Quote from: aminorex on April 02, 2014, 05:02:36 AM

I want a Klein bottle. There is a stock of 1000 waiwai on the wampum market. It is not moving. It is bidless. But they travel well by air, so I take one waiwai from the stock, by buying it on the market. The market moves against me. I.e. the value of one waiwai increases. I sent one waiwai to Alice by European swallow to pay for a Klein bottle. Alice wants wampum, so she sells the waiwai on the wampum/waiwai market. The market moves against her. I.e. the value of one waiwai decreases. Net impact on waiwai/wampum: Zen.

Youtube videos of my Klein bottle go viral. 1100 teenage girls in Uruguay want Klein bottles, at various times, 100 each day. As more and more school girls trade wampum for waiwai, the stock of waiwai declines, the cost in wampum increases. 100 waiwai are held by pidgeons. Alice takes the waiwai from the pidgeons and sells them for wampum the next day, but by that time 100 more Uruguayan school girls have pidgeons in the air. For 11 days, the stock of waiwai on the wampum market is reduced by 10%. Uruguayans 101 to 1100 pay 20% more for the waiwai, and Alice gets 118% as much wampum for her Klein bottles as she would have were the waiwai rates constant. If Alice's ten cousins start marketing their Klein bottles to Moldovan gigolos, whose pidgeons are twice as slow, those transactions will remove twenty times as much waiwai from the supply/demand balance on the wampum markets, and the price will rise confoundedly. The result will be a waiwai bubble.

Please cite a reference which says as demand (bids) increases, the float decreases? I have never seen such a claim. Rather as demand increases supply of float (asks) also increases to match it, but at a higher price. The supply increases faster than the demand because investors have larger and larger gains, this is why marginal price doesn't grow to the edge of the universe. The same is true in production, where the price won't go to infinity because new producers will come online to serve higher demand at higher marginal prices.

I scored in the high 90s (out of 100) in my Economics 101 university class, but I didn't major in Economics and that was 30 years ago. I renewed my interest in Economics starting around 2005. For interim decades I was doing only computer science and programming (and wasteful mischief which I am suffering from now).

Quote from: aminorex on April 02, 2014, 05:02:36 AM

PQ=MV, the value of the money stock is M, denominated in PQ/V. Increasing V decreases M.

Or it increases P x Q.

V has been falling since 2008 and M was increased by the Fed in order to keep P x Q propped up, but that was not a free market event and after 2016 P x Q is going to come crashing down because M is mostly debt and thus we have massive P x Q oversupply in the global economy.

Quote from: aminorex on April 02, 2014, 05:02:36 AM

Increasing the number of times a waiwai can flip during a fortnight, say by using African swallows instead of pidgeons, will increase laden air speed, thus decreasing the wampum per waiwai.

You got that backwards.

Increasing the V that doesn't need to convert to/from fiat doesn't necessarily decrease the fiat price of BTC. It may decrease the supply of BTC that wants to sell for fiat, while increasing the demand for BTC of those who hold fiat, because there are more network effects within the Bitcoin ecosystem that they want to avail of.

Quote from: aminorex on April 02, 2014, 05:02:36 AM

Using bitpay keeps BTC in the air.

That is irrelevant as I have explained. What it does is reduce the network effects (merchants accepting and holding Bitcoin thus being nodes in the Metcalf law valuation) within the Bitcoin ecosystem that those holding fiat must buy BTC to attain. If everything they can buy with BTC they can also buy with fiat, then there is no great need to buy BTC with their fiat.

That was precisely my point about why lose 3-5% on double exchange, when one can just buy with their credit card for 0%.

Sorry you really dropped the logic on this one.

Quote from: aminorex on April 02, 2014, 05:02:36 AM

That creates a churning marginal demand which decreases the supply on the fiat market. If you buy immediately before spending, and the merchant takes fiat, then the time in the air is small. If you buy in anticipation, V decreases, and the effective air time, from the point of view of the exchange market, is quite long. Using bitpay also adds to the bid and to the ask on the market, thus increasing liquidity, which in turn makes bitcoin marginally more efficient (less slippage) and less risky (as liquidity is available when it is needed).

If everyone makes a different color of Klein bottle, and everyone wants to collect the whole set, then there are N^2 pidgeon flights which need to occur. The first pidgeon reduced the stock of waiwai by a factor of 0.999. The second person, by a factor of 0.998, the n^2 person by a factor of 1-0.001*n^2. As a result the cost of a waiwai rises by a factor of k*e^(n^2).

Quote from: SlipperySlope on April 02, 2014, 05:15:19 AM

Quote from: aminorex on April 02, 2014, 05:02:36 AM

Quote from: AnonyMint on April 02, 2014, 03:47:34 AM

Quote from: SlipperySlope on April 02, 2014, 03:37:39 AM

Your model continues to boggle my mind.

I try to perform at least one Bitcoin transaction daily. Either by spending some, buying some, transferring some, or most often by receipt of mining earnings.

Suppose that I am responsible for permanently increasing the daily quantity of transactions by one. Today's adjusted number of transactions reported by Blockchain.info is 58,006, and your model projects a market cap of $1.50 * 58,006 * 58,006 = $5,047,044,054.00. My contribution makes the adjusted number of transactions 58,007, and the corresponding market cap is 5,047,218,073.50. The difference between the two market caps is $174,019.50. As the total number of Bitcoins at the time of writing is 12,591,775, my one incremental daily transaction lifts the corresponding price per bitcoin by 0.013 USD.

And this is why Quantity Theory of Money says M x V = value, not M alone. This is why selling out to fiat via Bitpay robs us of the square of the count of transactions and puts that value in fiat instead. The value of a network is the velocity times the position, not just the position, i.e. if all the actors (hodlers of money or nodes) don't interact then the network is a beautiful pile of do-nothing.

Using bitpay keeps BTC in the air. That creates a churning marginal demand which decreases the supply on the fiat market. If you buy immediately before spending, and the merchant takes fiat, then the time in the air is small. If you buy in anticipation, V decreases, and the effective air time, from the point of view of the exchange market, is quite long. Using bitpay also adds to the bid and to the ask on the market, thus increasing liquidity, which in turn makes bitcoin marginally more efficient (less slippage) and less risky (as liquidity is available when it is needed).

One of the ways I spend bitcoin is to buy gift cards from Gyft or Giftcard Zen. Unfortunately the coins get converted into fiat right away and my subsequent use of the gift card at, for example, Amazon does not add to the Bitcoin economy.

Bingo!

Quote from: rpietila on April 02, 2014, 08:38:58 AM

Quote from: aminorex on April 02, 2014, 05:02:36 AM

I want a Klein bottle...

I want some of that stuff that makes you think clearly Grin

What clearly was that?

Quote from: rpietila on April 02, 2014, 08:38:58 AM

- Trendline comparison: we are now at -0.291 log units. The trendline is at $932 and rising $7 per day, conclusion: rock bottom
- Prognosis: intact from yesterday

Arbitrary curve fitting again presented as uber confident analysis.