Quote from: revans on April 16, 2013, 01:49:29 AM

Quote from: rpietila on April 15, 2013, 11:23:14 PM

Quote from: Red on April 15, 2013, 10:59:44 PM

I'm asking how many bitcoins are in cold storage? (metaphorical Fort Knox) There was a scandal in the 70's were people started to believe Fort Knox gold had been secretly sold and was circulating. I'm wondering the opposite. What if fewer bitcoins are circulating than we presume are. We don't notice because the velocity of the circulating coins is so high.

Of all the bitcoins I have ever bought, I have perhaps been "short" maximum 10% of the previous high coincount. So at least in my case, 90% is in cold storage.

Currently bitcoin's value is volatile as the market is trying to figure out whether Bitcoin should replace gold or not. If the answer turns out affirmative, bitcoin's value will roughly stabilize after more and more of the economical activity will be financed through self-liquidating bitcoin-denominated credit, as outlined in Fekete's paper.

(I wonder if Fekete himself realizes that his work will be applied to make Bitcoin the new gold Grin

)

For anyone interested, I think the upper bound for bitcoin's value is therefore the current Gold market cap, about $7,000 billion. So one bitcoin will not be worth more than $300k. Actually the utility of holding bitcoins when that is reached, is about the same as holding gold right now ( = most people think you are a little stupid, no matter how rich you are).

But to get there, the value must increase. Actually we were (in log scale) half there barely a few days ago. With the bitcoin's long term value appreciation of 25%, we can be there sooner than most of us think. Anything over $300k should be regarded as a bubble, even if we are in a "new paradigm", it does not mean everyone will be able to get rich just holding bitcoins, only the early adopters (i.e. every one who buys bitcoins for significantly less than its fair value of $300k).

LOL

If you think the fair value of a Bitcoin is $300k you really have been utterly deranged by avarice. The hype is dying down, and the Bitcoin market is rapidly running out of 'greater fools'. The fair value of a Bitcoin for most people is zero, because that is the monetary utility it offers them. Whilst the novelty of being able to secure a small number of goods and services with Bitcoin will no doubt sustain the fanatics, it will not maintain the interest of many beyond that group.

I don't know fair value

Market value is down but NOT dead

Volumes are up (from mtgox weekly chart) http://wp.me/p3o0fk-1c