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Bitcoin Price Pressure

blog.samaltman.com

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Re: Bitcoin Price Pressure

#21

Post by dragontamer »

VMG wrote: post #18

> And even if bitcoin itself fails, I think the blockchain will be one of key technical innovations of this time period. A blockchain is only useful if it is heavily secured by hashing power. This is only the case if there is significant mining equipment devoted to validating blocks. That in turn only happens if there is a reward for validating a block. Long story short, it's currently very difficult to use a secure…

Or not? Proof-of-stake is arguably better than Proof-of-work. Peercoin, NXTCoin and so forth have fundamentally moved forward from the "waste more energy than the next guy" approach that is innate to Proof-of-work.

Re: Bitcoin Price Pressure

#22

Post by pmorici »

DennisP wrote: post #11
MarkPNeyer wrote: post #2

> The other way to get enough buy pressure would be if many people started deciding they want to hold bitcoin as a hedge or a speculation. ding ding ding. that's all i'm doing. i've had a bunch for a while. i don't need the liquidity, so i figure i might as well hang on to them. i think a lot of us are in the same boat. if a group of 100,000 'crazy' and 'irrational' people all decided to put $100 USD a month into bit…

But if the price is mainly based on that, it's nothing but a tulip bubble. I don't think we get sustainable value unless people are actually using it as currency to buy things.

Can you point to any modern day currency that is anything but a tulip bulb? So long as merchants are willing to accept it for payment it is decidedly not just a tulip bulb.

Re: Bitcoin Price Pressure

#23

Post by MarkPNeyer »

dragontamer wrote: post #13
MarkPNeyer wrote: post #2

> The other way to get enough buy pressure would be if many people started deciding they want to hold bitcoin as a hedge or a speculation. ding ding ding. that's all i'm doing. i've had a bunch for a while. i don't need the liquidity, so i figure i might as well hang on to them. i think a lot of us are in the same boat. if a group of 100,000 'crazy' and 'irrational' people all decided to put $100 USD a month into bit…

The only "outs" therefore are the greater fool theory ( http://en.wikipedia.org/wiki/Greater_fool_theory ) or a pyramid scheme structure. Or, perhaps all of this price-mongering is the wrong way to look at things. Consider this: BTC success should instead be measured in transactions / day . The only people who care about BTC per $$$ are speculators.

read my updated comment. you don't _need_ an out if you have your needs met and have the cash liquidity you need. since a lot of the people holding these things are libertarians with money, why would they sell them for dollars they think are worthless? they don't NEED outs.

Re: Bitcoin Price Pressure

#24

Post by natrius »

pcmonk wrote: post #17
sama wrote: post #14

Earlier quoted context omitted.

I think, especially in emerging markets, merchants will eventually hold bitcoin.

Why? Why wouldn't they just sell it immediately, for all the reasons why merchants sell it now?

Because if you're in Argentina, you can only sell them for Argentine pesos, which aren't a clear winner over bitcoins.

Re: Bitcoin Price Pressure

#25

Post by jbondeson »

sama wrote: post #14
pcmonk wrote: post #6

Using bitcoin for transactions won't help if the merchants immediately sell them (all the buying pressure just got cancelled out). Right now, bitcoin is only held in large quantities for speculation. Speculation, as he notes, has only worked for temporary bubbles. He says that bitcoin isn't failing, but I don't see how it can succeed. It doesn't make short-term economic sense for individuals to either mine or buy bit…

I think, especially in emerging markets, merchants will eventually hold bitcoin.

I see only three good reasons for a merchant to hold reserve in bitcoin: 1) pay their employees, 2) pay their suppliers, or 3) good old speculation.

When you start to see large suppliers get into the market then you'll start to see a decrease in immediate conversions.

Re: Bitcoin Price Pressure

#26

Post by pcmonk »

natrius wrote: post #24
pcmonk wrote: post #17

Earlier quoted context omitted.

Why? Why wouldn't they just sell it immediately, for all the reasons why merchants sell it now?

Because if you're in Argentina, you can only sell them for Argentine pesos, which aren't a clear winner over bitcoins.

So, we're going to try to stabilize our currency by tying it to every failing currency across the world? If bitcoin gets mainly used as a replacement for hyper-inflationary currencies, then it's never going to be a viable alternative to an even marginally strong currency. Tying all the world's currencies together isn't going to create a stronger currency than, e.g., the dollar or the euro. Thus, those who work in dollars or euros have economic reasons not to use bitcoins.

Re: Bitcoin Price Pressure

#27

Post by logicallee »

applecore wrote: post #10

There's no such thing as "default price pressure" (up or down) in financial markets. Every trade has both a buyer and a seller—for someone to have sold bitcoins, someone else has to have bought them.

Imagine if any two people who reside in the Bay Area would receive $3M at a $10M valuation within three weeks of asking for it (no questions asked) as long as they have incorporated and one of them can program. What do you think would happen to the Bay Area housing market in this situation? How can you not call it "buy pressure"?

Note: interestingly this is an extreme an unrealistic example, but it's not far from relaity!

Re: Bitcoin Price Pressure

#28

Post by dragontamer »

MarkPNeyer wrote: post #23
dragontamer wrote: post #13

Earlier quoted context omitted.

The only "outs" therefore are the greater fool theory ( http://en.wikipedia.org/wiki/Greater_fool_theory ) or a pyramid scheme structure. Or, perhaps all of this price-mongering is the wrong way to look at things. Consider this: BTC success should instead be measured in transactions / day . The only people who care about BTC per $$$ are speculators.

read my updated comment. you don't _need_ an out if you have your needs met and have the cash liquidity you need. since a lot of the people holding these things are libertarians with money, why would they sell them for dollars they think are worthless? they don't NEED outs.

If you don't need outs, then you don't care about the value of BTC.

Lets make this more explicit: Why are you so attached to the value of BTC? Dollars for instance, are worth less than a Euro and less than a British Pound. It is only in the insanity of the BTC market that people seem to care about making BTCs "worth more".

Re: Bitcoin Price Pressure

#29

Post by jbondeson »

natrius wrote: post #24
pcmonk wrote: post #17

Earlier quoted context omitted.

Why? Why wouldn't they just sell it immediately, for all the reasons why merchants sell it now?

Because if you're in Argentina, you can only sell them for Argentine pesos, which aren't a clear winner over bitcoins.

Well technically if you're a bitcoin merchant you can just as easily convert to USD or any other currency that is more stable than the Argentine peso.

Re: Bitcoin Price Pressure

#30

Post by natrius »

jbondeson wrote: post #29
natrius wrote: post #24

Earlier quoted context omitted.

Because if you're in Argentina, you can only sell them for Argentine pesos, which aren't a clear winner over bitcoins.

Well technically if you're a bitcoin merchant you can just as easily convert to USD or any other currency that is more stable than the Argentine peso.

How? Few Argentines have USD bank accounts, so there's no electronic market where they can sell bitcoins for dollars. They can buy dollar bills with bitcoins on the street, but that's not really scalable.
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