Will scarcity ever come into play? - page 2.

exstasie

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Quote from: stompix on January 18, 2019, 02:31:53 PM

Exchanges are not entirely separated from the world and if everybody would stop sending coins to an exchange there is only one way out of this, people will slowly come, buy whatever is left and in the end demands will be so large that the price will go up and of course at this point coins will fly back to be sold.

Exactly. Supply (new coins deposited) or demand (fiat taking coins off the ask side) is always affecting price discovery. The OP is coming at this like exchanges exist in some alternative universe where bots are just trading in a zero sum game. He's not accounting for actual buying demand or selling pressure that enters and exits the exchange via fiat and BTC.

Scarcity of coins has already resulted in multiple bubbles. When OTC buyers can't source coins off-exchange, what do they do? They start buying up coins on exchanges and driving prices up.....

clrpod

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Scarcity can only really come about now as coins get lost for one reason or another. Or if there's a big uptick in demand. I think that mostly scarcity will never be an issue because of the fact that 1 bitcoin can be broken down in to so many Satoshi. And I'm also fairly sure that if need be a satoshi could even be broken down.

stompix

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Quote from: Bitcoinwaist on January 18, 2019, 05:24:12 AM

Quote from: figmentofmyass on January 18, 2019, 12:11:34 AM

Quote from: Bitcoinwaist on January 17, 2019, 01:45:02 PM

The thing is how would anyone know if there ever was a shortage if coins seeing that price is derived by only the coins being traded back and forth on an exchange? If the same 5000 coins are traded back and forth to determine price, scarcity will never be taken into account right? Because all that matters are the coins on the exchanges being traded.

i don't get it. why would you ever conclude the same 5000 coins are being traded back and forth? haven't you ever deposited or withdrawn from an exchange? placed an order, market bought/sold? if so, you are literal proof that supply and demand on the exchanges is not static. every one of us can affect price discovery on these exchanges---assuming you have some coins or fiat, anyway.

I guess I am explaining it wrong. There are x number of coins on an exchange right now. If everyone outside of that exchange held on to their coins the only trading that would be going on would be the existing coins back and forth between the bots right and that would be how the price is discovered. meanwhile outside of the exchange a coin cannot be bought because no one is selling. how would the trading bots/traders realize this is happening if say only 10 people buy $100 worth of bitcoin each day not showing the true scarcity outside of the exchange?

Now the second one really made me scratch my head... Grin

Going for the first keeping away the isolation factor.
It doesn't matter how many times those 5000 coins are being traded, what matters is how many people are willing to trade and how much money they have.

If there are 5000 people and everyone wants to buy 2BTC there will be demands for 10 000 and scarcity will play its role.
If there are just 10 guys and all they do it actively trading for cents, with cents, then there will be no scarcity and there will be no active markets, the price will stagnate....deja vu.

Now for your second scenario, this is not possible, and will never be.

Exchanges are not entirely separated from the world and if everybody would stop sending coins to an exchange there is only one way out of this, people will slowly come, buy whatever is left and in the end demands will be so large that the price will go up and of course at this point coins will fly back to be sold.

As for the trading bots will realize this when they run out of money since their algorithms are most likely never built for such situations, and the fall of mt gox when bots were still trading there while everyone was putting pop-corn int he microwave is proof enough.

deisik

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Quote from: Bitcoinwaist on January 17, 2019, 08:00:39 AM

Or will it be a nonfactor because price is determined on the main exchanges which have a finite number of coins exchanging hands.
What i am getting at is the traders on bitstamp never have to acknowledge a shortage because the same number of coins are just being traded back and forth.
Or do you think that if somehow there is a shortage and it is acknowledged, wpuld there always be a shortage then going forward?

It is not quite clear what you are asking here. Basically, it all comes down to the balance of supply and demand, though many people don't really understand how it works in practice. Technically, there is no such thing as shortage of coins because supply is always balanced out by demand at a certain price (and vice versa). When the price goes up and ask orders get eaten, demand and supply are rebalanced instantly, so you can't even say there is a shortage of coins. If there were (let's assume that for a moment as a mind experiment), the price would be infinite with the ask side of the order book empty

That would count as a shortage

el kaka22

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Quote from: Bitcoinwaist on January 17, 2019, 08:00:39 AM

Or will it be a nonfactor because price is determined on the main exchanges which have a finite number of coins exchanging hands.
What i am getting at is the traders on bitstamp never have to acknowledge a shortage because the same number of coins are just being traded back and forth.
Or do you think that if somehow there is a shortage and it is acknowledged, wpuld there always be a shortage then going forward?

Eventually, right now there are not that many people that want to buy bitcoin that overshadows the sellers. Last year for example price went up to 20 thousand dollars not because bitcoin got more valuable but because there was too many new people who wanted to buy bitcoin and there wasn't that many sellers that can cover it so the price went higher and higher. That was the reason why bitcoin reached 20 thousand dollars.

Same could happen at any given time, if people want to buy bitcoin too much and there are billions of dollars ready to buy bitcoin whereas there are maybe a billion at most that is ready to sell eventually people will start to offer more for each bitcoin increasing the price. That is how the economy of bitcoin works, scarcity is always a thing in the play, only can be felt during bull runs tough.

Rapidgator

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Quote from: NeuroticFish on January 17, 2019, 01:32:19 PM

Quote from: Bitcoinwaist on January 17, 2019, 08:00:39 AM

What i am getting at is the traders on bitstamp never have to acknowledge a shortage because the same number of coins are just being traded back and forth.

No. With every halving the people should become less eager to sell cheap. It's a result of scarcity.
Of course, there's also about supply and demand. Scarcity alone doesn't help much if there are no buyers.
So it's a cat and mouse game, where scarcity is a factor, but it's one of many.

Okay, but less infaltion = bigger scarcity, so when on the market there is the same amount of sellers and buyers plus there is bigger scarcity than normal is that it has got infulence to the price. Also, I can agree that scarcity is a factor but in trading/investing/speculating there is more to analyze them.

Bitcoinwaist

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Quote from: figmentofmyass on January 18, 2019, 12:11:34 AM

Quote from: Bitcoinwaist on January 17, 2019, 01:45:02 PM

The thing is how would anyone know if there ever was a shortage if coins seeing that price is derived by only the coins being traded back and forth on an exchange? If the same 5000 coins are traded back and forth to determine price, scarcity will never be taken into account right? Because all that matters are the coins on the exchanges being traded.

i don't get it. why would you ever conclude the same 5000 coins are being traded back and forth? haven't you ever deposited or withdrawn from an exchange? placed an order, market bought/sold? if so, you are literal proof that supply and demand on the exchanges is not static. every one of us can affect price discovery on these exchanges---assuming you have some coins or fiat, anyway.

I guess I am explaining it wrong. There are x number of coins on an exchange right now. If everyone outside of that exchange held on to their coins the only trading that would be going on would be the existing coins back and forth between the bots right and that would be how the price is discovered. meanwhile outside of the exchange a coin cannot be bought because no one is selling. how would the trading bots/traders realize this is happening if say only 10 people buy $100 worth of bitcoin each day not showing the true scarcity outside of the exchange?

figmentofmyass

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Quote from: Bitcoinwaist on January 17, 2019, 01:45:02 PM

The thing is how would anyone know if there ever was a shortage if coins seeing that price is derived by only the coins being traded back and forth on an exchange? If the same 5000 coins are traded back and forth to determine price, scarcity will never be taken into account right? Because all that matters are the coins on the exchanges being traded.

i don't get it. why would you ever conclude the same 5000 coins are being traded back and forth? haven't you ever deposited or withdrawn from an exchange? placed an order, market bought/sold? if so, you are literal proof that supply and demand on the exchanges is not static. every one of us can affect price discovery on these exchanges---assuming you have some coins or fiat, anyway.

Febo

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Quote from: Bitcoinwaist on January 17, 2019, 08:00:39 AM

Or will it be a nonfactor because price is determined on the main exchanges which have a finite number of coins exchanging hands.
What i am getting at is the traders on bitstamp never have to acknowledge a shortage because the same number of coins are just being traded back and forth.
Or do you think that if somehow there is a shortage and it is acknowledged, wpuld there always be a shortage then going forward?
Thoughts?

Scarcity come into play every 4 years when mining halve. We had 25 btc in a block now we have 12.5 and soon we will have 6.25. Bitcoins yearly emission inflation is right now 3.83%. It will halve in less then 2 years. That will pt it just a bit over Gold mining yearly inflation. Scarcity is here. It just get visible every 4 years and forces bull run.

exstasie

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Quote from: Bitcoinwaist on January 17, 2019, 08:00:39 AM

Or will it be a nonfactor because price is determined on the main exchanges which have a finite number of coins exchanging hands.
What i am getting at is the traders on bitstamp never have to acknowledge a shortage because the same number of coins are just being traded back and forth.

The same number of coins are not just being traded back and forth. If you're a trader, you can prove this anecdotally by removing your asks from the order book and withdrawing your coins from an exchange: this effectively lowers supply. When someone deposits USD to Bitstamp and then buys BTC and withdraws to their own wallet, it's lowering available supply.

As long as people can freely deposit and withdraw fiat and BTC from an exchange, price discovery should be legitimate.

Thanasis

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If the demand increases the price will keep increasing so it causes the less supply of bitcoin so there will be no scarcity of it ever.The bitcoin can be diversified into many digits as we want to any traders can send it to exchanges with many digits included into bitcoin.

Choco99

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With millions of supply??, No.

gentlemand

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Quote from: Bitcoinwaist on January 17, 2019, 01:45:02 PM

The thing is how would anyone know if there ever was a shortage if coins seeing that price is derived by only the coins being traded back and forth on an exchange? If the same 5000 coins are traded back and forth to determine price, scarcity will never be taken into account right? Because all that matters are the coins on the exchanges being traded.

I think it's pretty easy to wind up going bonkers pondering such things. They're unknowable. And that works in the opposite direction too. You don't know who's buying and who's selling. It's not credible to think there's nothing but the same money batting back and forth. There'll be people buying or selling once and never coming back again.

You may also decide scarcity has arrived just as Grayscale decides to sell their 200,000 BTC at the same time as the Winklevii sell their 100,000.

Within a few more halvings if you want more than a fraction of a coin you're going to have to buy an existing one from someone. Mining is still an abundant source for coin buyers. That's going to dwindle to negligible levels. The effective end of inflation and the start of deflation is more arousing concept than scarcity.

Bitcoinwaist

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Quote from: NeuroticFish on January 17, 2019, 01:32:19 PM

Quote from: Bitcoinwaist on January 17, 2019, 08:00:39 AM

What i am getting at is the traders on bitstamp never have to acknowledge a shortage because the same number of coins are just being traded back and forth.

No. With every halving the people should become less eager to sell cheap. It's a result of scarcity.
Of course, there's also about supply and demand. Scarcity alone doesn't help much if there are no buyers.
So it's a cat and mouse game, where scarcity is a factor, but it's one of many.

The thing is how would anyone know if there ever was a shortage if coins seeing that price is derived by only the coins being traded back and forth on an exchange? If the same 5000 coins are traded back and forth to determine price, scarcity will never be taken into account right? Because all that matters are the coins on the exchanges being traded.

NeuroticFish

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Quote from: Bitcoinwaist on January 17, 2019, 08:00:39 AM

What i am getting at is the traders on bitstamp never have to acknowledge a shortage because the same number of coins are just being traded back and forth.

No. With every halving the people should become less eager to sell cheap. It's a result of scarcity.
Of course, there's also about supply and demand. Scarcity alone doesn't help much if there are no buyers.
So it's a cat and mouse game, where scarcity is a factor, but it's one of many.

Kopyleft

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Future of Security Tokens

Bitcoin has a limited supply which is capped at 21 million coins and majority of that has already been mined out.
As demand and adoption grows against a slow moving and finite supply, it is likely to have a positive effect on the price.

ngusmin

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Demand and supply will continue to spin in the market, and when demand decreases, crypto value will decrease. I don't think there will be a shortage of coins, but there is a decline and an increase in value.

rafanadal

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There is not enough demand for there to be a shortage.

Bitcoinwaist

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Or will it be a nonfactor because price is determined on the main exchanges which have a finite number of coins exchanging hands.
What i am getting at is the traders on bitstamp never have to acknowledge a shortage because the same number of coins are just being traded back and forth.
Or do you think that if somehow there is a shortage and it is acknowledged, wpuld there always be a shortage then going forward?
Thoughts?

Topic: Will scarcity ever come into play? - page 2. (Read 364 times)