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Bitcoin Price Touches $1,000 Again as Overstock Sales Hit $130,000

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Re: Bitcoin Price Touches $1,000 Again as Overstock Sales Hit $130,000

#41

Post by toomim »

olalonde wrote: post #28
jval wrote: post #13

This is just ridiculous. If Overstock is the biggest retailer in the world accepting Bitcoin, and on their opening day they only manage $130,000 in sales (130 BTC), what does that tell you about the volume of Bitcoin actually being used in trade and commerce rather than speculation? There are 12.5 Million BTC in circulation. I don't doubt that Bitcoin will become a revolutionary system of payments and money storage d…

It's not as small as you think. This is what Overstock's CEO had to say about it on Twitter: "#Bitcoin's first full day on @overstock.com was a huge success: 840 orders, $130,000 in sales. Almost all new customers. #stunned". https://twitter.com/OverstockCEO/statuses/421754592427139072 130 BTC is 0.001% (130/12.5M) of all Bitcoin spent in one day at Overstock. Does Overstock typically receive 0.001% of all the USD mo…

We don't have to guess, we can calculate this precisely.

The M1 supply of all USD is $2.1 Trillion [1]. Overstock has $1.1 Billion in revenue per year [2]. So they pull in .05% of US currency per year, or 0.00014% per day.

The bitcoin money supply is $12.5 Billion [3]. Overstock pulled in $130,000 in a day, which is .001% of the bitcoin money supply.

So they got 7 times the proportion of bitcoin than they get of USD.

[1] http://en.wikipedia.org/wiki/Money_supply [2] http://en.wikipedia.org/wiki/Overstock.com [3] https://blockchain.info/charts/market-cap

Re: Bitcoin Price Touches $1,000 Again as Overstock Sales Hit $130,000

#42

Post by minimax »

nofi3939 wrote: post #36
minimax wrote: post #30

How is adoption of bitcoin as a payment technology a bullish indicator for bitcoin as an investment? The prices on Overstock are still in dollars and bitcoin as a payment technology works equally well whether bitcoin is priced at $1,000,000 or $0.01.

If you believe that overstock will lead to increased demand for BTC (perhaps not due solely to overstock but a wave of merchants who follow suit) and that the demand outpaces BTC's inflation (i.e. the ~3600BTC mined into existence each day), then BTC's value will rise as a consequence.

The Overstock case doesn't increase net demand for bitcoins. This is how Overstock works. I have dollars and I want to buy something on Overstock. I buy some bitcoins with my dollars. I send bitcoins to Overstock and Overstock sends me the product. Overstock then sells the bitcoins to convert back to dollars.

So there is a buy and a sell for each transaction which creates no net demand for bitcoins. And if you consider the alternative where I already have bitcoins because I mined them, then I have bitcoins and I send them to Overstock who sells them for dollars. In that case you actually create downward pressure on the bitcoin price (against the dollar) since there is no buy on my part to net against Overstock's sale of bitcoins.

Re: Bitcoin Price Touches $1,000 Again as Overstock Sales Hit $130,000

#43

Post by atmosx »

toomim wrote: post #41
olalonde wrote: post #28

Earlier quoted context omitted.

It's not as small as you think. This is what Overstock's CEO had to say about it on Twitter: "#Bitcoin's first full day on @overstock.com was a huge success: 840 orders, $130,000 in sales. Almost all new customers. #stunned". https://twitter.com/OverstockCEO/statuses/421754592427139072 130 BTC is 0.001% (130/12.5M) of all Bitcoin spent in one day at Overstock. Does Overstock typically receive 0.001% of all the USD mo…

We don't have to guess, we can calculate this precisely. The M1 supply of all USD is $2.1 Trillion [1]. Overstock has $1.1 Billion in revenue per year [2]. So they pull in .05% of US currency per year, or 0.00014% per day. The bitcoin money supply is $12.5 Billion [3]. Overstock pulled in $130,000 in a day, which is .001% of the bitcoin money supply. So they got 7 times the proportion of bitcoin than they get of USD.…

Wait 1 week. Then check the numbers of BTC sales again :-)

Re: Bitcoin Price Touches $1,000 Again as Overstock Sales Hit $130,000

#44

Post by greyman »

jval wrote: post #13

This is just ridiculous. If Overstock is the biggest retailer in the world accepting Bitcoin, and on their opening day they only manage $130,000 in sales (130 BTC), what does that tell you about the volume of Bitcoin actually being used in trade and commerce rather than speculation? There are 12.5 Million BTC in circulation. I don't doubt that Bitcoin will become a revolutionary system of payments and money storage d…

Why do you think the price is inflated? The whole market cap is only $11B.

Re: Bitcoin Price Touches $1,000 Again as Overstock Sales Hit $130,000

#45

Post by atmosx »

RoboTeddy wrote: post #20
jval wrote: post #13

This is just ridiculous. If Overstock is the biggest retailer in the world accepting Bitcoin, and on their opening day they only manage $130,000 in sales (130 BTC), what does that tell you about the volume of Bitcoin actually being used in trade and commerce rather than speculation? There are 12.5 Million BTC in circulation. I don't doubt that Bitcoin will become a revolutionary system of payments and money storage d…

> I don't doubt that Bitcoin will become a revolutionary system of payments and money storage down the track, but the price of coins is outrageously inflated at the moment. Prices rise immediately in anticipation of positive future events.

Really?

If that was the case the bust of DPR and the downfall of SR should drive the price of BTC down, to it's knees - since it was the only market where BTC was treated like a curency. This fact shows that either BTC is not as rational as one might think or that big players (or a small team of players) are trying to keep the price as high as possible (by not selling in bulk).

Note that if A. Shamir's paper is correct, and we don't have proof of the opposite, than 98% of BTC is owned by 2% of portfolios. IF that's the case, then it's no wonder it's over-inflated.

The sad thing is some people believe, that somehow this is more liberal while might complete driven, by a small team of unknown/anonymous players.

NOTE: I'm not stating that this scenario is real, but to me seems not far fetched at all.

Re: Bitcoin Price Touches $1,000 Again as Overstock Sales Hit $130,000

#46

Post by olalonde »

toomim wrote: post #41
olalonde wrote: post #28

Earlier quoted context omitted.

It's not as small as you think. This is what Overstock's CEO had to say about it on Twitter: "#Bitcoin's first full day on @overstock.com was a huge success: 840 orders, $130,000 in sales. Almost all new customers. #stunned". https://twitter.com/OverstockCEO/statuses/421754592427139072 130 BTC is 0.001% (130/12.5M) of all Bitcoin spent in one day at Overstock. Does Overstock typically receive 0.001% of all the USD mo…

We don't have to guess, we can calculate this precisely. The M1 supply of all USD is $2.1 Trillion [1]. Overstock has $1.1 Billion in revenue per year [2]. So they pull in .05% of US currency per year, or 0.00014% per day. The bitcoin money supply is $12.5 Billion [3]. Overstock pulled in $130,000 in a day, which is .001% of the bitcoin money supply. So they got 7 times the proportion of bitcoin than they get of USD.…

I believe that $1.1 billion revenue figure includes international orders whereas the 130 BTC figure was for US orders only (they haven't enabled Bitcoin payments for international orders yet). In other words, that proportion should be a bit higher.

Re: Bitcoin Price Touches $1,000 Again as Overstock Sales Hit $130,000

#47

Post by aqme28 »

CamperBob2 wrote: post #22
jval wrote: post #13

This is just ridiculous. If Overstock is the biggest retailer in the world accepting Bitcoin, and on their opening day they only manage $130,000 in sales (130 BTC), what does that tell you about the volume of Bitcoin actually being used in trade and commerce rather than speculation? There are 12.5 Million BTC in circulation. I don't doubt that Bitcoin will become a revolutionary system of payments and money storage d…

Why would I want to spend Bitcoins that are increasing in value? I'll spend them on the way down, not up.

Why would I ever save dollars when they're always decreasing in value?

Re: Bitcoin Price Touches $1,000 Again as Overstock Sales Hit $130,000

#48

Post by a3_nm »

minimax wrote: post #42
nofi3939 wrote: post #36

Earlier quoted context omitted.

If you believe that overstock will lead to increased demand for BTC (perhaps not due solely to overstock but a wave of merchants who follow suit) and that the demand outpaces BTC's inflation (i.e. the ~3600BTC mined into existence each day), then BTC's value will rise as a consequence.

The Overstock case doesn't increase net demand for bitcoins. This is how Overstock works. I have dollars and I want to buy something on Overstock. I buy some bitcoins with my dollars. I send bitcoins to Overstock and Overstock sends me the product. Overstock then sells the bitcoins to convert back to dollars. So there is a buy and a sell for each transaction which creates no net demand for bitcoins. And if you consid…

This is the initial setup, but as there is some cost involved when converting bitcoins to USD and back that is degressive with volume, if many people are buying through bitcoins, it would start making sense for Overstock to hold the bitcoins for a while and convert them in bulk, so this could eventually increase the demand for bitcoin after all, no?

(Of course, given the current volatility and volumes, it would make no sense for Overstock to do this yet.)

Re: Bitcoin Price Touches $1,000 Again as Overstock Sales Hit $130,000

#49

Post by jljljl »

ok_craig wrote: post #25
CamperBob2 wrote: post #22

Earlier quoted context omitted.

Why would I want to spend Bitcoins that are increasing in value? I'll spend them on the way down, not up.

1. They are not guaranteed to increase in value 2. Spending bitcoin helps the ecosystem, thereby increasing the value of your other coins in the long run. 3. Having things now is often more desirable than slightly more later. (You can't eat bitcoin. If bitcoin is all you have to spend, you will spend it on food, because food now is worth more than more valuable bitcoin later. If you also have dollars, then you'd just…

>> Spending bitcoin helps the ecosystem, thereby increasing the value of your other coins in the long run.

One person spending Bitcoin has a negligible impact on helping the ecosystem, so the incentive for doing this is pretty small. You would likely gain a bigger benefit holding on to your BTC and letting other people help the ecosystem.

Re: Bitcoin Price Touches $1,000 Again as Overstock Sales Hit $130,000

#50

Post by nofi3939 »

minimax wrote: post #42
nofi3939 wrote: post #36

Earlier quoted context omitted.

If you believe that overstock will lead to increased demand for BTC (perhaps not due solely to overstock but a wave of merchants who follow suit) and that the demand outpaces BTC's inflation (i.e. the ~3600BTC mined into existence each day), then BTC's value will rise as a consequence.

The Overstock case doesn't increase net demand for bitcoins. This is how Overstock works. I have dollars and I want to buy something on Overstock. I buy some bitcoins with my dollars. I send bitcoins to Overstock and Overstock sends me the product. Overstock then sells the bitcoins to convert back to dollars. So there is a buy and a sell for each transaction which creates no net demand for bitcoins. And if you consid…

It's true that the Overstock transaction itself doesn't create new demand.

But it may bring new users who buy/hold BTC, if they see it as a useful store of value or just for convenience sake to make future purchases. Overstock's CEO said they may start holding it for longer if they can pay their vendors in BTC or have derivatives that allow them to hedge against decline in value.

Also, because the exchanges charge a fee to convert to/from fiat (e.g. 1% in coinbase's case), that creates some incentive to stay as BTC.

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