Topic: Why is the value dropping? - page 2. (Read 4324 times)

Relax man, some early adopter in this moment solding its bitcoin in quantity of 100 bitcoin in way to not super-decreasing the price.

Coins would be issued into existence instead on being created through mining.

The credits must be redeemable, you can only issue credits that you have the ability to redeem in good or services. It would have to be tied to a reputation keeper.

Sublime5447: The abundance model sounds like a great way to create a cascading credit crisis to me. Kind of like Ripple. What am I missing?

so what other can be the solution than dramatically lowering bitcoins inflation/ new coins per day?

The high inflation enforces centralisation. Lower inflation would mean less competition amongst miners since they would not be a main marketforce anymore.

I'd say: bring the impact down of what miners can do to the markets each and every day and you'd reap a more decentralised network and more stable and better prices.

It is a fault in bitcoins design to have miners being a burden on the market for such a long time. (just my 2 cents)

miners have too much power over the markets, trade and price. Too much money is extracted by them. It's not their fault or the fault of hardware manufacturers, it's the fault in the specs. To break it down to one sentence: Halving takes too long.

That is what you are saying. I am saying the USD and bitcoin are both failures because they both work on the same principles. The miners are the central issuing authority, soon to be two brothers alone. https://bitcointalksearch.org/topic/german-mining-project-377701

  Two Kinds of Money

1.The Scarcity Model: A single uniform quantity in limited supply made valuable by its own scarcity.
In other words, the value of this type of money depends on the supply of, and demand for, the money commodity itself. Conventional definitions of money define money only in terms of this model, a "medium of exchange". Examples are: cowries, gold and silver, fiat cash and coins, bank credit, and now, in the model's purest and most spectacularly speculative form, Bitcoin.

2. The Abundance Model. A promise of something specific from someone specific made valuable by its redemption in real production. The value of this type of money is defined by the promised redemption in goods and/or services. As such, this type of money is promises of an indefinite number of non-uniform commodities in indefinite supply and, unlike the limited quantity "coin" concept of money, the total quantity of these credits in circulation does not affect their value, because the value of a credit is defined by what its issuer will redeem it for in real goods and/or services. Examples are: business-to-business barter credits, customer rewards, travel points, discount coupons, mutual credit systems

lol, good luck with that.

I disagree. Pricestability does not need central planning, it just need lower dilution of existing coins (aka lower inflation).
Bitcoin is not designed to hold its value, it is designed to be volatile.

Lower dilution of coins (lower inflation) would lead to better properties in holding value and thus to shorter bearmarkets. Bubbles would still occure and pop but it would come back more reliable and quickly.

Go ahead and relaunch it with central control of moneysupply and see if you can get that sold.  

What you are actually basically saying is: "bitcoin has failed because it has no central control and the FED is doing it right"
Can't be serious.

Price stability requires an elastic supply, currency is a system of measurement, we dont limit the number of inches and we shouldn't limit the number of units of value.

lol @ the idea of bitcoin with variable coinsupply. lmao
Fiat is better than that for sure

i said it on the other thread. I say it here again:

mining becomes centralised, small miners are driven out of buisiness, few large miners dump harder than many small ones would, thus the price drops more, the competition becomes harder, more are driven out and thus centralisation is enforced more. This is a spiral with no way out.

It comes down to: 3600 btc a day was too high inflation.
Less inflation would have provided more stable prices, higher prices and less centralisation in mining.

This volatility is caused by the inflation. People say you need the coins to secure the network. Guess what: if miners would get less coins a day the price would be higher and it would be about the same for them.
Now you have the situation where the network is driven by incredible hardware and electricitycost - way more than need to be.  These days nobody in their right mind would want to buy bitcoin because it's really just a miners-scam to make the miners rich.

read my lips: Inflation leads to destruction of wealth and centralisation. There is no excuse for it. Inflation is poison - you should know that!

Thats not the reason but is a big part of it. The reason the price is dropping is because one the price never really went that high, it was really just because of manipulation at the mt gox. exchange, see this report (willyreport.wordpress.com/) and secondly the price is falling because it was sold to the public as a currency which it is not, bitcoin is a digital collectible it is the equivalent of a digital baseball card and you cant price an economy in baseball cards.   

bullshit. Just cut the inflation. Your conclusions are wrong. You don't need a variable coinsupply, you need a lower inflation.

That's why the best monetary systems regulate the price level, by targeting a certain rate of inflation, whilst ignoring everything else.

Exactly to the point there, in my opinion.
That's why we're probably going into nothingness on this experiment, as interesting and inspiring as the concept might be...

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Yeah, I think that most of the users here aren't exactly educated nor experienced in the world of finance. Fixed coin supply can never offer stability. Coin supply has to be dynamic to be on par with the economy, that is dynamic. Supply has to be regulated with the availability of resources, so that money can keep stable value. And without stability, money has very little use. The main characteristic of a low quality currency is instability, because it's almost impossible to make any solid plans when you rely on a currency that's value can't be predicted. That's why bitcoin is more of a gimmick and a lot more development has to be done before open sourced monetary systems become truly practical.

This is the reality after ASICs:


The cost of network rises and the value of coin drops.
Anyway, I think that we're done here.

Re. "useless work":  Bitcoin is butting up against the main problem of algorithmically-determined inflation--it's hardwired, and thus by definition can't adjust to change.

Mined coin=inflation rate of Bitcoin's monetary supply.  When Satoshi chose the block reward halving rate six years ago, he had to guess the future state of Bitcoin economy.  Literally guess.  The real economy, fiat economy, constantly adjusts the inflation of the monetary supply.  I'm not sure how many here fully appreciate the gravity of this shit.

https://en.bitcoin.it/wiki/Myths
Bitcoin Myths:

The value of bitcoins are based on how much electricity and computing power it takes to mine them
This statement is an attempt to apply to Bitcoin the labor theory of value, which is generally accepted as false. Just because something takes X resources to create does not mean that the resulting product will be worth X. It can be worth more, or less, depending on the utility thereof to its users.

In fact the causality is the reverse of that (this applies to the labor theory of value in general). The cost to mine bitcoins is based on how much they are worth. If bitcoins go up in value, more people will mine (because mining is profitable), thus difficulty will go up, thus the cost of mining will go up. The inverse happens if bitcoins go down in value. These effects balance out to cause mining to always cost an amount proportional to the value of bitcoins it produces.

A sampling of charts. Difficulty (blue) goes up after price rises. Difficulty comes down after the price crashes.

Have you even looked at the charts for 1y difficulty increase and compared it to the price movement?
I can't tell anymore if you are trolling me or being serious.

If the price has dropped, then difficulty has still increased. People need their ROI with initial equipment purchase. If operating the machinery costs even a little less then electricity, then miners will continue, to at least make some money back from.their initial investment of buying the equipment. And they operating will cause the selling pressure as described above.

This is why mining difficulty follows the cost, not the other way around.

When the price drops, difficulty drops. People stop operating at a loss.

Mining cost does not affect Bitcoin price. Bitcoin price affects mining output.