Topic: Something's Got to Give - page 2. (Read 3422 times)
Based on prior estimates which put the upper limit of the exchange rate as $1 million equivalent if it saw universal adoption, and a simple ratio of world monthly economic output.
The Bitcoin economy would need approximately $1 billion in monthly commerce to justify an exchange rate of $140 with no speculative premium.
Based on what. That would be a velocity of 8.5 which is simply unheard of in any economy.
If you are concerned about holding bitcoin, don't hold bitcoin. Let Bitpay convert for you and relax
But Bitcoin is more similar to gold than USD, isn't it? What is economic activity of gold?
Very significant, I imagine, given how it is stealthily replacing the USD as a means of exchange, especially between Asian giants. (The US cannot very well go and bomb Russia or China into submission!) In India, gold is very widely used as jewellery and money.
But Bitcoin is more similar to gold than USD, isn't it? What is economic activity of gold?
Gold is a central banker's toy. What would the market price be if they weren't storing large quantities of it? This may be true, but all currencies and commodities, including PMs, have a significant "speculative premium". Yet their value doesn't just crash (very often).
The calculation I did takes that into account. If the ratio of economic activity/purchasing power for Bitcoin was the same as the USD, it would require $1 billion of commerce every month to justify $140.But Bitcoin is more similar to gold than USD, isn't it? What is economic activity of gold?
This may be true, but all currencies and commodities, including PMs, have a significant "speculative premium". Yet their value doesn't just crash (very often).
The calculation I did takes that into account. If the ratio of economic activity/purchasing power for Bitcoin was the same as the USD, it would require $1 billion of commerce every month to justify $140. The Bitcoin economy would need approximately $1 billion in monthly commerce to justify an exchange rate of $140 with no speculative premium.
This may be true, but all currencies and commodities, including PMs, have a significant "speculative premium". Yet their value doesn't just crash (very often).
BitPay grows *faster* than BTC price. Bitcoin: 300% in last month, BitPay transactions: 750%.
That's good, but they still have a lot of catching up to do.The Bitcoin economy would need approximately $1 billion in monthly commerce to justify an exchange rate of $140 with no speculative premium.
tl;dr: Use a payment processor and let them worry about the exchange rate risk. BitPay is signing up new merchants every day and, even though the use of Bitcoin for commerce is lagging far behind the speculative growth in the exchange rate, the actual economic economic activity which will support Bitcoin's purchasing power in the long term is growing.
BitPay grows *faster* than BTC price. Bitcoin: 300% in last month, BitPay transactions: 750%.
http://www.marketwatch.com/story/bitpay-eclipses-silk-road-in-bitcoin-sales-with-explosive-52m-march-2013-04-02
To the OP BTC-E isn't used by the experienced traders. It lacks sufficiently good methods to move large amounts of fiat (our company has needs to clear $200K+ per week off exchanges and I am sure a company like bitpay needs double that or more).
Also not sure where you got $99 from (maybe looking at EUR price). BTC-E shows $130 now. It hit a peak of $149 and has been trading downward since MtGox closed. I am not saying Bitcoin hasn't come too far too fast (it may have) but your BTC-E angle is just a red herring. A correction won't kill Bitcoin it has momentum way beyond the current exchange rate. In time more sophisticated methods will be developed that allow merchants to hedge themselves (partially or fully) in real time while remaining completely in the crypto world.
Still a higher exchange rate is important. It means the value of the money supply is worth more, it means the market is deeper, it means larger players can enter without splashing all the water out of the pool. For any significant commerce to happen (i.e. > $1B in goods & services exchanged for BTC daily) the price would need to be much higher (say >$1000 per BTC). Slower is probably better but nobody can control the market and between any two points it is essentially a random walk.
Also not sure where you got $99 from (maybe looking at EUR price). BTC-E shows $130 now. It hit a peak of $149 and has been trading downward since MtGox closed. I am not saying Bitcoin hasn't come too far too fast (it may have) but your BTC-E angle is just a red herring. A correction won't kill Bitcoin it has momentum way beyond the current exchange rate. In time more sophisticated methods will be developed that allow merchants to hedge themselves (partially or fully) in real time while remaining completely in the crypto world.
Still a higher exchange rate is important. It means the value of the money supply is worth more, it means the market is deeper, it means larger players can enter without splashing all the water out of the pool. For any significant commerce to happen (i.e. > $1B in goods & services exchanged for BTC daily) the price would need to be much higher (say >$1000 per BTC). Slower is probably better but nobody can control the market and between any two points it is essentially a random walk.
To my fellow peers who posted above, I have to disagree. I use bitcoin as money all the time. It is money. Here is how to do it.
Today I have to pay my VPN service bill. What I will do is buy about $6USD worth of bitcoin. I will then send about that in BTC much to my provider. Because I put $12 in the first month I started this service I am a month ahead. So, really I am spending the money from last month.
Last month I bought that bitcoin for about say $2.10. That means I receive my service for a third of the cost, AND I get to keep the balance of the coins.
BTCTry doing that with any other kind of money.
Today I have to pay my VPN service bill. What I will do is buy about $6USD worth of bitcoin. I will then send about that in BTC much to my provider. Because I put $12 in the first month I started this service I am a month ahead. So, really I am spending the money from last month.
Last month I bought that bitcoin for about say $2.10. That means I receive my service for a third of the cost, AND I get to keep the balance of the coins.
BTCTry doing that with any other kind of money.
Thank you for proving my point. You can't price stuff in bitcoins... hence why it's not a currency.. it's more like gold.
correction:
someone's got to give
as in the last one holding bitcoins
someone's got to give
as in the last one holding bitcoins
To my fellow peers who posted above, I have to disagree. I use bitcoin as money all the time. It is money. Here is how to do it.
Today I have to pay my VPN service bill. What I will do is buy about $6USD worth of bitcoin. I will then send about that in BTC much to my provider. Because I put $12 in the first month I started this service I am a month ahead. So, really I am spending the money from last month.
Last month I bought that bitcoin for about say $2.10. That means I receive my service for a third of the cost, AND I get to keep the balance of the coins.
BTCTry doing that with any other kind of money.
Today I have to pay my VPN service bill. What I will do is buy about $6USD worth of bitcoin. I will then send about that in BTC much to my provider. Because I put $12 in the first month I started this service I am a month ahead. So, really I am spending the money from last month.
Last month I bought that bitcoin for about say $2.10. That means I receive my service for a third of the cost, AND I get to keep the balance of the coins.
BTCTry doing that with any other kind of money.
IT'S NOT MONEY!
Bitcoin is not "money" as currently defined. It's not a currency.. it's a store of wealth. The offline world equals would be Gold and Silver.
Think of it this way.. you have 1500 dollars, you put it in a gold coin... its value appreciates over time... a few years from now you go there and cash it out for 2000 (just an example).
That gold coin stored your wealth for that period of time and increased it's value... that's an old school version of bitcoin.
Now countries trade in gold, central banks trade in gold, but you don't walk into walmart and hand over a gold coin for your massive christmas shopping.
You know why you don't hand over that Gold coin for shopping at Walmart, because you can buy more at walmart next month with it. Hence why Bitcoin is not currency as normally defined.. it's a store of wealth.
You want to go shopping at walmart, you cash .003 of your bitcoin and get your money and use that... just as if you sold 1/10th of your gold coin to go shopping there..
Bitcoin is not "money" as currently defined. It's not a currency.. it's a store of wealth. The offline world equals would be Gold and Silver.
Think of it this way.. you have 1500 dollars, you put it in a gold coin... its value appreciates over time... a few years from now you go there and cash it out for 2000 (just an example).
That gold coin stored your wealth for that period of time and increased it's value... that's an old school version of bitcoin.
Now countries trade in gold, central banks trade in gold, but you don't walk into walmart and hand over a gold coin for your massive christmas shopping.
You know why you don't hand over that Gold coin for shopping at Walmart, because you can buy more at walmart next month with it. Hence why Bitcoin is not currency as normally defined.. it's a store of wealth.
You want to go shopping at walmart, you cash .003 of your bitcoin and get your money and use that... just as if you sold 1/10th of your gold coin to go shopping there..
Something has given. It is the mainstream resistance to bitcoin. 
Not. This will, if anything, stiffen mainstream resistance to acceptance as a currency. The current rush is all speculators piling into the game, not anyone who seriously contemplates using BTC as money. Mainstream acceptance will come with stability.
Something has given. It is the mainstream resistance to bitcoin.
That's true, but-- back to the post with you!
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