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General discussion (archive)Bitcoin: is anyone here mining or earning it?(83 posts)(83 posts)
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This is my favourite topic
Posted April 06, 2014
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cjrgreen: That's not quite so: the dollar does not have a value "imposed by law", it has a value that is determined by the buyers and sellers of dollars (and of goods, services, obligations, and securities denominated in dollars). One of those uses is the payment of debts and taxes in the United States.
I'm affraid you didn't understand what i said or i failed to express myself correctly. Of course the "value" itself, i mean, how much one dollar is worth depends on offer and demand. This is not what i'm saying. I'm saying that the dollar is accepted as a currency in the US because the law says so. If there wasn't the government there to say that the dollar is the official currency, it wouldn't have any value at all. It's enforced by law. For example, sellers in the US can't reject payments in dollars in any way, but they are not forced to accept payments in pounds. An official currency has "liberatory power", which is indeed enforced by law.

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cjrgreen: The difference between a bitcoin and a currency is that a currency has a government and a banking system behind it: institutions that stand ready and make effort to maintain its value stable relative to other currencies and its supply sufficient to deal in the goods and services that make up the national (or, especially for dollars and euros, international) economy.
Exactly.

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cjrgreen: And gold gained ascendancy as a metal of coinage not because it was scarce, but because it was sufficiently plentiful and durable. It has no intrinsic value, apart from its uses in arts and industry.
Yes, but i didn't say that gold was used because it was scarce.

Whether gold (or any other metal, for that matter) has intrisic value or not is debatable. There are economists sayind that it does, and others saying that it doesn't, so let's just agree to disagree here. I personally think it does exactly because of it's characteristics as a metal.
Post edited April 06, 2014 by Neobr10
Posted April 06, 2014
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Neobr10: Whether gold (or any other metal, for that matter) has intrisic value or not is debatable. There are economists sayind that it does, and others saying that it doesn't, so let's just agree to disagree here. I personally think it does exactly because of it's characteristics as a metal.
Who, besides Austrian school economists?
Posted April 06, 2014
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real.geizterfahr: Honestly... Every freakin store accepts money. Why would you want to spend your money on something that limits the posibilities on how you can use your "money"? I don't get it.
Speculation. The way i see it most people investing in Bitcoins just want to sell it later for real money.
Posted April 06, 2014
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grimwerk: Actually, looking at http://bitcoincharts.com/markets/ I've partly answered my question. I can see Bid/Ask figures as you've described, but it's not clear to me how I'd extract info about the effect of large transactions on price.
One thing you can look at to get a bit of an idea of liquidity is the daily trade volume (the last column on that chart). Totaling up most of the exchanges on that list, the daily trade volume stands at about 26,000 bitcoins, or about $12 M. It's likely you'd see a noticeable price impact if you tried to make a trade at 10% of that or higher. There are also a bit over 12 million outstanding bitcoins, so daily trade volume is at about 0.2% of the total bitcoin supply.

To put some perspective on that, the company I work for has a market cap of $3 B and an average daily trade volume of $40 M, or 1.3% of the total shares, and it's considered a pretty sparsely traded company. To give some additional perspective, the New York Stock Exchange has an average daily trade volume of around $50 billion.

Also, just a fun little calculation to finish things up with, if everyone currently holding bitcoins wanted to sell them, with the current rate at which they're being traded it would take about 1 year and 3 months of constant trading to move them all.
Posted April 06, 2014
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grimwerk: Actually, looking at http://bitcoincharts.com/markets/ I've partly answered my question. I can see Bid/Ask figures as you've described, but it's not clear to me how I'd extract info about the effect of large transactions on price.
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DarrkPhoenix: One thing you can look at to get a bit of an idea of liquidity is the daily trade volume (the last column on that chart). Totaling up most of the exchanges on that list, the daily trade volume stands at about 26,000 bitcoins, or about $12 M. It's likely you'd see a noticeable price impact if you tried to make a trade at 10% of that or higher. There are also a bit over 12 million outstanding bitcoins, so daily trade volume is at about 0.2% of the total bitcoin supply.[...]
The number of outstanding bitcoins may be somewhat misleading thought. Over 60% of those didn't move for years apparently, and I could very well imagine, that many early adopters just didn't bother to back up their bitcoins when they changed to newer rigs or formated their harddrives.
Post edited April 06, 2014 by Robette
Posted April 06, 2014
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Luisfius: Nope. Bitcoin transactions have fees. And they take WAY TOO LONG to authenticate.
That highly depends. Small (in byte size) transactions don't have fees, and my experience when buying from Humble Bundle is that the transaction is no slower than using a credit card or paypal.
Posted April 06, 2014
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DarrkPhoenix: explanations
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grimwerk: That was excellent, thank you. I've been reading brief explanations of liquidity and bid-offer spread to try an get a handle on what you were saying earlier, and you've really summed it up for me quite nicely.

So when you want to convey information about exchange potential*, how do you do it? As price alone doesn't seem to cover it. If you wanted to describe bitcoins, for example, you'd need price, some indication of liquidity, and some figure that indicates how price varies if you buy or sell large numbers of bitcoins.

*I don't know the proper term for this, and I hesitate to use value or price.

Actually, looking at http://bitcoincharts.com/markets/ I've partly answered my question. I can see Bid/Ask figures as you've described, but it's not clear to me how I'd extract info about the effect of large transactions on price.
The rule there is that price is what you pay and value is what you get. But, I agree that's perhaps not obvious to people that haven't spent time investing. And even for investors, there's plenty of people that don't know that.
Posted April 06, 2014
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hedwards: The rule there is that price is what you pay and value is what you get. But, I agree that's perhaps not obvious to people that haven't spent time investing. And even for investors, there's plenty of people that don't know that.
Of course, if any of us could accurately and consistently value stocks then we'd know exactly what to invest in and would be stinking rich.
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Community
General discussion (archive)Bitcoin: is anyone here mining or earning it?(83 posts)(83 posts)
(83 posts)