Topic: Stephen Reed's Million Dollar Logistic Model - page 9. (Read 123165 times)

Note the strong growth of bitcoin transaction quantity in the past month below. Metcalfe's Law suggests that bitcoin price is proportional to the square of the transaction quantity. Perhaps the growth in transaction quantity predicts a price increase, or conversely transaction quantity will soon plummet to match its lows of early summer.

[reposted from the rpietila quality TA thread]

Here is an interesting chart comparison between the great bubble of June 2011 and the November 2013 bubble. The general shape is that of a dampened oscillation. Because 2013 was a year in which two bubbles occurred, perhaps the November 2013 bubble will have a longer period of collapse than the April 2013 bubble.

This is the weekly chart from Mt. Gox from the 2011 bubble . . .



And here is the current weekly chart from Bitstamp . . .

What about computers, harddrives and mobile phones? They decrease in price for the same parameters and improve their parameters for the same price. And people still "risk" buying them.

What about food? Imagine food (even dinner in restaurant) gets cheaper 1.1x each day (about 2x in a week, about 15x cheaper in a month, etc.). How long would you be hungry?

I see world where people consume responsibly and think twice or three times is something is really "necessary to have today". I see world where you must think very, very carefully before you borrow money (you have to be extra sure about profitability of your investment) and saving is a virtue.

Money is not what you declare as money (despite whatever any court might say to the contrary) but what works as it. Being a medium of exchange makes something into money, since this is the essence of what is money...

They could just as well ban the law of gravity (I mean that Texas court)!

This assumption is wrong.

1. You are never sure if will be able to buy two cars next year.
2. You might need the car for business, which will let you earn 3 times the value of car, so it is profitable.
3. You might just need the car of living - for example leaving on some remote land, where closest shop is 20km from you.

Just to make this theory even more wrong:

You can put your money in bank, getting (hopefully) more interest than inflation rate. Let's say you get 3%. So if you buy next year you can buy 1.03 cars.  Ergo, everyone who buys anything is stupid according to you.

probably a more interesting/accurate model analysis is using total bitcoin value instead of price (i.e. bitcoin price times total coin in existence)?

Since price is usually only a lagging indicator for monetary inflation, it probably will not pick up the total technological good value of the network with any temporal accuracy.

Bang on.  Now if your money supply is dependent on debt and interest payments to bond holders this situation represents a deflationary death spiritual, but to a finite world it represent deferred and appropriate consumption, your point proves the Austrian model is viable.

As a US taxpayer, the tax treatment of bitcoin transactions is most favorable when Bitcoin is categorized as a commodity, such as gold. I endorse the domestic legal actions of the Bitcoin Foundation in this regard.

If and when some national jurisdiction chooses Bitcoin as a legal tender currency, we in the USA may pay ordinary income taxes on the gains resulting from using bitcoins to buy stuff. My understanding that foreign currency held for investment however, e.g. a possible future Bitcoin currency, receives favorable tax treatment when sold for dollars.

Bitcoin is a currency however right now, simply because enough people worldwide believe it to be one. It certainly has the primary properties of a currency: Durability, Divisibility, Transportability, and Noncounterfitability.

Citation please? Thanks.


Sure it does. Cigarettes are indeed money - in the limited economies where they serve as a store of value and a medium of exchange.


Perhaps economists use this HCA of which you speak. I wouldn't know. However, what you list as the basic fundamental assumption is completely bone-headed. Fiat currencies being perfectly stable? In a world where the currency of international settlements (USD) has lost 98% of its purchasing power since its inception? A theory based upon such flawed axioms is worthless.

Edited to add:

I have personally experienced Bitcoin to be a phenomenal medium of exchange, and as a store of value has so far exceeded my wildest dreams. Whether old-school economists in stuffy academic ivory towers want to deny it monetary status is no concern of mine. From my viewpoint, it has been performing as money superior to any other money I have ever had the privilege to have known.

And here's the kicker. As the masses slowly awaken to the benefits of Bitcoin, they're not going to be concerned with whether the same-said economists call it money either. If they see Bitcoin as providing attributes superior for their individual purposes than does fiat, they'll use it as their dominant store of value, medium of exchange, and, as adoption becomes pervasive their unit of account -- even if economists refuse to call it a form of money.

The reality is market cap has nothing to do with the price of cryptocoin..just go to coinmarketcap and look at the coins just launched, they have volumes which are less than 10,000 dollars but market cap is around millions...
www.coinmarketcap.com

It looks like the real testing of the log chart's association with bitcoin values is about to begin. In order to stay close to the chart values in 2015 would have to ride the model from $6xxx at the beginning to $88xxx at the end of the year. That alone would be absolutely phenomenal, and I can't imagine what kind of impact that would have on our economy, but 2016's log growth is from $88xxx to $581xxx. That kind of math is just silly.

Is this even realistically possible? Everything about the idea seems unfathomable and unrealistic to me. I know, I know. 2013 saw Bitcoin grow from $13 to $1100, but that total market cap was still relatively small. For a single Bitcoin to be worth $581xxx the market cap would be phenomenally high.

Unless they need a car. If I need a car I will buy when I need it no matter what that money can do in the future, because I need it now. If I merely would like a better car, but could wait for that better car another year or two while their price drops/my purchasing power rises I will wait. This seems like it would be good for the world to deter overconsumption, build more rugged products in the first place, and maintain what we already have.

Bitcoin is not a monetary item as clearly indicated by the Bitcoin Foundation in a Texas court right now. The Bitcoin Foundation is currently demonstrating that bitcoin is not a monetary item in that court case in Texas. Bitcoin is a variable real value non-monetary item. There is nothing monetary about bitcoin. Bitcoin is an experimental digital medium of exchange. Cigarettes normally are a medium of exchange in prisons (so I read). That does not make cigarettes money.

Bitcoin is a digital medium of exchange and a relatively unstable store of value. Bitcoin is not money or a monetary item. To be a monetary item, accountants must be able to assume that bitcoin is perfectly stable in real value over time like they do with all fiat currencies when they account a great part (not all) of the world´s economic activity.

Bitcoin is a digital variable real value non-monetary item similar to digital rare stamps. Bitcoin is not a currency. Bitcoin is a cryptocommodity and payment platform. The blockchain technology is very innovative. It has a lot of respect from many people. However, people do know that bitcoin is not money.


For bitcoin to be money it has to be relatively stable in real value, like the major fiat currencies, e.g., the USD, Euro, Pound, Yuan, Yen, etc. The world economy is based on (uses) the Historical Cost Accounting model. The HCA model is based on the stable measuring unit assumption: accountants and economists assume money is perfectly stable in real value over time for the measurement of a great part (not all) of the world´s economic activity.

Bitcoin is not a currency or money or monetary item. Bitcoin will never be assumed to be perfectly stable in real value. That is the last thing the bitcoin economy wants. Thus bitcoin will never be money or a currency.

There is an interesting experiment to simulate with three cryptocurrencies the mexican peso. So there are things going on with the blockchain.

But saying bitcoin is a currency or money its the same as saying a stone is a scissor. Maybe there is ore in the stone and maybe you can do after alot of processes to make a scissor out of it.

anyway happy studies in economics and hayek (more elemantary is marx and the game theory. hayek is contrary to keynes, but keynes itself 'oh my god' oldschool.)

I won't judge stupid behavior (here I am feeding the troll) but if products and services get cheaper and cheaper (price deflation)  only stupid people would risk buying 1 car today when they can buy 2 better cars for the same price next year.

Re read that Hayek book you were given at school.

stupid people. when prices fall i buy and do not save. where are you people living? where are you from?

no, no. we are intelligent, we buy, when prices are cheap, so we save money, but then we have money and goods.  therefor we have here even more intelligent people who are destroying that. with out the more intelligent people it would be chaos here.

So this discussion is never ending. Just trust me. its a Bug.

Fixed money supply? interesting. like the tulip bubble. great experiment. i am better off with my pseudo-science, Sir.

alot success for you!

One does not just read Hayek, one must understand the words.   as the economy grows so prices fall people save, then when the economy shrinks prices increase people spend and so a market equilibrium is formed this is only possible with a fixed money supply.

we are reading hayek in public schools, here in austria and he can not really help you to break useful paradigms. Which quote do you have in mind?

Sir, my contribution in this thread will be limited.

I just want to point on the fact, that growth of market (trading, goods etc.) always goes with inflation of the monetary basis. Thats like 1+1=2. So how can this problem being solved with btc as an fixed amount trading unit? P.e. by another trading unit or by raising the price etc.

What problems will accure, when you raise the price of the trading unit?  Examples: Goldstandard. The topic about back to goldstandard with BTC is sooo 2013.
What problems will accure by another trading unit? Examples: China and America are having different currencies, different inflations, different interest rates. When the growth in market or decline happens in China, Yen is rising, not the Dollar. So we see a growth by 15 % in the last XX Years.
etc.....

do you count 1+1=2?

Um, no.  Not at all.  Your mind has been broken by pseudo-science, Sir.  Read some Hayek.

Bug in Theory:

"Note that this model ignores the fact that when bitcoin is fully adopted by the underlying economy, it will continue to grow in price at least in proportion to economic growth."

BTC price cannot grow in proportion to economic growth as when you hold btc and is gaining in price you did not make a contribution to the growth. monetary growth must happen there were economic growth is happening.


BTC is not built to be a currency even some people saying it can be or people use it as it would be. Man you stucked in early 2013. What we know by now, BTC blockchain can be used instead of banks making transactions. So the price of BTC inclusive all the ecosystem working with it together could be taxed by the number of transactions made, thats like 6 billion now for btc and about 1 billions for the ecosystem, growing with the number of transactions. By holding BTC you make an invesment in a share of that transactionsystem.

If you invent another use for the bitcoin or the blockchain, let us tell 

A word document could contain malicious code within macros to exploit vulnerabilities on your system. or the extension could simply be spoofed. yes, it's a university site, but that doesn't mean it's guaranteed safe. the page could even be compromised and a malicious file injected. perhaps it's paranoid, but this is bitcoin. people should be mindful about links to third party sites and never, ever, download and run files from anyone.