Quote from: nicetry on July 05, 2014, 08:04:49 PM

Quote from: franky1 on July 05, 2014, 12:48:52 PM

back when bank notes were backed by gold. you could never swap a bank note for the true value of gold. firstly the exchanger would look at the speculated price, then the local spot price for the area and add on their own admin fee.

Another guy that wants to "invent" what "backed by" means. If the US Dollar is BACKED by gold, then the exchange rate is set by the US Treasury, 1 dollar for certain amount of gold. In effect, U.S Dollar price no longer fluctuates against gold; because for every dollar, there is an equivalent amount of gold kept at Ft. Knox. What is all this mumble jumble about speculated price and local spot price and admin fee??? What the heck are you talking about? Are you talking about today's U.S. Dollar? The US Dollar has been off the gold standard since the 1970s, aka US dollar is not backed by gold anymore. In fact, no currency is backed by gold anymore in today's world.

clever man.. read my posts again... gold 50 years ago i said.. and now minimum wage..

Quote from: nicetry

Another big flaw in your arguments. Your posts all assume that the price of bitcoin is driven by production cost, but it is exactly the opposite. The price of bitcoin is actually driving production cost. Your $500-$600 figure all include the mining equipment costs, and what determines the equipment costs? You think the makers of these equipments price them according to their material cost? Yea fat chance. Why do you think miners are all being sold/bought in BTC? Or at least priced according to BTCs?

price of bitcoin isnt driving production costs.. its production costs driving th price. because miners do not sell for a loss based on production cost not based on the changes of rigs costs..

for instance i have been running the same rig for 2 years.. whether it was priced at 60btc 2 years ago or 1btc today for the same gighash.. i dont change my goal sell price dependent on the rig cost.. i sell my coin dependent on my electric and time (production costs)+spot(profit)

your trying to say that gold is not backed by the production cost+spot but gold is backed by dollars. because dollars pay for the excavator which then digs out the gold!

so if an excavator costs $50k 2 months ago, and now advertised for $40k, no one in their right mind would sell 20% cheaper based on mining equipment price changes..

yes part of my production cost is the initial outlay of the rig) but has nothing to do with me changing my sell price if a rig producer changes their price day/weekly.. as thats irrelevant..

only when a person BUYS a rig, does that become part of production costs.

again if i buy a rig today, and suddenly the manufacturer has a half price promotion tomorrow due to a bitcoin value change. im not going to reduce my sell price.. purely based on a manufacturers dailyt price change..

if production costs is $500 im selling for above $500 no lower, no matter what promotions or rig costs changes happen hours/days later

Quote

Furthermore, cost of production in no way prevents a coin from dropping below production cost. Let's say something catastrophic happens, such as bitcoin gets attacked via 51%, or has a major fork, what prevents it from dropping below this magical $500 threshold of yours? And you think your miners will still cost the same amount of BTCs compared to before this drop?

im not saying that the speculation part will make some panicers sell at a loss, but on average the price if you actually looked at a chart, always evens out, to at or above mining cost, yes there are pumps and dumps, spikes and crashes, but they always recover to atlast mining cost+ levels..

take for instance november-december.. that was a spike 300% above mining costs. due to the "china wanna own the planet" positive speculation then it crashed to $600 due to china "not allowed to own it" negative speculation news, and then down to $400 mtgox.. but then it held.. ask yourself why wasnt bitcoin at $10 in march!!!!

because true value was just shy of $400, and speculation averaged about $50 ontop.. today costs is a little above $500 and speculation (postive attitude) gives it atleast $120 speculation