Post
Topic
Board Beginners & Help
Re: States vs Bitcoins
by
DannyHamilton
on 08/05/2013, 12:24:34 UTC
Over the last month somebody poured about $ 300 million into Bitcoins.
- snip -
Someone has bought up a fifth of the entire currency supply

What is your source of these two numbers?

Price difference for April ~ 30$ per coin
entire BTC supply is 11M
BTC11M*$30=$330M

Average proce for April ~$120 per coin

$300M/$120 = BTC2 500 000
this is slightly more than fifth part of entire currency supply

An this is very conservative estimations. I think there was much more in reality.

You misunderstand how valuations work.

Imagine the following:
entire supply is BTC11M
Bitcoin current price is $100
Suddenly everybody decides they don't want to sell their bitcoin for less than $130, and everyone with a limit order between $100 and $130 pulls their limit orders off of MtGox.
Someone places a Market order to buy BTC1
Order is filled at $130 for BTC1.
Bitcoin current price is therefore $130.

Note that the "price difference" in 10 minutes is $30, but this does not mean that "somebody poured about $300 million into Bitcoins".
One person "poured" exactly $130 into bitcoins.  That's all.

It also does not mean that "Someone has bought up a fifth of the entire currency supply".
One person bought 0.00000476% of the supply.