Topic: The Bitcoin economy needs about $100,000 a day of new money (Read 6711 times)

That's quite true, but remember that even metals and commodities  have big variances in their values over years: iron ore, for talking of something I know well, in 10 years prices grown steadly from 13 to 170$/ton (due to big requests from asian market), but steel pipes (made from ore and recycled steel) prices grow "only" of 200% in same time range (reaching a top of 400% then dropping down). When most of the steel products will be made from recycling steel the ore price will drops again.
All the commodities are subject to the market law of demand/offer and their value can be cleared by the discovery of new commodities or new technologies: just before the WW II where I live you have to exchange 5/10Kg of rice to obtain 1Kg of salt now 1Kg of salt worths some €cents (that make 1Kg of rice worth about 10/20Kg of salt admitted that someone wants to do a similar exchange). Even the gold, used as main commodities in a lot of places, has his price raise from 461.09$/oz in 1981 to 1526$/oz of today, but it reaching a low 260-290 in 2000-2001; if you had invested in gold in 1981 and try to use it in 2000 you find your value near halved.

When "crashing" means "you cannot pay in USD anymore" you might be right. But in case of legal tender, a "crash" is more likely hyperinflation / rebooting the currency with a 1/1000 exchange rate (Romania, Turkey all did that in the last decade, Poland in 1995) and you can get around that pretty nicely with Bitcoins.

Cryptocurrencies would crash right along with fiat currencies.  The Internet's infrastructure is not funded by bitcoins.  It's funded by the same fiat currencies that some people deride as being essentially worthless.  Until you can buy Cisco routers with bitcoins, pay your ISP bill in bitcoins, and pay the power bill in bitcoins, the cryptocurrency is very much subject to the same flaws in the system as fiat currency.

The only 'currencies' that would remain are those that have value as assets.  Metal, (iron, copper, gold, silver), food, medicine, alcohol, shelter, weapons.

Thanks for the explanation, I've got your point and no, I'm not sufficient motivated to do that 
Overall I've got the last 4 blocks, stripped away of the "self transactions" and obtained a 80-90.000BTC/Day instead of 240-250.000 of my previuos stat (stat that was already weighted).
I stay on my idea that the BTC economy really begin to works when we reach the 50-100.000BTC/hours of transactions: with this rate it can be in about a year.

Ugh!  Why won't this statistic die a painful death?  The overwhelming majority of the bitcoin volume that you see is people sending money to themselves as the "change" part in a transaction.  I've put a cogent explanation here: http://forum.bitcoin.org/index.php?topic=27472.msg346658#msg346658.  My best guess for the actual amount of BTCs moving a day is something like 20,000-50,000 BTCs a day, and if you're sufficiently motivated, you can calculate a pretty accurate estimate yourself (see the post I've linked to).

Here's an example.  Take a look at this block:  http://blockexplorer.com/block/00000000000007200e80dfb3a741b845a5c0e38a1ca5eef43a7059842578e86a.  That shows up as 0.747 million BTCs trading hands in 10 minutes (as far as I can remember, the average daily "volume" measured this way is somewhere around 2-3 M, so this is admittedly an example block chosen to vividly highlight the general problem).  If you bother to take a look at the blocks contents, you'll see that 0.744 million BTCs of *that* is simply one very rich early adopter sending a trickle (679.58 BTCs to be exact) to addresses that may or may not belong to other people (it could be his own Mt. Gox. account, for all we know), and sending large amounts of Bitcoins to himself over and over again.  In other words, in this one block, literally 99.9% of the "volume" is fluff, i.e., someone sending Bitcoins to themselves.  Think this person's just schizophrenic?  Look at just about any other transaction on any other block, most of them transfer something like 99% of the input money back to the sender (it gets worse: focusing on the total volume grossly overweighs transactions by owners of large amounts of BTCs, as in this example, and they *definitely* send large amounts of money back to themselves as change).

Since you were so eager to conclude that the "volume" as you measured was evidence that the BTC "economy" was vibrant, would it be unreasonable to suggest to you that the *actual* volume is evidence of hoarding and speculation?  It's not a coincidence that the *actual* volume is in the same ballpark as the Mt. Gox volume.  I'll let you follow that train of thought to its logical conclusion...

The Bitcoin price is driven in part by speculation, but MtGox and the others move a really little amount of BTC (the total number of order placed on MtGox is of about 50.000BTC). If you examine the transactions in the blocks you can see a quite big exchange of BTC. I've found that in 5 hours there are something like 60.000BTC used, that's make about 100.000.000 of BTC/yr moved (and this excluding the big transactions: there are some of 30-40.000BTC in the past 2 days). To have an idea of the evolution of transactions back in december blocks carry an average of  300-400BTC each now we are easily over 2-3.000 BTC
Numbers like those ones tells me that bitcoin are used not only hoarded or used as speculation, so there is an economy around BTC. And when this economy will reach a bigger volume (at least 50-100.000BTC/hour) we probably have the price driven by the request of the market.

Just my satoshi 

Central bank based economies get closer to complete crash every year. Bailouts get more expensive. National debts accelerate. Taxes increase. The whole system is going toward a global economy crash. Cryptocurrencies, being a new kind of money, are not automatically subject to all the same laws that are bringing down those systems, and have other advantages, so as the existing economies crash, cryptocurrencies are the only way out. Even if Bitcoin crashes to pennies per bitcoin, its still a good investment (if you buy at that time) for that reason. Its going to grow because its not subject to many of the flaws of the existing system.

are you high?

I think that's backwards.  The mining cost is now above the price of Bitcoins.  Or so seems to be the grumbling in the mining community from those considering buying hardware.

Beyond help I'm afraid.

... mining cost has been well below the "price" of bitcoins for months now. Do some research before spouting off your FUD.

It's worth noting that the price of Bitcoins went up until it reached roughly the cost of "mining". Then the rise stopped. The price has basically been around $14-15/BTC for weeks now, with occasional excursions usually associated with Mt. Gox problems.

The difficulty stops rising when mining becomes uneconomic, because miners drop out and new miners don't start up. We currently seem to be in a situation where many existing miners with sunk costs continue to operate, but buying hardware no longer pays. See the difficulty discussion.

The cost of mining acts as a price ceiling, not a floor.

(Yes, in theory, heavy demand from Bitcoins for transactional purposes could push prices beyond the cost of mining. But that's not happening. Most of the enthusiasm for Bitcoins comes from "miners".)

Well, that still doesn't allow to deduct "it takes about $100,000 a day in new money to keep the price of Bitcoins stable."

Obviously they don't, but early adopters sell enough to make the effect roughly the same.

Mine and hold. 

same

i got my little dinky rig but i am also holding onto my coins as well

I run a medium-size bitcoin mining farm. Haven't sold any coins for weeks.

Why do you assume miners immediately cash in all their mined coins?

That's patently untrue. Bitcoin allows for micropayments in order to reduce spam and brute force password hacking. That's a use value greater than zero.   

Funnily enough, this appears to be exactly what has happened... the weekend dips disappeared not long after lots of people started talking about how they were getting their USD into the site for the weekend to take advantage of them.