is most likely to go up in value or to maintain its value.  Makes a lot of sense, and surely many of us have become more enlightened on such topic from the diptwats who are suggesting that we should strive to make bitcoin more spendable as if making bitcoin more spendable should be amongst our primary concerns - which does not make logical sense, and even people who are without much education are going to gravitate towards following gresham like behaviors if they have any kind of appreciation of the comparative value retention attributes of any kinds of monies that they hold.   Of course, some people give it no thought, but anyone who consciously attempts to achieve the most bang for the buck will frequently subconsciously engage in these kinds of behaviors without anyone teaching them... about gresham or having to explain any of the underlying theories.


For sure there is already a certain high degree of victory, even if bitcoin were to get squashed into the ground from here on out, the idea has been birthed and the idea has also been shown to have some functionality, so in that regard, there is a certain segment of the population that have come to better understand how money works including being better able to distinguish between sound money practices and not so sound money practices, and these kinds of ideas get into the heads of a variety of people the longer that bitcoin stays around, which assisted to become more powerful by Schelling point principles.



I don't know about fitting like a glove, but there can be a tendency for matters to kind of work themselves out in a way in which individuals gravitate in a direction to make things happen, and some of the nice things about bitcoin happens to involve how a lot of the built in incentives have a great way of playing out, which causes a lot of people to conjecture that the balancing of incentives with code and difficulty adjustments and proof of work and monetization came from a lot of deep thought, rather than merely getting lucky, even though there might have been some aspects that were lucky, too.


I hate to go down the road of speculating about their various plays, whether it is government, financial institution, rich people because there are a combination of things that they can attempt, yet part of the problem still ends up being that bitcoin gives hardly any shits because it has been designed to prepare for these kinds of attack attempts, so lucky for us that bitcoin has gotten off of the ground, and the longer that it exists the stronger it becomes, getting back to Schelling points  - so surely, attacking bitcoin would have had greater likelihood of success to nip it in the bud 5 years ago or more - so even if there might be some successful efforts to burden people more and more and to try to attack bitcoin in various regulatory  or prohibition ways,  there might be success in getting the price to go down for even extended  periods of time, and so in that regard there will develop stronger underground systems and even wacamole issues because even governments are not able to cooperate to attempt to get what they want because they do not agree upon what they want, and that is part of the genius of the incentives built into bitcoin including the fact that some governments might need to begin to attempt to develop their mining and acquisition of bitcoins rather than trying to bash bitcoin or create nonsense competition projects that are  likely to get swallowed by BTC in the longrun anyhow.

Yeap, this is the thing I wasn't taking in to consideration at all. Damn FED and his minions  
Absolutely stellar response, thanks for the effort and about this Copernicus "joke", I just checked the Wikipedia and yes, it's there, just look at the end of first paragraph, bold text  https://en.wikipedia.org/wiki/Gresham%27s_law
He's books were mostly on the forbidden list, that's why modern history forgot how great of an economist he was.
It's cool to read things like this, if it was true that would mean that we or rather satoshi, have already moved the scales a bit in our favour. Ah, another field where a battle with the forces of darkness parable fits like a glove.
Any ideas with what they can come up with next? The gov. I mean. More probable is "one world currency" or blockchain dollars?
I have heard some rumours that parts of EU are planed to move cashless in just one year form now... kinda scary.

I don't even understand the Copernicus reference.







It's likely that we cannot exactly attribute meaning to overall market behavior.  Of course, there are motivations to make money and there are also motivations to attempt to destroy the asset, if possible.  So the negative motives and the positive motives balance out to a battle, and sometimes there can be profits in other areas that are made by keeping BTC low.. for example if BTC is a threat to your business model or even some governments (to the extent that they are able) might engage in tactics to attempt to push the price down through rulings, prosecutions, FUD spreading, etc.



Sure there is likely some of that going on, too.


Of course, the motivations are going to be diverse, and surely frequently even the bearwhales might not understand how far they can push matters, and surely it is more profitable if they can dump early and cause a contagion in which others end up going along with it while they are slowly acquiring back their position without pushing the price up (which acquisition might take place OTC while dumping may occur on exchanges to cause the most negative influence as possible), and surely sometimes even the bearwhales lose control and may switch sides to start to buy when they figure that they are no longer able to push the price down.. the trend is your friend, as we know.


There is a mixture of the employment of old tools, but of course, bitcoin and other crypto is bringing about some different dynamics in trading, too, including more abilities for laypeople to get in which contributes to more extremes and manipulators trying to take advantage of way broader amateur traders.  Of course, there is some wild, wild west aspect, too in terms of trying to figure out what the asset is and attempting to figure out whether it should be regulated or not, so the extent to which any regulation exists in bitcoin and other crypto is a developing area - that also creates some new dynamics that likely play out differently from a more mature market.

Certainly there remains differences of opinion (and some people are going to bet correctly and some will get it wrong) regarding whether bitcoin is an actually new asset class or if the old tools will apply, and furthermore, there is differences of opinion regarding whether the four year fractal patterns are good predictors of BTC's likely price performance, and also disagreements regarding whether bitcoin is in a s-curve exponential adoption curve including what stage of the curve it is in, if it happens to be in such curve.  Some folks will be right and others will not, but does not stop the ongoing attempts to battle and to attempt to physically force the BTC price to go much further than expected and for much longer than expected, but part of my own personal theory remains that status quo institutions and whales are having quite a difficult time to try to keep bitcoin prices down, and sure they might have some more tricks up their sleeves, perhaps? perhaps?

Respect my Copernicus bro!   Everyone forgets Kopernik    give the guy at least some merits yo?
Jokes aside;
Why would you think "they" do it? Is it only in order to acquire bigger quantities of coins and profit hugely later on?
Or maybe there is something else I don't even consider as a reason for such speculation-action? Is this even a speculation mechanics or a new bread of something?

There seems to be a decent number of ways to consider the matter, Jet Cash.  Of course, if we are talking about effect of the actual physical coins, then we are talking about more of a hard effect rather than the soft effects of expectations, so I personally believe that it could be presented either way, and sometimes physical alone can be considered and sometimes expectations of future issuance and whether bitcoin is actually on schedule regarding issuance (which seems pretty concretely set  when it comes to bitcoin).

Of course, bitcoin is amongst the first of asset classes that is being attempted to be used as money and to have a solid scarcity.  Sometimes, I was taking issue with some of the stock to flow discussions because from my reading, sometimes I was missing the parallel that was being attempted, so they were trying to suggest that bitcoin is mined and new coins come into existence, and sure there is some truth to that, but we also know what that is going be with a decently high level of certainty, even accounting for the various scenarios in which consensus could be changed to inflate the BTC supply.

Many of us have also noticed another phenomenon and that is before bitcoin halvenings there is all kinds of pressures to attempt to keep BTC prices down, and even to spread FUD suggesting that bitcoin halvenings were going to cause the opposite effect than what logic would dictate, including the dumbass death spiraling of mining power based on loss of incentives to mine.  Anyhow, what seems to happen is the various powers that be in the bearwhale space push the BTC price down for as long as they can and as low as they can.  And it seems to me that part of the reason that we end up having such an explosion in the price that ends up happening a decent amount of time after the halvening is because the actual physical supply of BTC ends up being so constrained that there has to be a kind of physical resolution that does not even matter so much about what people think about the future, but then the explosion will cause a kind of piling on, too.  So the physical and the psychological will surely play off of one another, even when sometimes one or another might seem to be more of a driving factor under certain circumstances that are trying to be described or explained.

I believe that in the case of Bitcoin, the velocity should be calculated using the quantity of coins that are apparently available and released for use. I believe this because Bitcoin means a variety of things to different people and organisation, and its capabilities are fairly complex.

The term "velocity" comes from the Equation of Exchange, MV = PQ, where M is the money supply, V is the velocity, and PQ is the total value of goods exchanged for the money. The velocity can be thought of the number of times a particular unit of the money is spent in the time period.

The velocity is important because it determines the value of the money supply. You can rewrite the equation as M = PQ / V. Since the number of bitcoins can be considered constant at 21 million (though we are actually not quite there yet), this shows that the value of a bitcoin depends on adoption (as measured by PQ) and the velocity. Assuming constant adoption, increasing the velocity results in a lower value and decreasing the velocity results in a higher value.

The velocity is affected by several factors, including hoarding, fractional reserve banking, and technology.

Hoarding: If a portion of the money supply is hoarded and thus spent very slowly, then that behavior, of course, reduces the velocity.

Fractional Reserve Banking: With fractional reserve banking, each actual bitcoin backs a larger number of apparent bitcoins. The ratio is called the money multiplier, and the velocity is increased by this ratio. You could instead apply the ratio to the number of bitcoins, but I think it is easier to apply it to the velocity and stick with a constant 21 million bitcoins.

Technology: One of the factors that affects the velocity is simply how quickly a person can spend money that they have received. For example, the artificial delay in money transfers in the U.S. ("3 to 5 business days") lowers the velocity. Technology can speed this up. Bitcoins can be spent again by a receiver even before the transaction has been confirmed. The Lightning Network allows bitcoins locked up in channels to be spent and respent over and over. Better technology increases the velocity.

Oh?  So you believe that we are not having an intelligent and or "legit" conversation if the response does not follow some of your expected parameters?  Didn't I attempt to respond to all of your points, to the extent that I thought that I understood them to be?


Nothing wrong with that, I suppose.


i suppose if you believe that bitcoin is not meeting its objective, then you are free enough to invest in snake oils, if you believe that they might be able to do better than bitcoin.  I personally believe bitcoin is living up to its initial hype, and maybe even beyond expectations.  Of course, I did not get involved in BTC in the earliest of days, so I only started to study it in late 2013, within the context of my first beginning to develop a BTC related investment plan and attempting to continue it and to tweak it along the way.  Personally, I believe that bitcoin has met if not exceeded my initial expectations, and surely has become a lot more involved in my life than I though that it was going to be, especially in my earliest days of looking into it.  Surely, each person is going to have a different opinion regarding his/her life experiences, the extent to which s/he has studied into bitcoin as compared to other possible investments and/or whether s/he is actually content with what bitcoin has delivered in light of initial expectations (and whether those initial expectations were accurate or even if the present expectations are accurate).



I believe that I am fairly tolerant of differing views, so whether you are getting emotional about it or whether you believe that I am disrespecting you, that is upon you.  You said whatever you said, and I responded within my discretion regarding how I thought, at the time, that I should respond.  We may or may not end up agreeing, but if you believe that there is some kind of standard regard that you deserve, then we might end up not being ready, willing or able to figure out the extent to which we might agree or disagree about some of these matters or the extent to which our disagreement even matters, because each of us is free to conclude his/her own ways, to invest accordingly or to share or not, such ideas in the various threads of this forum.

Lol holy shit man, I'm not sure I've ever seen someone take something out of context as much as you just did here. First off, I was trying to have a legit convo, not trash talk what you said but to provide my opposing viewpoint (and educated opinion).  I'm an investment advisor by trade, so I'm pretty familiar with how money works and what's realistic and what's not..at this present moment.

I am almost completely a btc maximalist ( I do like Monero quite a bit ). I also don't view btc as much of an investment (since it inherently is not just as satoshi made clear) as I do a currency that is decentralized, permission-less, fungible etc that can change the world. The power it gives back to the people to no longer be fucked over by big banks which are evil to their core is something I've dreamed of since I found out about it.

I just wanted to quickly point out a few things. I would enjoy an open discussion that doesn't include throwing jabs and trying to belittle someones viewpoints (whether they were perceived correctly or not)..but that doesn't seem like it's your type of thing. 

I found this website that is showing live velocity and other useful information regarding Bitcoin in real time.
You can see that in last 24h Bitcoin velocity was around 530%
https://bytetree.com/bitcoin
  

Great.  Don't use bitcoin then, if it going to be a potential issue.


Are you saying anything different from me?  You think that bitcoin's primary use case is to compete with those payment mechanisms?  Do you think that bitcoin serving as a payment mechanism adds much value to why people actually currently want bitcoin?

Get real.  Sounds like you are brainwashed by some shitcoin ideas about what actually brings value to bitcoin and what bitcoins actual innovation was.. 11 years ago and still building.



Bitcoin  is the most sound money ever.  What do you mean by "best"?  Do you even understand gresham's law? 





How well do you believe that the USD is going to hold its value against bitcoin in the coming years? 

How well has the USD held its value against bitcoin in the past 11 years?

Of course, the USD has a lot of liquidity, and there are some ways that USD is better than bitcoin, but in terms of holding its value, good luck if you are going to invest in the USD and not invest in bitcoin in the coming years.  You might be correct, but I think that the odds are against you, in terms of concluding which one is going to have more value in the coming years.  Of course, investing in bitcoin does not need to be an all or nothing proposition, and if you already are used to having dollars, you might want to consider how much to hedge in bitcoin.. Don't overdo it, either way.  Good luck, sounds like you are going to need it if you are getting distracted into love of the dollar in comparison to bitcoin.



Do I have any problems with the dollar?  How about you try transporting $1million worth of value over the border and compare doing that with bitcoin or the dollar?  Sure it is a hypothetical, but there are use cases for bitcoin, too, and maybe you need to consider that before getting all high and mighty about whatever seemingly lame dollar loving points that you seem to be attempting to make.



When it comes to sound money, we are going to see how this plays out in the coming years.  I can see that you are trying to narrow in on some nonsense points which don't really tell us much about what is the value of bitcoin as compared to the dollar and how individuals might chose to allocate their holdings depending on their own situations, including their cash flows, other investments (or options), risk tolerance, timeline, skills and research abilities etc.



You could argue, but why should you?


Anything wrong with that?  Bitcoin might not be the same for everyone in terms of their various use cases and the extent to which they might want to hold some of it for the present or for the future.


Yes.  Lightning network is one option within bitcoin that is still being developed, as you seem to know, but you want to get scared about some nonsense point.  You can use lightning or not.  It is your choice, so no need to get scared, especially if you chose not to use it.



Who gives any shits about Monero?  Does that somehow relate to bitcoin? 

Yeah, if Monero has some features that bitcoin wants to incorporate, then maybe that could be relevant to bitcoin, and those features might be absorbed into bitcoin, and on the other hand, if Monero provides some utility that you value, then you could do that, too, if you want.  Otherwise, who cares about Monero?



Seems to me that there are going to continue to be various onchain developments as well as second layer and even third (or more) layer developments in bitcoin.  Rome was not built in a day, and bitcoin seems to have a lot of options and a lot of development, so we seem to be in quite early stages, so your wish about multi-layered seems likely to remain a reality in bitcoin and likely even to get quite expanded in the years to come, from my largely non-technical understanding what seems to be bitcoin's ongoing development direction.


Of course, bitcoin is like a plane that is continuing to be built while it is flying, including some disconnection between various player that are building it along the way.



I doubt that there is any kind of generational complication here, beyond normal changes that happen in society with passing down traditions or creating new traditions and practices.  Of course, with anything new, it takes a while for society to adapt to it and for use cases to evolve and for problems to be identified, to the extent that they exist, but there are social interactions too about what is going to be acceptable and accepted and what is not, so there are different concepts of "acceptable" in different parts of the world. 


Hard to disagree with Andreas on many things, and so in some sense, he seems to be saying that bitcoin does not give any shits because things just happen and things just change with the passage of time.

Humbly I have to disagree here entirely. When you're buying something in person, 99% of the time someone needs that payment instantly. Not in 10mn. People don't have time to wait around for that, on both sides. Fast and easy is what it's all about.  That's why apple pay, tap cards, etc are so popular. 

I love Bitcoin, but to say it's the "best" money, I can't agree with you there.  No currency of any kind is more coveted than the US dollar. It's backed by the strongest nation in the world, accepted by many worldwide (the US dollar is the only dollar you can take to other countries where there is a chance they will still accept it). Now is bitcoin the "best" money by concept? I could absolutely argue that point. Until transactions are LN fast, and volatility slows down greatly...it's likely to simply remain the "bullion of currency".  A safe haven. I've transacted using LN before and it's fantastic and I've got great hope for it's future use...but the fact that it makes transaction anonymous (or mostly so) is scary to me.  See  Monero country bans for example.  I hope btc transactions remain multi layered.  This still has so many question marks however.  I do have faith as the older generations die off, that society as a whole will accept digital anonymous transactions much more so.  The old farts are the ones really fighting it. why?...

"There are critics who criticize this technology primarily based on their world view.   It is politically inconsistent with their world view.  It’s not that they do not like the technology it’s that they do not like the implications of this technology and the primary criticism you get then is “this should not be” to which all I can answer is ..and yet it is.  “but we mustn’t”… and yet we did, “but you shouldn’t”.. but yet we did"- Andreas Antonopoulos. 

I doubt that transaction times of 10 minutes for 1 confirmation is holding BTC back.  Sure, at some point bitcoin is going to become better for smaller transactions and for quick payments, etc etc... but rome was not built in a day, and of course, lightning network is attempting to make bitcoin better in the small/quick transactions arena.

In accordance with Gresham's law, there is going to be reluctance to spend the best money, and bitcoin is the best money, but of course, if other monies are removed from the system because they die away or maybe there might be places where people do not have any other options, then in those circumstances they can spend their precious bitcoins.... otherwise, currently, there are fewer incentives to spend bitcoins when there remains so much upward price potential and there are likely other options that are available to people.  Of course, I would rather spend credit card, cash or some other means if it is going to allow me fewer transactions and I am also concerned that BTC prices might be going up before I am able to replace the BTC that I had spent in such hypothetical transaction(s).

What you say was right back in 2017 or early of 2018, but now I think it is not right. Fees of Bitcoin transactions has become very cheap and does not an issue when people want to use Bitcoin as means to transfer their funds.

The barrier that hinders Bitcoin from massive acceptance is its too long block time (10 minutes). It means people have to wait at least 10 minutes to see their transactions get first confirmations. If in the future, developers can reduce block time to help Bitcoin users having confirmations faster, I think the really big explosion of Bitcoin will occur. Lightning network has not yet shown its good effects as we expected.

Bitcoin velocity also connected to BTC fees, so if we can improve there and make fees lower, velocity would be higher.
I would like to see charts of Bitcoin Velocity compared to recent failed currencies in Latin America and Venezuela for example.
We have to take in consideration that Bitcoin is used there, and lot of that is not even registered, as some consider it illegal.

This is a really interesting stuff and thanks for sharing! While I think that this graph is a very neat way to track between the two btc "stances" (currency or storage bullion), I also think that this chart is premature for what it's trying/wanting to prove/show.  We are just 10 years in to btc/cryptocurrency while the US Dollar has obviously been around for much longer.  The US dollar is a highly mature currency that has been used for both short and long term for it's entire existence, hence the straight across lines.  Bitcoin is in its infancy and there are too many factors that throw this chart off.

If you follow the chart one common theme is that when the price of btc falls, so does the size of transaction.  That doesn't mean that it's now being used more so for small , payment transactions, but rather that so many coins were sold off and stopped being bought as much as before. I would argue that small payment transactions have likely steadily increased from day 1 by number of users and rarely go much lower ..however the chart lines are skewed due to this market being so small compared to the dollar, so buying and selling of a few completely offsets the line.  People are likely hodling even more so now than ever imho (by number of users)...however there are several handfuls of whales in the btc markets that move the entire line significantly, not necessarily showing what the avg person is really doing.  Will look further in to this and see if I still agree w/myself here but that's my 2 satoshis.

edit- my apologies if redundant, didn't read others posts yet, wanted to give my 2 before doing so then compare/adjust.

I'll be basing my contribution on the effect velocity of bitcoin has on the price but first I'll like to point out some important key points. The price of bitcoin can be influence by many other factors and sometimes this factors compliment each other (they work hand in hand) and most times the media hype plays a major role considering it's the perfect platform to engage a large audience. The velocity of bitcoin might not have direct impact but it does play a role to trigger a reaction that mighty influence the price of bitcoin since it'll present the assumption that the circulating of bitcoin is either in the increase (causing fud) or decrease (causing fomo). It all depends on how the media interpret the situation to pass on to the masses and that's a disadvantage preventing bitcoin from been accepted as a global currency as the velocity can be easier manipulated.

Your example shows the weakness of Bitcoin and its community is that it is too sensitive to the news making it hard to become a currency.
In return if it is another currency such as the USD, the central bank and the reserve will take action to stabilize the currency. If it rises too high they will sell it, if it drops deeply they will buy. Besides, the fact that Bitcoin has a huge price fluctuation will adversely affect the economy.
I think that for the very next period of time Bitcoin is only considered a speculation to make a profit.

I think Bitcoin should only be considered as an asset or an investment, it is difficult for Bitcoin to become a marketable currency. Bitcoin's very small number of 21,000,000 is not enough for the global market. Bitcoin's fluctuating price is also one of the reasons why Bitcoin is hard to become a currency, you cannot change the price printed on the product every day.
Where I live, you can keep Bitcoin or other cryptocurrencies, as you would be against the law if you used them in payment.