Topic: Speculators - page 2. (Read 3972 times)

Maybe for a debt based currency, like the dollar.


This is balanced out by the psychological good of decreasing prices.


First, you'll never have 5 million bitcoins, nobody will. Even those with large amounts will eventually sell them to new users as the price increases. Second, there are two options here... if you were actively trading that 5 million, then as soon as the market "realizes" that that money is gone, deflation will occur and prices will take into account the smaller number of bitcoins. If you were just holding that 5 million indefinitely, then nothing has really changed.


This idea comes from a fundamental misunderstanding of currency exchanges. Every bitcoin he buys must be sold buy a current holder. As he starts buying up bitcoin, people are going to realize this and increase their selling prices comparatively. Eventually, he'll be paying millions of dollars per bitcoin. This would be a great way for him to distribute his wealth to users of a comparatively worthless crypto-currency. Thanks, George!

It's still a psychological issue. If one unit of currency exchanges for say, $1000 USD, many people will say "oh that's too much" without regards to the actual currency. The same sort of thinking is sometimes a factor in splitting a stock- it's not as though any individual really wants or needs to purchase Intel Corp in $20 increments, it's just that people feel better about a stock being in a certain range.

Deflation slows the economy.  It's psychologically bad to constantly getting pay cuts, because currency values are going up.

So the maximum amount that can be made throughout time is 21 million?  What happens if I have 5 million bitcoins and my house burns down and the 5 million bitcoins are destroyed with my computer?  Big time deflation if the supply can't be replenished to 21 million.

I agree at this point making any changes to the code for the currency would be near impossible.  A new currency would have to be created.

Soros could wreck the thing because he has enough money to buy out the whole market pretty easy.  He is adept at currency manipulation: http://en.wikipedia.org/wiki/George_Soros#Currency_speculation
It would benefit him because he wants a one world currency under control of certain groups.  Bitcoin would put the kibosh on that.

How could Soros "wreck the whole thing", and how would that benefit him?

The deflation thing has been mentioned.  What's the problem?  No, the current implementation does not allow for more than 21 million and this is intentional.

What problem do you expect to happen by not having inflation?

Then you know you're in for a nice ride.


There has been a legion of thread discussing deflation, you should look those up before thinking deflation is outright bad. There is not limit to the divisibility of BTC, so I don't see how a 21M cap would doom the currency.


Mixing "cosmetic" decision making rule in the core code based on user action is a good recipe for security holes

Indeed it might look like that, but how is it different from IBM, MS, Google, Facebook, Paypal, Visa, Mastercard, Intel, Wallmart and any other successful company out there. Why all of the sudden do they not look like scam carried out to make  billionaires out of their founders?


Just consider the implications of a scenario where you are wrong on this one.

Bittertea -
true, but basically what I'm saying is I think it will go down before it goes up by the values I listed.  Unless the speculators never cool off.  If I big time investor like George Soros finds out and jumps in it could wreck the whole thing.
I see a growing problem with deflation over the long run with this currency.  Can the Bitcoins continue to be replenished even after the 21 million mark is reached?  If not the currency is doomed to die.

TheKoziTwo -
You would have to make the algorithm only count for total numbers of coins in and out of the system.  Maybe the people who programmed Google's web ranking algorithm for detecting web farms would be able to come up with a way where the system would be hard to fool.

Goatpig -
true if I had come in and saw them languishing at a few tenths of a cent for months I may not be as interested.  However I still would have been able to see the potential.

the program allows you to trade in bitcoins many magnitudes lower than 1BTC if necessary

A thing about early adopters:

2 things can attract you to Bitcoins:

1) The outstanding price: You are mainly showing interest in Bitcoin because of the value it managed to cumulate. As such, you wouldn't have bought in when pizza's were being sold for tens of thousands of BTC, so you don't deserve to rant about it nor do you have any right to pretend to that profit.

2) The usefulness: You see Bitcoin as proper store of value and a potential currency that is both economically sound, technologically innovative, and may very well change the face of the world. As such, you understand that early adopters deserve their profit, that the time at which you bought into Bitcoin is not relevant to your ability to use to its full potential, and that even today, you're still an early adopter and you're in for a ride.

Might sound like a good idea at first, but assuming you want to calculate current usage based upon the weighted amount of transactions there will be incentive for hoarders to simply send all their bitcoins back and forth between their own wallets to avoid generation of new bitcoins.

You can move money to MtGox using Dwolla, it's pretty easy to set up, though it might take a week or so to complete your first transfer.

As far as early adopters unfairly benefiting, think about it this way...

Back when bitcoins had never traded above $0.06/BTC, what would you have said if someone suggested that you invest a couple thousand dollars into this currency, or infrastructure to support this currency? Most likely you would have called them insane. Today, that doesn't seem like such a bad idea now that we have a history of an uptrend.

Early adopters took large risks, and if bitcoin succeeds in becoming a widely adopted currency, will reap large rewards. I see absolutely nothing wrong with that.

Anyway, if you think about it in the terms you have mentioned, that each bitcoin could be worth much more in the future than it is today, even if you buy at $9/BTC, you're still an early adopter.

I say this as someone who first bought bitcoin around $0.50 and has a respectable amount of savings (and investment) held in BTC.

Heard about Bitcoin recently.  Seems I missed the gravy train on this one.  Looking over at mtgox it seems like speculators are driving the price of bitcoins up.  Also it's hard to get in since they don't accept pay pal

Anyway the actual worth of bitcoin I think for now is over valued because how few places they can be spent and the speculators.  However if this currency goes mainstream and it starts to be accepted everywhere on the internet, it's value will be huge.  I came up with an equation that gives a rough estimate of value (a kind of absolute measure of value).  It helps me see if a currency is over valued or under valued.  Assuming we had the total supply of 21 million bitcoins today and the number of internet users was where it is now at about 2 billion, one bitcoin would be worth about $250,000 USD.  The problem is the value is only going to go up from there.

Lets imagine 50 years from now bitcoin has become the universal currency and there are 8 billion users, but still only 21 million bitcoins (assuming all the bitcoins are still around).  Each bitcoin would be worth about 1 million in USD today!  This would make transactions with bit coins ridicules. A hambuger off the dollar menu would cost 0.000001 bitcoin.  The solution may be presentation however.  So a hamburger on the dollar menu would be 1 Millibitcoin, which could be shortened to 1mB.  That may solve the problem, but the way the system is now seems like a scam to make billionaires out of the early adopters to me (if it works).

Just thinking out loud here, but a better system I think would automatically set set the bitcoin creation difficulty based on the current usage.  That way the currency would always have a rock hard steady value.  If someone horded a bunch only to release them all at once, the creation of coins would automatically become almost impossible until the market absorbed the extra currency.  Just an idea, athlough it may be more hackable I don't know.

I'm doing a post about this on my blog tomorrow: http://www.thefashionablephilosopher.com/