Topic: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion - page 32909. (Read 26620660 times)

It's obvious that price is not driven by difficulty, but inflation does have an impact on price - at this stage inflation in BTC its non negligible, and its in fact built into the system to pay for the work and costs of mining during the early days of Bitcoin. Thus, looking at growing difficulty and expecting growing price is a fallacy (in fact its the other way around) - but nevertheless Bitcoin is currently inflating at a 12.5% yearly rate, and what miners do with those newly minted coints has inevitably an impact on price.

I believe that there will be lots of newly minted coins hitting the exchanges in late 2013, will just wait and see.

EDIT: in fewer words, wether miners decide to speculate (holding) or to pay for their fiat costs (selling the coins for good) has inevitably an immediate impact on price.

The short term chart does look like there may be a break out. There is a rising triangle, which is pretty bullish.

I'm still not convinced that the breakout will last, but I've bought a chunk of BTC again and may sell into the breakout, should it occur.

[It is also painful not holding much BTC. Holding so much fiat feels... dirty!]

Gotcha. What you referred to as inflation, I see as increase in supply.

I tend to think of inflation as a function of value, as in how much of a currency is required to buy something.

With fiat currencies, inflation is usually measured by indices covering everything from wages to fuel prices. It takes more USD each year to buy a gallon of gas or hire a laborer for an hour.  Bitcoin is referred to as deflationary because it takes fewer and fewer coins each year to buy something, be it an ASIC miner, an American dollar or shitloads of herbs.

Gotcha. What you referred to as inflation, I see as increase in supply.

I tend to think of inflation as a function of value, as in how much of a currency is required to buy something.

With fiat currencies, inflation is usually measured by indices covering everything from wages to fuel prices. It takes more USD each year to buy a gallon of gas or hire a laborer for an hour.  Bitcoin is referred to as deflationary because it takes fewer and fewer coins each year to buy something, be it an ASIC miner, an American dollar or a pound of herbs.

Basic math.

This year (2013) aprox. BTC1,312,500 will be minted, those are being added to the BTC10,500,000 minted until the end of 2012, so at the end of the year you will have around BTC11,812,500

That's a yearly inflation of 12.5%

In 2014 it should be around 11%, in the following years it will decrease until aprox. 9% (2016) until it falls to 4% in 2017 because of the next reward halving.

Yes, surprise, Bitcoin the deflationary currency its in a heavily inflationary phase and it will be for the next decade. Good thing is that the inflation is predictable and immune to third party manipulation.

Bitcoin is currently inflating at a 12.5% yearly rate

Why do you keep saying XBT when almost everyone uses BTC?

Yeah, honestly, I think it's pretty clear which one is used the most,

XBT, BTC, Ƀ, these are all the same thing and you should understand them. The one that gets used most, will win in every day life. Some argue that XBT will win as the rule for non-governmental money is X… like in XAG and XAU.
My fav is Ƀ as it's easily typed once you know the code ctrl-u + 243. BTC is good, too. XBT it will be if the others insist in it. Just be easy with whatever and please don't insist in your choice being the best. Time will tell.

Yeah, honestly, I think it's pretty clear which one is used the most, so having all kinds of alternatives only helps to confuse newcomers.
And bitcoin is confusing enough already if you are new to it...

XBT, BTC, Ƀ, these are all the same thing and you should understand them. The one that gets used most, will win in every day life.

This.

Price isn't driven by miners, but by traders and commodity speculation as has been amply demonstrated elsewhere.

Why do you keep saying XBT when almost everyone uses BTC?

Most of GPU miners didn't want ROI as soon as possible, as I explained earlier - they counted on reselling their GPUs, and they were mostly hobbyist. But I'm a miner myself, I know a lot of miners, I've seen in first person who are the customers of companies like KnC and how much they are spending, and you have to understand that this last media bubble exposed Bitcoin to a lot of new and uneducated people who run profit calculators at current difficulty (without having their miners yet), they do not even understand that difficulty is growing exponentially, and at the end of the day there is a "gold rush" in which a lot of new people is entering mining because they think they will get rich quick... So we have now a) a lot of individuals investing money they cannot afford to lose on BTC miners, and as you surely know there is a "get-rich-quick" feeling on BTC - they think they will recoup their investment FAST, and this is why they are putting in this game more money they should; b) there are more and more "professional" miners that are investing money in mining with the only intention of generating profit - they will run their operations as a business. That people has to pay for huge electricity costs, renting of industrial places where they will host their operations, etc. etc. etc. A lot of fiat expenses to cover.

During the GPU era, I rarely saw a) and b) miners, most were small-time hobbyist, running their rigs in their bedrooms. During this change to ASIC, I'm seeing a lot of both a) and b). This people needs to recoup fiat ASAP.

I surely don't know what's the %, but I surely know there are a lot of newcomers spending all their fiat savings (tens of k's of $) in miners because they think they will break even in one month and then they will have a x10 ROI in the first year... Loan or no loan I don't know, but you can be sure they are throwing at this more money they can afford to lose because they think this is a "no brainer" and they do not want to "miss the train".

I know for sure because I've been meeting/discussing with a lot of guys like that since March, both in cyber and meatspace.

There will be a lot of pain for miners very soon, you will see.

It sounds like mr Market's manic depressive phase is on :p