I fully respect your position
I'm thoroughly devastated.
Topic: Taking a step back - page 2. (Read 3256 times)
Of course the market is driven by speculation! You all know that's how markets work, right? If people think that the net-present-value of something is higher than it's currently trading at, they're going to buy it, even if that NPV is dependent on *future* flow.
So, about that...
On the store of value side, we can run some quick calcs to discover that if about 2% of the world's private-investment demand for gold (which is about 16% of total gold) shifted to bitcoin, it would demand a price of about $1500/btc.
On the transactions side, if 10% of total global black market transactions get done in bitcoin, with a btc money velocity of 5, that also commands a price of $1500/btc.
Now, let's say that price is the success case, and if it happens at all, it won't get there for 10yrs. Let's also say that there's a 75% chance that bitcoin completely fails in that timeframe.
So we have a 75% of $0/btc in 2023, and a 25% chance of $1500.
Using an 8% discount rate, that puts fair *current* value at $173.
Just a quick example, but you get the idea... The analysis people really need to make is what they consider the success/fail cases to be, what the probability and timeframes on them are, and whether they have sufficient risk tolerance.
So, about that...
On the store of value side, we can run some quick calcs to discover that if about 2% of the world's private-investment demand for gold (which is about 16% of total gold) shifted to bitcoin, it would demand a price of about $1500/btc.
On the transactions side, if 10% of total global black market transactions get done in bitcoin, with a btc money velocity of 5, that also commands a price of $1500/btc.
Now, let's say that price is the success case, and if it happens at all, it won't get there for 10yrs. Let's also say that there's a 75% chance that bitcoin completely fails in that timeframe.
So we have a 75% of $0/btc in 2023, and a 25% chance of $1500.
Using an 8% discount rate, that puts fair *current* value at $173.
Just a quick example, but you get the idea... The analysis people really need to make is what they consider the success/fail cases to be, what the probability and timeframes on them are, and whether they have sufficient risk tolerance.
IMHO the current value of Bitcoin is mostly due to speculation and its usefulness as a safe store of value.
It is not reflected anymore by the current Bitcoin economy.
That doesn't mean it can't go up a lot more.
Just where the top will be nobody knows because we're in uncharted territory, also with the Euro crisis.
I don't expect much of a fallback though, maybe down the 50s at most.
Another possibility is that we get several months of stability at a certain price while the Bitcoin economy catches up, like in the first half of 2012.
It is not reflected anymore by the current Bitcoin economy.
That doesn't mean it can't go up a lot more.
Just where the top will be nobody knows because we're in uncharted territory, also with the Euro crisis.
I don't expect much of a fallback though, maybe down the 50s at most.
Another possibility is that we get several months of stability at a certain price while the Bitcoin economy catches up, like in the first half of 2012.
Its one of those, prove what I'm thinking type discussions!
Only a fool would argue that the price today is not speculative driven. However, whether it actually grows to 000000s is anyone's guess, hence speculation!
The real value of bitcoins is whatever someone is willing to pay for it - its that easy. At the moment, everyone is buying it as a shortcut to a happy retirement, and while it might happen, in most cases, I don't think it will.
However, being early adopters as long as you know when to sell, what have you got to lose?
Only a fool would argue that the price today is not speculative driven. However, whether it actually grows to 000000s is anyone's guess, hence speculation!
The real value of bitcoins is whatever someone is willing to pay for it - its that easy. At the moment, everyone is buying it as a shortcut to a happy retirement, and while it might happen, in most cases, I don't think it will.
However, being early adopters as long as you know when to sell, what have you got to lose?
@BitPirate
Sorry but you're using past performance as evidence of future performance, so I'm disregarding it. And the announcements of Wordpress and Namecheap were months ago, so it would be quite a delayed reaction if that's what's causing this move.
The only thing of value to me that you've mentioned is wallet adoption, so I'll look into that.
I'm content in letting this rest as it is, but I appreciate your help.
Sorry but you're using past performance as evidence of future performance, so I'm disregarding it. And the announcements of Wordpress and Namecheap were months ago, so it would be quite a delayed reaction if that's what's causing this move.
The only thing of value to me that you've mentioned is wallet adoption, so I'll look into that.
I'm content in letting this rest as it is, but I appreciate your help.
I'm not at all predicting future performance. You may want to re-read. I was providing a case for Bitcoin's value not being overblown. Actually you didn't ask me to predict future performance. Which is good, because I can't.
What I can tell you is that the risk of failure is fairly constant over time. I also _consider_ that the risk of a steep decline is offset by buying pressure at lower prices. There was strong evidence for this during the block chain fork.
Hope this helps.
I fully respect your position
I'm thoroughly devastated. What I'm getting is statistics about reddit readership and pointing to fringe services like Wordpress, Namecheap, Reddit and Mega.
Wordpress is fringe now?
Alexa Traffic Rank
Global Rank 22
I fully respect your position
@BitPirate
Sorry but you're using past performance as evidence of future performance, so I'm disregarding it. And the announcements of Wordpress and Namecheap were months ago, so it would be quite a delayed reaction if that's what's causing this move.
The only thing of value to me that you've mentioned is wallet adoption, so I'll look into that.
I'm content in letting this rest as it is, but I appreciate your help.
Sorry but you're using past performance as evidence of future performance, so I'm disregarding it. And the announcements of Wordpress and Namecheap were months ago, so it would be quite a delayed reaction if that's what's causing this move.
The only thing of value to me that you've mentioned is wallet adoption, so I'll look into that.
I'm content in letting this rest as it is, but I appreciate your help.
Also--An insurance company is now accepting bitcoins (the one that I work for). https://bitcointalksearch.org/topic/first-insurance-company-to-accept-bitcoin-155036
Not trying to advertise, but it's a real business, and judging by some of the companies that have contacted us, there are quite a bit more businesses beginning to accept bitcoin that are actual brick and mortar businesses, not just things like Wordpress etc.
I do feel that the extreme increase in bitcoin price in such a short time IS overall hurting some adoption, as even though we accept Bitcoin, right now it looks like it would be a terrible idea to sell or pay for anything in something that is rising so quickly, so in that regard I think it's difficult to get people who WANT to pay with bitcoins. For us at least, it would be better if the price stabilized so that it could be used without fear of drastic appreciation/depreciation in a short period of time.
Ken
Not trying to advertise, but it's a real business, and judging by some of the companies that have contacted us, there are quite a bit more businesses beginning to accept bitcoin that are actual brick and mortar businesses, not just things like Wordpress etc.
I do feel that the extreme increase in bitcoin price in such a short time IS overall hurting some adoption, as even though we accept Bitcoin, right now it looks like it would be a terrible idea to sell or pay for anything in something that is rising so quickly, so in that regard I think it's difficult to get people who WANT to pay with bitcoins. For us at least, it would be better if the price stabilized so that it could be used without fear of drastic appreciation/depreciation in a short period of time.
Ken
BTW, I should also add -- I wouldn't deride WordPress, Reddit or Namecheap. The first is an Internet phenomenon with a massive network effect. The latter I would consider the #2 registrar after Godaddy. WordPress is beyond huge.
Yes, they are just Internet names, but we have to start somewhere and the network effects from these big names in the industry will be very positive. If adoption continues in this vein, BTC will have a very high future utilisation.
Furthermore, it is entirely reasonable to speculate on the future trade value of BTC now, not after the fact. Bitcoin market cap is still far below that of PayPal and will be for a long time.
Yes, they are just Internet names, but we have to start somewhere and the network effects from these big names in the industry will be very positive. If adoption continues in this vein, BTC will have a very high future utilisation.
Furthermore, it is entirely reasonable to speculate on the future trade value of BTC now, not after the fact. Bitcoin market cap is still far below that of PayPal and will be for a long time.
Oh, come on, don't let the facts get in the way of a good religion. Bitcoin is useless except to buy drugs and weapons on SR and maybe to do a spot of money laundering. The real value of a BTC is between $1 and $1.5
Couldn't that be said of Bitcoin speculators? They think BTC is embarking on global acceptance and is going to save the world in less than a month, and for these reasons it should immediately be valued at $10000/coin.The biggest claims to fame at this point are Wordpress (an open source CMS that most none-techies don't know or care about), and Namecheap (a niche registrar -- would be understandable if GoDaddy took BTC). Plus a handful of fly by night service providers and everyone is equating it to global acceptance.
I'm expecting some reasonably sound metrics on a fundamental adjustment that is commanding a 500% increase in valuation. What I'm getting is statistics about reddit readership and pointing to fringe services like Wordpress, Namecheap, Reddit and Mega. Does no one have hard statistical data of new user adoption that is said to be causing this move? I haven't seen it, all I see is "look at this useless number that can indicate one of several different things, but I'm going to cherrypick the one that makes me say I can get $100 for my BTC."
Quote from: BitPirate
As far as I can see, the user base is expanding, and speculation:usage ratio is stable or decreasing.
You say it but you don't show it, what the hell. Can I see some reporting on hard numbers? Did MtGox publish some whitepaper on this? I don't understand.I actually posted this twice in this forum already -- there's a search function you can use. It's not like "is BTC overvalued?" is a rare topic on this subforum, after all :-)
Anyway; I'll bite. Here you go:
You can see that the overall level of speculation is high, but as a ratio to overall transactions, it has actually been decreasing since late last year.
The previous bubbles are very pronounced if you zoom out, but -- I'll be honest -- it's impossible to establish cause/effect for these ones. Jury's still out IMO:
You can also check blockchain.info "my wallet" adoption as a surrogate measure of overall usage. Find that yourself.
As far as I can see, the user base is expanding and accelerating -- not linearly but not quite exponentially either, with a significant increase in gradient this year. This should be having an exponential impact on the price. That's what I'm seeing.
Here's CNY:BTC over the past year on a log chart. Doesn't look unexpected to me.
I'm interested in discussing both points of view sensibly, but may I ask you to tone down your attitude a bit please? "What the hell" indeed -- and quite why you "expect" anything from the rest of us is beyond me.
Well, if you can't point to anything that perhaps the community would consider a valuable indicator, I guess I'm wishy washy.
No - you're 100% correct. The only merchants which accept btc are currently illegal (SR etc) or quasi-legal (gambling sites) or fringe tech sites (with the possible exception of WordPress.) When Google, Amazon, EBay or even GoDaddy start to treat bitcoins with a modicum of respect perhaps the current valuation would make sense. Until then we are in a speculation bubble - there's no saying the bubble can't goto triple or even quad digits, but it's still a bubble.
I've been (VERY) wrong about how high the price would go so far - but eventually some sort of sanity has to win out (probably.. lol) I still think the true present value of a btc is about $8-15USD after the coming correction - time will tell.
So you focus on what you consider an ill-conceived metaphor instead of the point at issue. Clearly I won't be getting any answers which just further indicates to me that there might not be anything behind this move. Which is fine, it'll play out as it will. Appreciate the feedback guys.
Would love to see how you came to these numbers and ultimately your conclusion. Please lay that out for me with as many facts as possible because I've thus far failed to see what has caused a 500% move in valuation in less than 3 months. Burden of proof doesn't fall on me, I'm just asking for proof, everyone else is making the claim that this is all sensible movement.
I'm curious what you would consider proof. I mean, you must not be reading the same forum I am because there is proof all over. No one will waste their time with you until you lay out what you are expecting.
Quote from: BitPirate
As far as I can see, the user base is expanding, and speculation:usage ratio is stable or decreasing.
You say it but you don't show it, what the hell. Can I see some reporting on hard numbers? Did MtGox publish some whitepaper on this? I don't understand.And about people saying burden of proof rests on me... so when I go and buy a vehicle, the burden of proof is on me to find out why this vehicle is worth the price tag? It's not the person suggesting a value? Keep in mind I'm not suggesting anything, I'm just asking for why this move is occurring. Now, in addition to not receiving feedback that holds water, I'm getting trolled about needing to prove why I think it shouldn't be worth $88, when I'm not even saying it shouldn't' be worth $88.
Ack, your comparison doesn't hold water. It would be more accurate to say you observe a transaction where both the car seller and buyer agree on a price, and after the fact you ask for a justification... well, the justification is that presumably the seller and the buyer have analysed the market and come to the conclusion that that is the right price for the car in those circumstances. Nobody is suggesting YOU should buy a single Bitcoin... but we are saying that since the price is what it is, then it is what it is, which is about the most philosophically consistent position one can take.
Furthermore, any chart zoomed out to years-long timescale of nascent market, will look absolutely like that -- exponential or above growth as new users flood in. The previous crash happened at a totally different point of development of Bitcoin.
BTC is not immune to crashes -- but posting a zoomed out chart does nothing to show it will crash now.
Here is a more sensible chart. It's not even log scale!
Hell, over 60 days it doesn't even look that bad!
BTC is not immune to crashes -- but posting a zoomed out chart does nothing to show it will crash now.
Here is a more sensible chart. It's not even log scale!
Hell, over 60 days it doesn't even look that bad!
Well, if you can't point to anything that perhaps the community would consider a valuable indicator, I guess I'm wishy washy.
Would love to see how you came to these numbers and ultimately your conclusion. Please lay that out for me with as many facts as possible because I've thus far failed to see what has caused a 500% move in valuation in less than 3 months. Burden of proof doesn't fall on me, I'm just asking for proof, everyone else is making the claim that this is all sensible movement.
I'm curious what you would consider proof. I mean, you must not be reading the same forum I am because there is proof all over. No one will waste their time with you until you lay out what you are expecting.
This reads to me like "no proof will satisfy me". You really can't get more wishy-washy and moving-goalpost prone than "some reasonably sound metrics"
Would love to see how you came to these numbers and ultimately your conclusion. Please lay that out for me with as many facts as possible because I've thus far failed to see what has caused a 500% move in valuation in less than 3 months. Burden of proof doesn't fall on me, I'm just asking for proof, everyone else is making the claim that this is all sensible movement.
I'm curious what you would consider proof. I mean, you must not be reading the same forum I am because there is proof all over. No one will waste their time with you until you lay out what you are expecting.
Quote from: BitPirate
As far as I can see, the user base is expanding, and speculation:usage ratio is stable or decreasing.
You say it but you don't show it, what the hell. Can I see some reporting on hard numbers? Did MtGox publish some whitepaper on this? I don't understand.And about people saying burden of proof rests on me... so when I go and buy a vehicle, the burden of proof is on me to find out why this vehicle is worth the price tag? It's not the person suggesting a value? Keep in mind I'm not suggesting anything, I'm just asking for why this move is occurring. Now, in addition to not receiving feedback that holds water, I'm getting trolled about needing to prove why I think it shouldn't be worth $88, when I'm not even saying it shouldn't' be worth $88.
Exactly!
There are markets all over the world where BTC is selling right now for ~$90.
If you don't think it's worth it, the burden of proof is on YOU.
As far as I can see, the user base is expanding, and speculation:usage ratio is stable or decreasing.
There are markets all over the world where BTC is selling right now for ~$90.
If you don't think it's worth it, the burden of proof is on YOU.
As far as I can see, the user base is expanding, and speculation:usage ratio is stable or decreasing.
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