Static or Reducing Difficulty, Panic? - page 2.

rezin777

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Quote from: chiropteran on June 07, 2011, 12:17:28 PM

Quote from: rezin777 on June 07, 2011, 12:12:54 PM

Can you show me how difficulty affects price?

Difficulty limits supply

False.

Edit: (This can be true to some extent, but only as a result of lag. The difficulty will adjust every 2016 blocks to try to allow 6 blocks found per hour. The network can outpace it.)

chiropteran

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Quote from: rezin777 on June 07, 2011, 12:12:54 PM

Can you show me how difficulty affects price?

Supply and demand. Difficulty limits supply, if it drops it actually means your supply (mining income) is going up, relative to the number of miners involved. Each miner gets more BTC, if they sell their excess it's a glut in supply.

Currently, difficulty increasing each adjustment means supply is decreasing, which causes prices to rise.

I realize it's a lot more complex than I have made it out to be, but independent of other variables it seems that a difficulty decrease would just be the first warning sign that value may be dropping.

tomcollins

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Quote from: chiropteran on June 07, 2011, 12:11:35 PM

Is it safe to say that when difficulty either drops or basically remains the same (as opposed to increasing by a large margin every adjustment) that the BTC value has peaked, at least for a time?

Obviously, this won't occur next adjustment, given current stats, but if say, a month from now difficulty actually drops during an adjustment, do you think it would set off a panic and people would start trying to sell?

No it is not safe to say this. Please explain why you think it might be.

rezin777

full member

Activity: 154

Merit: 100

Can you show me how difficulty affects price?

chiropteran

sr. member

Activity: 348

Merit: 250

Is it safe to say that when difficulty either drops or basically remains the same (as opposed to increasing by a large margin every adjustment) that the BTC value has peaked, at least for a time?

Obviously, this won't occur next adjustment, given current stats, but if say, a month from now difficulty actually drops during an adjustment, do you think it would set off a panic and people would start trying to sell?

Topic: Static or Reducing Difficulty, Panic? - page 2. (Read 2756 times)