5 ms·

Supply, Demand, and Bitcoin

37 points by Kinnard 13y ago

anologwintermut 13y ago
" The more they’re worth, the more you think you’ll be able to sell it off for in the future. The more you want" Seems to be precisely the some larger fool theory that denotes a bubble, regardless of supply, demand, or donuts. That aside, one can readily check if people mining bitcoins were actually selling them in that time period. Given the frenzy, I doubt it. But it's probably worth checking
nos4A2 13y ago
Nice article. I am a miner, and I made this observation, the dollar value that I mine any given day has been almost constant since a year (except the brief $200 spurt, which the author explains by accounting for the difficulty upgrade delay). When the value goes up the number of BTC mined goes down (because more people are mining). Its quite a beautiful correlation actually.
- Kinnard 13y ago
  Beauty indeed. Architecture this elegant is more appropriate for an organism than a currency.
Centigonal 13y ago
Kind of obvious, but worth explicating: If this model for Bitcoin price is accurate, then there are going to be a lot of very interesting market-timing-related implications.
gailees 13y ago
Why isn't everyone just quitting their day jobs and becoming Bitcoin miners? It's like the modern day Gold Rush!
- Kinnard 13y ago
  The West is reckless.
- erikpukinskis 13y ago
  Because difficulty increases to the point where the folks with the cheapest electricity are breaking even. And the cheapest electricity in the world is free (dorm rooms, cubicles, etc). The only money to be made in Bitcoin mining is in making fairly strategic investments during the leading edge of advancements in efficiency, or changes in miners' understanding of the economics.
  - Kinnard 13y ago
    It's getting more complicated than that. Expect financial deepening to occur when it comes to mining. http://jpkoning.blogspot.com/2013/02/financial-deepening-and-currency.html http://jpkoning.blogspot.com/2013/02/financial-deepening-and... I would also keep in mind that lots of people are thinking about harnessing the bitcoin network for a plethora of applications. http://qz.com/84056/the-bitcoin-network-is-now-more-powerful-than-the-top-500-supercomputers-combined/ http://qz.com/84056/the-bitcoin-network-is-now-more-powerful...
    - waterlesscloud 13y ago
      One notable point is that one mining company, Asicminer, has a bitcoin-denominated stock that dramatically increased in value over the last several months. It IPOed at 0.1 btc per share, now trading at about 2.5 btc. Along with the increase in the value of btc relative to the US dollar, Asicminer now has a market cap (on paper) of about $125 million, from an IPO that raised about $200k. They're based in China, Shenzhen I believe, and have been making the most of their self-designed asics. They currently represent about 18% of the entire bitcoin network, as measured by hashrate. http://www.asicminercharts.com/live/ http://www.asicminercharts.com/live/
      - jebeng 13y ago
        Yes, quite the success story. Only possible because of the ineptitude of other market participants utterly failing in deploying ASICs.
rjvir 13y ago
This article makes bitcoin sound like a ponzi scheme
- Kinnard 13y ago
  How so?
- brazzy 13y ago
  That's because it has some characteristics of one.
Kinnard 13y ago
http://www.reddit.com/r/Bitcoin/comments/1eq3v1/bitcoin_is_not_a_donut_supply_demand_and_bitcoin/ http://www.reddit.com/r/Bitcoin/comments/1eq3v1/bitcoin_is_n...

37 points by Kinnard 13y ago

" The more they’re worth, the more you think you’ll be able to sell it off for in the future. The more you want" Seems to be precisely the some larger fool theory that denotes a bubble, regardless of supply, demand, or donuts. That aside, one can readily check if people mining bitcoins were actually selling them in that time period. Given the frenzy, I doubt it. But it's probably worth checking

nos4A2 13y ago

Nice article. I am a miner, and I made this observation, the dollar value that I mine any given day has been almost constant since a year (except the brief $200 spurt, which the author explains by accounting for the difficulty upgrade delay). When the value goes up the number of BTC mined goes down (because more people are mining). Its quite a beautiful correlation actually.

Kinnard 13y ago
Beauty indeed. Architecture this elegant is more appropriate for an organism than a currency.

Centigonal 13y ago

Kind of obvious, but worth explicating: If this model for Bitcoin price is accurate, then there are going to be a lot of very interesting market-timing-related implications.

gailees 13y ago

Why isn't everyone just quitting their day jobs and becoming Bitcoin miners? It's like the modern day Gold Rush!

Kinnard 13y ago
The West is reckless.
erikpukinskis 13y ago
Because difficulty increases to the point where the folks with the cheapest electricity are breaking even. And the cheapest electricity in the world is free (dorm rooms, cubicles, etc). The only money to be made in Bitcoin mining is in making fairly strategic investments during the leading edge of advancements in efficiency, or changes in miners' understanding of the economics.
- Kinnard 13y ago
  It's getting more complicated than that. Expect financial deepening to occur when it comes to mining. http://jpkoning.blogspot.com/2013/02/financial-deepening-and-currency.html http://jpkoning.blogspot.com/2013/02/financial-deepening-and... I would also keep in mind that lots of people are thinking about harnessing the bitcoin network for a plethora of applications. http://qz.com/84056/the-bitcoin-network-is-now-more-powerful-than-the-top-500-supercomputers-combined/ http://qz.com/84056/the-bitcoin-network-is-now-more-powerful...
  - waterlesscloud 13y ago
    One notable point is that one mining company, Asicminer, has a bitcoin-denominated stock that dramatically increased in value over the last several months. It IPOed at 0.1 btc per share, now trading at about 2.5 btc. Along with the increase in the value of btc relative to the US dollar, Asicminer now has a market cap (on paper) of about $125 million, from an IPO that raised about $200k. They're based in China, Shenzhen I believe, and have been making the most of their self-designed asics. They currently represent about 18% of the entire bitcoin network, as measured by hashrate. http://www.asicminercharts.com/live/ http://www.asicminercharts.com/live/
    - jebeng 13y ago
      Yes, quite the success story. Only possible because of the ineptitude of other market participants utterly failing in deploying ASICs.

rjvir 13y ago

This article makes bitcoin sound like a ponzi scheme

Kinnard 13y ago
How so?
brazzy 13y ago
That's because it has some characteristics of one.

Kinnard 13y ago

http://www.reddit.com/r/Bitcoin/comments/1eq3v1/bitcoin_is_not_a_donut_supply_demand_and_bitcoin/ http://www.reddit.com/r/Bitcoin/comments/1eq3v1/bitcoin_is_n...