Quote from: zimmah on June 07, 2016, 07:16:16 PM

Quote from: DaRude on June 07, 2016, 07:11:14 PM

Quote from: zimmah on June 07, 2016, 06:22:25 PM

Quote from: DaRude on June 07, 2016, 06:11:13 PM

Quote from: zimmah on June 07, 2016, 03:04:05 PM

Quote from: marcus_of_augustus on June 07, 2016, 01:15:23 AM

Cost of production is doubling in less than a month ... that will set the new floor for bitcoin price to the $840-960 range (at the minimum without difficulty increases) in the medium term.

Cost of production for a monetary good is the economic defence against counterfeiting. While gold is money, and sometimes attracts a monetary premium substantially above it's cost of production, for someone to produce gold "from nothing" they need to expend an equivalent amount of resources to the cost of production. Over long terms the price of the monetary good may be attracted to its cost of production but ultimately that is as cheap as you can acquire it for, as long as it is still desirable as a monetary good. For the same reason the lowest value of fiat paper money is the cost of the paper it is printed on and the ink, i.e. it's cost of production (about a few cents for a $100 bill).

While bitcoin is still valued as a monetary good, that can be transported in minutes across the internet as a final settlement for bearer instruments exchanged on a censorship-resistant network, it still needs to defend against counterfeiting. The cost of production defends against counterfeiting since this is as cheap as you can produce bitcoin. If bitcoin becomes more desirable for other reasons of its utility, such as store of value, medium of exchange (network effect increasing), etc., then it may easily attract a monetary good premium on top of the cost of production, but the cost of production has invariably set the floor for the lower bound on bitcoin prices, as long as it has remained a monetary good.

Bitcoin is still monetising.

agreed, the lower boundary of the rpcie is the production cost.

It could accidentally be below this value for a short time, but never for long.

The upper boundary is pretty much unlimited (limited only by the amount of value we can exchange for it). So the absolute upper value would be everything in the world divided by the amount of bitcoin in circulation. Of course we would never quite reach that value, but that would be the absolute upper limit it could never go above.

Ughh ingenious Roll Eyes

following that logic lets
Step 1: Increase difficulty 10x fold, thus increasing cost of production for all miners 10x
Step 2: Huh

Step 3: Bitcoin to da moon???

Just have to somehow get the note to investors for them to check the current productions costs before they decide the utility value of BTC and how much they should be willing to pay for BTC

A transaction has 2 sides, a buyer and a seller

Let's assume some people sell for less than the cost of production, eventually they will run out of coins to sell, and the only new coins on the market will be either coins that were bought before and resold (usually t a higher price, because no one would like to sell for less than they bought for, unless forced to do so). Or freshly mined coins, that well sell at least at the price of production, unless the miner is forced to sell for lower to cover his expenses, but if a miner continually sells at a loss, mining will be unprofitable for him, so eventually he'll be forced to quit.

Therefore, over time, the price will reach at least the price of production, because those who sell for less than that will run out of coins to sell.

I don't know how I can explain it any simpler.

No no and again no, seller doesn't set the price buyer does. Market couldn't care less what seller likes or doesn't like. Here's the price someone is willing to buy the BTC you produced if that's not profitable for you, you go out of business, you go out of business there's less hash power dificulty adjust all other miners are that tiny bit more profitable. Rinse and repeat.

On a separate note, everyone ignoring that BTC5k sell wall @ $576

Ok, I'd like to buy all your bitcoins for $1 each.

Also, if you happen to have any gold, i offer $0.01 per gram of gold.

I'd also like to buy both your house and your car for a combined price of $3

You see? Nobody would accept such offers because they're complete garbage offers, way below the price the seller wants for them, So the seller chooses not to sell.

The price has to be agreed between buyer and seller, if one of them does not agree, the trade is off.

If you don't even understand this, don't bother replying, because i'd be better of talking to a banana peel.

The demand doesn't come from one buyer but from market as a whole, as a seller obviously i choose the highest bidder. Why would i sell it to you for $1 when someone else is willing to pay $575? Now i'd prefer to sell it for $10,000 each because i bought a bunch of these USB miners from my local retail store and my cost of electricity is sky high, but somehow i doubt that any buyer cares much about that. Miners must sell, and don't have an option not to because they don't like the price. Otherwise they become investors and carry additional FX exposure risk on their "inventory" (assuming utilities, salaries, equipment, is purchased with other currency). They're not kids mining in parents garage that can choose not to sell if they don't like the price, and somehow get a consortium going where everyone other miner does the same.

Your line of though only works if all (or majority) of miners collaborate together in kind of an oligopoly (think OPEC) and agree to artificially restrict supply bellow certain price, and even that probably won't work for long.

Or to use your example: I want to buy BTC from you for $575, you want to sell it for $1000 and explain how your cost of production is so high. I wish you good luck finding an idiot that cares, and just wait after you lower the price to my buy range or invest in something else. After spending few days trying to convince people to buy it for $1000 because of your high production cost you give up or get hungry or need to pay the electricity bill and sell it to the highest bidder. The fall in your logic is that it doesn't account for difficulty adjustments and that it can scale down.