Topic: Why Are Bitcoins Worth $70? (Read 5956 times)

Trade wisely, yes.

But this is a bad anology, you imply that a rock won't fall until you let it go, i.e., sell. Thats just not true. Often that rock is driving to the ground and you cant get your hand off it fast enough to stop from being crushed by it as it hits the gard pavement.

Here's the line for you: bulls makemoney, bears make money, pigs ge slaughtered. Don't be a pig!

Imagine what happens if the price goes back up dramatically from this point and people still don't believe in Bitcoin.

That's right, the price is depends on the demand. if there are more bitcoin adopt come in, the price will rise especially halving time is next year demand is more than supply = price up.

with a request that many sellers can determine their selling prices, and if it has been entered into the market then they followed the pair matching prices

It's flashback friday an actual thing? because there are a lot of good threads from years ago that are worth bumping as a reminder for newbies to see how wrong people was when people sold at ridiculous prices such as 15$. I remember a thread with a guy saying he was selling at that price and abandoning Bitcoin because it was "all over".

Dude. Flashback Friday was yesterday. Get it!

I think it will not go to 70 level but it reach that level. That will happen only if very bad news comes out on bitcoins.

The way to determine to determine the price is by using the money velocity equation:
V*M=nT (1)

where V is average velocity (how fast money changes hands in actual transactions), M is the number of money units, i.e., bitcoin - currently about 11m. nT is the nominal value of all transactions measured in BTC.

nT=P*Y where Y is the real value of all transactions and P is the price level (antiderivative of inflation level) which is inversely proportional to the value of the money, so nT=Y/val.

Whence

(1)=> V*M=Y/val => val=Y/(V*M) (2)

Lets put some values into this equation (2), note that I am just making qualified guesses now. Some people may very well improve upon this answer below:

Y is the real value of actual Bitcoin transactions, I say actual because many transactions in the Blockchain are just transfers between different accounts which have the same owner. Satoshidice transactions are real transactions, though, since they fulfill a market demand. I choose to measure Y in dollars. Let's just assume the Y is currently 20 times the value of the revenue of bitcoinsstore.com, so Y=20*400,000$/month=8,000,000$/month=96,000,000$/year ~100,000,000$/year.

I assume V=1/year which is close to that of state fiat currencies. Plugging this into (2) yields:

val=100,000,000$/(1*11,000,000)~9 dollar/BTC

This is a fairly low value since I have not accounted for speculation (buying because some expect BTC to rise in value comp. to $) and since I may have underestimated Y. Speculation can be accounted for in a higher Y and a lower V which both raise the value of "val".

I hope this gives you an idea of how to evaluate BTC's potential, though. It all depends on Y in the long run, i.e., how large the market for actual Bitcoin transactions will become in the future.

Regards,
Sword Smith

Edit: I want to point out that I see my estimate on Y as an estimate of the current value of transactions and by no means an estimate of the value of future transactions. The value of M is also highly debatable.

yes. https://bitcointalksearch.org/topic/mtgox-buy-all-you-can-157361

How do you know this? Do they publish these numbers somewhere?

Looking at a recent chart it looks to me like Cyprus is responsible for the move from ~$47.50 - $70+

The price will get a correction down to ~35USD/BTC. But in the long-term, if BTC were to stick as a widely-used international currency, I think we'll long for the days when it only cost 70USD.
Think about offshore banking and crime- I think that pretty soon they'll adopt BTC as a means of transferring large amounts of money and that will eventually lead to a much higher and stable exchange rate.

And if you put even higher logarithm on the Y axis then it practically changed only a tiny bit in last few years.

https://bitcointalksearch.org/topic/fundamental-analysis-thread-143973

I concur

indeed. This chart looks pretty reasonable to me

You cannot plot it with a linear scale, on that chart you posted one cannot see anything, its totally distorted because it over-exaggerates movements at higher prices and downplays the equally large movements at lower prices. Why do you bubble advocates always use such distorted scales for the y-axis? You do it because you want it to look like a bubble. Post it with a logarithmic scale like everybody else who is seriously analyzing the price history, then the relative price movements will be represented the same way in all price regions, it won't be distorted and then it won't look like a bubble anymore at all!

Q. Why Are Bitcoins Worth $70?
A. No idea why you think they worth 70$.

Q. Why Are Bitcoins Worth $770+?
A. Because of 5500 new accounts pending verification on MtGox as of now.

Actually, it's quite simple. If there is 10 million people wanting to have bitcoins worth 1$ and there is 10 million bitocoins, the price will be 1$

If they either want to have 10$ each or if there is 100 million of them, the price wil be 10$ etc..

How will it be in the future? Just find out how many want to have bitcoins, how much they want and then you know.