Quote from: miztaziggy on January 12, 2015, 10:18:47 PM

Quote from: Ralphs on January 12, 2015, 09:03:31 PM

Quote from: miztaziggy on January 12, 2015, 04:13:42 PM

What gives Bitcoin its value?

Supply and demand?

Surely, as more merchants accept Bitcoin, more bitcoin gets sold for $$ driving the price down. The lower the price, the more people will panic and sell their BTC or trade it for goods, thus reinforcing the cycle.

I am getting to the point now where I am so tempted to sell my own BTC. I don't normally waver on things like this, I believed Bitcoin had a bright future, but my belief is shaken now.

I can't see anything in the near future that will increase the demand side of the equation....

Wouldn't more merchants accepting bitcoins give them more value as they (bitcoins) are then given more utility? To the majority of people if you can spend bitcoins at say a walmart, target, etc. they would be much more willing to buy them because of their benefits over USD.

In the short term, no, in my opinion, it's exactly the opposite.

Early adopters aren't likely to be pro investers. They're likely to be (no offence meant) geeky types.

Now we have a load of guys sitting there with 10 - 200 BTC that at one point were pretty much useless. All of a sudden, they're worth quite a bit of money, but hard to turn to cash. So, now that BitPay will accept them on say Overstock, mr geek can buy himself a new PC or whatever with his BTC that he previously had no use for.

Problem is that BitPay just sell the BTC for cash straight away, thus increasing supply for BTC and driving down price.

Ahh but then what about the people that buy BTC to pay for goods?

Lol. Really. Pull the other one.

I worked it out once what it would cost for some goods in the UK paid in BTC.

I can't remember the exact figures, but it was something like I could buy a GPU/mobo/CPU from Scan and pay £900 in currency, or, I could go to LBC and buy Bitcoins, then use those Bitcoins to buy the same goods. With the markup on the BTC from LBC, then the reduced rate from BitPay at the other end, I would have had to buy about £1,050 worth of BTC for the same goods.

Alternatively, I could buy my BTC through BTCE. It would reduce the amount I had to pay slightly, maybe £975 or something, but to get funds into any of the exchanges takes ages. At least 3 days. By that time I could have had the goods delivered and installed.

There are lots of speculations that the increasing merchant activity drives down the price. In the meantime data and proper analysis indicate that this is a completely false conclusion.

As you can see at http://www.coindesk.com/analysis-around-70-bitcoins-dormant-least-six-months/ "Swanson also points out a "sobering" trend: although the number of merchants accepting bitcoin has increased fourfold this year, blockchain activity is not seeing a corresponding increase."

There are other underlying issues with Bitcoin and/or with its surroundings that cause the current price drop, the issue is not the merchant activity.