Topic: Silk Road sale.... BTC explosion. - page 2. (Read 16280 times)

I'm sorry you had it basically right. Sorry for forgetting to indicate my agreement.

Bitcoins seem to have had a return close to a stock than a currency, making it possible to invest in them, so holding on to them won't necessarily cost you in the same way holding on to currency will.


Sure. That's pretty much what I meant, just spelling it out for people that don't follow - if you permanently increase the number of people holding for a short time, a long term positive price adjustment should follow. If you only increase the demand for a short time without increasing the number of people holding coins, I'd only expect price to increase until the increased demand is finished (sale is over).

Consider the US dollar. You lose money by holding US dollars because they do not yield interest like treasury bills. However, you can't hold treasury bills and trade them for dollars whenever you make a purchase. This would be too costly in terms of time and fees. To balance these two problems, you hold enough dollars to satisfy your near term spending needs. It is this demand that makes dollars valuable. The same idea applies to bitcoin.

Everyone can hold bitcoin only temporarily. However, even demand just to hold for a short while can increase price.

I think it's false to think that increased merchant activity won't increase BTC price. First of all, not all merchants sell 100% of their BTC, some of them believe in Bitcoin and will hold at least a portion of them long term. Thus they become investors as well. Even if a minority of merchants do this, it will still have an effect especially when we're talking about a market the size of Silk Road.

Then there are a large number of side effects from Silk Road activity (pun intended) which are not directly related to the buy/sell ratio. Not only will the news about increased trade reach the ears of speculators who will drive the price up at least a little, Silk Road is most likely getting more new users than usual which will definitely lead to more people using Bitcoin and more people talking about how great it is.

It's hard to quantify the total effect but I can guarantee it has a meaningful effect when you put everything together. Some Silk Road merchants might understand this as well which will lead them to do speculative short term hoarding because they expect the price to rise. Again it's unknown what percentage of them think about this at all, but I'm sure some do.

The more bitcoin is used for the purpose it's supposed to be used for, the greater the demand. If more people want bitcoins to spend, they have to get them first. At a guess there'll be a delay of 12 - 24 hours until the coins get back into the system. When more people use bitcoin to purchase items, more coins will be unavailable for a short period of time.

But the effect of a permanent larger number of bitcoin users is different to what is proposed here. For the Silk Road discounts this weekend, changes i bitcoin price will depend on i. whether new users are attracted to bitcoin because of the discounts and ii. if they will become permanent bitcoin users (and iii. whether we think the fickle minds of speculators and those with enough buying power to influence the market by themselves will be trying to derail the bitcoin price change).

If the answer to i. is 'no', then there might be a short term increase in coin price as demand increases. But after the sale there'll be no percentage increase in the number of coins permanently out of circulation.

If the answer to i. if 'yes' but the answer to ii. is 'no', then the btc price increase is likely to be higher as demand increases due to even more short term demand, but again after the sale there'll be no percentage increase in the number of coins permanently out of circulation and I'd expect the price to return to a similar level to pre sale.

If the answer to i. if 'yes' and the answer to ii. is 'yes' then I'd expect the same btc price increase during the sale, and a correction to slightly higher btc prices than current.

All of this assumes the answer to iii. is 'no' which is unlikely. Any of these price increases could start a rally, followed by a correction, followed by ummmm no idea. But long term, an increase in bitcoin users will lead to an increase in the percentage of bitcoins permanently out of circulation and increase price.

lets say that 90% of the merchants of a small country sell their goods for XYZ dollor and then turn around and exchange XYZ dollars for USD

XYZ dollars wouldn't be worth much at all

why is bitcoin different?


^ this makes sense to me

please explain why we are wrong

thank you

Respect

Let's reduce what you said to its core elements:

1) Growth in "bitcoin GDP" does not affect prices.
2) Once "bitcoin GDP" grows then prices will be affected.

Do you understand that you are a fucking idiot now, or are you still confused?

No... you don't understand.
http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect

you dont have to be rude

sure if their is more demand for goods in bitcoin, then the demand for bitcoin goes up. but the point is the seller wont hold on to the btc, he will sell right away to avoid the volatility.

all this dose in increase volume and add support for current price.

in the future once bitcoin has a real working economy... the "bitcoin GDP" will have a huge impact on the price. right now it has very little effect if any

Not everything is illegal and it depends on your jurisdiction.

In general, (and you have proven this time and time again) you are a fucking idiot.

Growth in demand for goods and services conveniently purchased with bitcoin will shift the demand curve for bitcoin outwards. In the long-run, growth in txn demand will have an overwhelming influence on bitcoin prices. Without txn demand, the price of any currency falls to zero. If short-run things like a "sale" don't influence prices, it is because price is determined by long-run expectations about demand growth. A one-off sale has no effect on long-run expectations. If it did, a sale would provide an opportunity for speculators to buy prior to the sale, sell during the sale, and buy again after it ends. I don't believe in that kind of BS.

A permanent 10% reduction in effective silk road prices (for example if silk road's fraud prevention technology improved) would definately boost bitcoin prices.

 

I believe they announced the sale on Monday and it will happen this saturday through sunday.

nice broad brush you paint with there.

if i use silk road to purchase something that is not illegal in my jurisdiction then neither i, nor silk road nor the seller are breaking any laws.

the only effect buying things for bitcoin has / always will have is providing stability at the current price.

buyer buys 10 @ 5.95
1 hour later
seller sells 10  @ 5.95

At the very least I am interested in how big of an effect it will have.  Did SR announce this sale early enough for users to get money to the exchanges?

When you're buying something 100$ that's $10 off.  Not bad.  Also many individual sellers are offering additional sales (some 2 for 1) and free samples for shipping price only.
That said I still think it will do little to affect Bitcoin

lol +1

Is 10% a big deal in this case?

########## - normal price
######### - sale price
##### - 2 for the price of 1

I doubt this will have an effect on the price.  First, if anyone is buying bitcoins for the sale it is going to take a while and they have most likely done it already. First you need to get money through dwolla to mtgox, then get bitcoins, then send them to SR account.   Then, most sellers try to cash out BTC to USD as soon as possible because of the volatility of Bitcoin.

While it is a great sale, it will do little to affect the bitcoin market which is influenced more by investors/speculators/traders.

You should! Support Bitcoin economy, take drugs, shoot guns!