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I am really surprised they don't accept bitcoin and I think they should not just because they will get more funding, but it seems in line with their ideals.
I donated $5 via credit card but I would be willing to donate 10x that much if they accepted bitcoin.
I donated $5 via credit card but I would be willing to donate 10x that much if they accepted bitcoin.
Bitcoin's market cap of approximately 12 Billion dollars is dwarfed by Visa's credit purchase volume of $981 billion for 2012.
I agree with you that bitcoin still has room to grow. But when it comes to calculate how high, why is it that the two numbers in the quotation above are comparable? Why do you choose Visa's credit purchase volume totaled over a year, as opposed to a month, a week, a day, a decade .... ?
Its true those two numbers are not directly comparable and that is a weak point of the article.
Even though I made the critique, I'm not sure how to fix it. It is the zillion dollar question: how do we calculate the target price of BTC? What variables do we need? I think the velocity of bitcoin needs to be a variable, and any estimate that does not have that as part of the calculation is suspect to me; that's as far as I've gotten
...Yeah and that is tough. The velocity of bitcoin is definitely a variable. But part of it will depend on the growth of bitcoin, how many new users are there, how many new ways are there to spend bitcoin, and from my understanding it is impossible to get figures for these.
I think it is clear that if the user base stayed static, bitcoin would be worth far less than 1000/btc. But bitcoin is just beginning to take off. There will be plenty of crashes along the way to a "fair value", but as long as bitcoin is growing fast the price should be going up rapidly. I am assuming on a few million people use bitcoin, and the number of potential users is in the hundreds of millions.
The Chinese government's ban on certain trading activities is certainly bad for bitcoins growth in that country with 1B+ people, but I think there is enough growth potential in just the U.S. to justify a 1000/ btc price.
Bitcoin's market cap of approximately 12 Billion dollars is dwarfed by Visa's credit purchase volume of $981 billion for 2012.
I agree with you that bitcoin still has room to grow. But when it comes to calculate how high, why is it that the two numbers in the quotation above are comparable? Why do you choose Visa's credit purchase volume totaled over a year, as opposed to a month, a week, a day, a decade .... ?
Its true those two numbers are not directly comparable and that is a weak point of the article. What I was trying to demonstrate was how small the Money Supply of bitcoin is compared to the moneyflowing through the major payment processors.
Many merchants dislike the fees imposed by Visa ect and Bitcoin can offer an alternative to these services. If Bitcoin was to become a major form of payment then its market cap would have to rise substantially.
Dispelling The Rumors: Why Bitcoin May Have Room To Rise
As Bitcoin breaches $1,000 a coin dozens of die hard libertarian fanatics and some enterprising speculators have become instant multimillionaires off of investments as small as a few hundred dollars.
The mania has incurred endless speculation, including bold pronouncements and lots of criticism. For some Bitcoin is the new gold or the future currency of the world. For others it is a Ponzi scheme or a bubble reminiscent of the Dutch tulip craze. In truth it is neither of these extremes, and I will attempt to explain and determine Bitcoin's value through a rational evaluation and by dispelling misconceptions.
http://static.cdn-seekingalpha.com/uploads/2013/12/4/12337391-13861979576225643-Gabe-McHugh_origin.png
Misconception: Bitcoin has no intrinsic value
Bitcoin does have some intrinsic value based on its unique properties as an unregulated financial product that can be transferred very easily and cheaply. For example it allows for participation in set of online retailers and service providers that don't accept any other type of payment such as online gambling websites. It also facilitates fast, global transactions with 0 to minimal fees, which SF based, venture backed Bitcoin exchange Coinbase believes will help it gain favor with merchants who are unhappy with high credit card fees. Although currently only a fraction of users have Bitcoin for its intrinsic value (and the majority have it for speculative purposes), Bitcoin does have value as a medium of exchange. Thes value propositions combined with a fixed quantity and an expanding user base give it room to grow.
Misconception: The Dutch Tulip Analogy
Bitcoin is similar to the dutch tulip bubble analogy in that both Bitcoin and 1630's tulips are heavily speculated on "commodities" with little intrinsic value. However a key difference between the two is that the quantity of Bitcoins is capped at 21 million, whereas tulip production is more or less unlimited. This cap decreases the likelihood of an extreme crash and allows Bitcoin to appreciate in value as more people become interested in the currency. Another key difference is that tulips are an old invention and likely weren't seeing massive global adoption for their intrinsic value in 1630's Holland. On the other hand, Bitcoin is barely 5 years old and has only came into the media limelight two years ago. Its prospects for increasing adoption are immense and should serve as a means to drive up price.
Misconception: The Ponzi Scheme Analogy
Bitcoin is very similar to a Ponzi scheme in that early adopters of the coin can earn millions of dollars and that Bitcoin relies on an ever increasing user base to allow speculators to make money. The key difference between a Ponzi scheme and Bitcoin is that while fraudulent Ponzi scheme investments have a value only insofar there are new investors, Bitcoin has some intrinsic value. As soon as there is no longer growth in new user acquisition the price of Bitcoin will fall dramatically, but never to zero, as there will be some users who use it for its intrinsic value.
Misconception: The Gold Analogy
Bitcoin is actually surprisingly similar to gold. There is a fixed supply of both Bitcoins and gold, both Bitcoin and gold have some intrinsic value, and both Bitcoins and gold are both heavily invested in for speculative purposes. The key difference between Bitcoin and gold, is gold's position as a medium of exchange and store of wealth for millennia, combined with the assumption that a greater percentage of gold is used for its intrinsic values in semi-conductors and in jewelry versus speculation.
Determining the real value of Bitcoin
It is impossible to determine the number of Bitcoin users and how much Bitcoin is being used for speculation versus how much is being used for its intrinsic value. Likewise it is impossible to measure exactly how many people are using Bitcoin and what the growth in user acquisition is. However because Bitcoin is still a new technology, and the lack of Bitcoin infrastructure created large barriers to entry up until recently, it is likely the Bitcoin user base still has room to grow substantially.
As long as the Bitcoin user base is growing (and purchasing Bitcoins) faster than speculators cash out, Bitcoin will be continue to rise in value. Eventually when the user base stops growing the balance will shift and there will be more sellers. This will trigger a massive decline in Bitcoin until it reaches a more stable value. If Bitcoin's lower merchant fees and other value propositions make it into a widely accepted form of payment it still could settle at a very high value. Bitcoin's market cap of approximately 12 Billion dollars is dwarfed by Visa's credit purchase volume of $981 billion for 2012. Based on what we know about Bitcoin, my prediction is Bitcoin will continue to rise in value for the next 1-5 years as new user acquisition continues rise.
1B7a91F83TpnMg6aGBa2pYcRiJrot23RNQ
Follow me on SA: http://seekingalpha.com/author/gabe-mchugh
As Bitcoin breaches $1,000 a coin dozens of die hard libertarian fanatics and some enterprising speculators have become instant multimillionaires off of investments as small as a few hundred dollars.
The mania has incurred endless speculation, including bold pronouncements and lots of criticism. For some Bitcoin is the new gold or the future currency of the world. For others it is a Ponzi scheme or a bubble reminiscent of the Dutch tulip craze. In truth it is neither of these extremes, and I will attempt to explain and determine Bitcoin's value through a rational evaluation and by dispelling misconceptions.
http://static.cdn-seekingalpha.com/uploads/2013/12/4/12337391-13861979576225643-Gabe-McHugh_origin.png
Misconception: Bitcoin has no intrinsic value
Bitcoin does have some intrinsic value based on its unique properties as an unregulated financial product that can be transferred very easily and cheaply. For example it allows for participation in set of online retailers and service providers that don't accept any other type of payment such as online gambling websites. It also facilitates fast, global transactions with 0 to minimal fees, which SF based, venture backed Bitcoin exchange Coinbase believes will help it gain favor with merchants who are unhappy with high credit card fees. Although currently only a fraction of users have Bitcoin for its intrinsic value (and the majority have it for speculative purposes), Bitcoin does have value as a medium of exchange. Thes value propositions combined with a fixed quantity and an expanding user base give it room to grow.
Misconception: The Dutch Tulip Analogy
Bitcoin is similar to the dutch tulip bubble analogy in that both Bitcoin and 1630's tulips are heavily speculated on "commodities" with little intrinsic value. However a key difference between the two is that the quantity of Bitcoins is capped at 21 million, whereas tulip production is more or less unlimited. This cap decreases the likelihood of an extreme crash and allows Bitcoin to appreciate in value as more people become interested in the currency. Another key difference is that tulips are an old invention and likely weren't seeing massive global adoption for their intrinsic value in 1630's Holland. On the other hand, Bitcoin is barely 5 years old and has only came into the media limelight two years ago. Its prospects for increasing adoption are immense and should serve as a means to drive up price.
Misconception: The Ponzi Scheme Analogy
Bitcoin is very similar to a Ponzi scheme in that early adopters of the coin can earn millions of dollars and that Bitcoin relies on an ever increasing user base to allow speculators to make money. The key difference between a Ponzi scheme and Bitcoin is that while fraudulent Ponzi scheme investments have a value only insofar there are new investors, Bitcoin has some intrinsic value. As soon as there is no longer growth in new user acquisition the price of Bitcoin will fall dramatically, but never to zero, as there will be some users who use it for its intrinsic value.
Misconception: The Gold Analogy
Bitcoin is actually surprisingly similar to gold. There is a fixed supply of both Bitcoins and gold, both Bitcoin and gold have some intrinsic value, and both Bitcoins and gold are both heavily invested in for speculative purposes. The key difference between Bitcoin and gold, is gold's position as a medium of exchange and store of wealth for millennia, combined with the assumption that a greater percentage of gold is used for its intrinsic values in semi-conductors and in jewelry versus speculation.
Determining the real value of Bitcoin
It is impossible to determine the number of Bitcoin users and how much Bitcoin is being used for speculation versus how much is being used for its intrinsic value. Likewise it is impossible to measure exactly how many people are using Bitcoin and what the growth in user acquisition is. However because Bitcoin is still a new technology, and the lack of Bitcoin infrastructure created large barriers to entry up until recently, it is likely the Bitcoin user base still has room to grow substantially.
As long as the Bitcoin user base is growing (and purchasing Bitcoins) faster than speculators cash out, Bitcoin will be continue to rise in value. Eventually when the user base stops growing the balance will shift and there will be more sellers. This will trigger a massive decline in Bitcoin until it reaches a more stable value. If Bitcoin's lower merchant fees and other value propositions make it into a widely accepted form of payment it still could settle at a very high value. Bitcoin's market cap of approximately 12 Billion dollars is dwarfed by Visa's credit purchase volume of $981 billion for 2012. Based on what we know about Bitcoin, my prediction is Bitcoin will continue to rise in value for the next 1-5 years as new user acquisition continues rise.
1B7a91F83TpnMg6aGBa2pYcRiJrot23RNQ
Follow me on SA: http://seekingalpha.com/author/gabe-mchugh
Re: Borrowed $1,000,000 (1 million dollars) from my dad to invest in BTC (serious)
1,000,000 is enough money to retire on. Talk to someone who knows something about investing and have him set you up with a solid portfolio. You should be able to withdraw 40k-70k a year. With that type of money you can coast, travel, pursue any interest or hobby. Congratulations you have freedom. Don't fuck it up by dumping it all in bitcoin.
Slow down and think.
Slow down and think.
i do not know that it is in bubble mode. bubbles are fragile structures inflated by a force which, once withdrawn, results in the collapse of the structure. forces implying a higher bitcoin price are increasing, not decreasing, and show no signs of being near the limits of their increase. bubbles are not supported by the rationally discounted future fair value or cash flows. the price of bitcoin is more than supported by its rationally discounted future fair value.
the only way you could infer that bitcoin was in a bubble would be if you were convinced that its future fair value, after discounting for risk-free rates and the error distribution attributed to your future value estimate, was insufficient to support current price levels. you might be convinced of this by established fact and sound reasoning (necessary or probabilistic), or you might be convinced of this by "intution" or "peer-pressure" or "a skeptical disposition" or sunk cost fallacies, normality bias, etc. if you have established facts and sound reasoning which leads you to such skepticism, please do share them. no one can anticipate all unknown facts or creative proofs, and no one wants to be deluded by their ignorance or lack of time to explore the full space of inference. if you do not, then please reconsider your convictions - and especially please reconsider whether you should be spreading fallacious or delusional ideation.
the only way you could infer that bitcoin was in a bubble would be if you were convinced that its future fair value, after discounting for risk-free rates and the error distribution attributed to your future value estimate, was insufficient to support current price levels. you might be convinced of this by established fact and sound reasoning (necessary or probabilistic), or you might be convinced of this by "intution" or "peer-pressure" or "a skeptical disposition" or sunk cost fallacies, normality bias, etc. if you have established facts and sound reasoning which leads you to such skepticism, please do share them. no one can anticipate all unknown facts or creative proofs, and no one wants to be deluded by their ignorance or lack of time to explore the full space of inference. if you do not, then please reconsider your convictions - and especially please reconsider whether you should be spreading fallacious or delusional ideation.
First off your bolded statement is nonsensical. Bitcoin is not an investment that "generates future cash flows". Bitcoin is most like a commodity with some intrinsic value but is also highly speculated in (similar to gold). However it differs from traditional commodities mainly in that there is rapid growth in how many people are learning about bit coin and adopting it.
What is driving the price up is:
New users who are using bitcoin for its intrinsic value
Speculators
When the growth of new users stalls there will be some sort of crash. I will post an in depth article on this soon.
Listed in order of importance:
1.) Free advertising- Accepting bitcoin should increase sales as it engages the bitcoin community and the company will receive buzz on various bitcoin oriented websites
2.) Branding- Accepting bitcoin may give the impression that the business is savvy and forward thinking.
1.) Free advertising- Accepting bitcoin should increase sales as it engages the bitcoin community and the company will receive buzz on various bitcoin oriented websites
2.) Branding- Accepting bitcoin may give the impression that the business is savvy and forward thinking.
You have so many options. You could do the cheap in crisis European countries, Spain, Italy, Portugal, Greece, Malta, any number of Latin American countries, Colombia, Costa Rica, Honduras, Nicaragua, Mexico, Belize, a variety of Caribbean countries, and SE Asia, Cambodia Thailand ect.
Hehe, what do you think happens to a government without currency?
Is this a serious question?
Is this a serious question?
Is this a serious question?
Bitcoin can increase as long as new adoption continues, as soon as adoption declines the value of bitcoin will decline to near its intrinsic value. That being said is it possible to find data on how many new wallets are being created/ how many new people are joining bitcoin?
I post 4-5x a day on another forum http://www.political-crossfire.com/index.php. I am willing to rent out my signature there to whoever is interested.
1B7a91F83TpnMg6aGBa2pYcRiJrot23RNQ
1B7a91F83TpnMg6aGBa2pYcRiJrot23RNQ
I think everyone knows bitcoin is in bubble mode right now, 12B in market cap isn't justified by the amount of transactions that occur, alot of the money in BTC is speculation. The amazing thing about BTC though is that it still has the potential to rise significantly. I could see 10k a coin.
I couldn't care less if a BTC is ever used in a point of sale transaction. There are many investors like myself who only see it as a store of value to be cashed in/out at exchanges.
Why would anyone use bitcoin as a store of value as opposed to precious metals like gold and silver? I think bitcoin has use as a means of moving money between countries, for purchasing items not priced in fiat (ie silkroad), or as a speculative investment.
The truth is those who are in bitcoin for speculative purposes have an endgame plan of holding USD. It is these people who will pump a bubble and sell into a crash.
For me it's also a hedge against failing fiat. Less of a concern for me since I'm not american or greek, but no western countries are safe.
I am a huge fan of bitcoin but:
It is not safer: Gold has been a store of value for thousands of years, bitcoin is going on 5. Gold prices although fueled by speculation is alot more stable, gold won't fall overnight too $1000/oz but bitcoin could fall to $50/coin within a matter of a few days.
Gold is very easy to get, you can buy it online or through multiple physical locations.
Bitcoin is much easier to manipulate than gold. Media and press can easily inspire confidence or fear in the coin to manipulate prices.
I agree holding a bunch of fiat is terrible, but bitcoin shouldn't be a wealth preservation strategy, but a speculative investment or a hobby.
No.
If bitcoin proves to be fundamentally impractical for small, high-volume transactions, why couldn't it still have great value for use in large transactions such as real-estate, yachts, gold, etc. and as a secure store of value?
Because that would be an incredibly small market cap. One fact is the richest 3% control most of the money, but the masses (the 97%) spend most of the money that is spent.
"Exponential and power-law probability distributions of wealth and income in the United Kingdom and the United States" by A. A. Dragulescu and V. M. Yakovenko
I don't understand how you come to the conclusion that it would be an incredibly small market cap. It is already approaching 10 billion dollars, and its use as a store of wealth is minuscule compared to things like gold and offshore bank accounts. Why couldn't it increase in popularity for this purpose tenfold or one hundredfold?
Ponzi-bubbles eventually return to their intrinsic value. The logic is presented in that linked thread. I don't know why it is so difficult for readers to comprehend that investors only stay invested while gains accrue. Eventually the supply of greater fools ends, then the value has to be supported by those who hold it not for gain, instead for use as a currency, i.e. its intrinsic value. An investor would sell that point (retaining only enough needed for spending and rest moved to an investment which can accrue more gains), because gains would not continue to accrue and Bitcoin pays no dividend because it has no income (note BitShares is an altcoin that claims it will have an income and pay dividends).
If you could argue that the masses will use it as a currency (which I think is impossible), then that value could be higher than the current price. However, you are asking what the valuation will be otherwise.
Edit: I did an estimate of Bitcoin's intrinsic value earlier this year. Compare with the past performance of wider-eyed estimates.
I attempted to value the bitcoin currency based on Money Supply and velocity trying to come up with a real value. I came up with $60-120/ btc.
The problem with this method is that the user base of bitcoin is constantly expanding creating a higher intrinsic value. It will eventually stabilize when non-speculative use peaks and stabalizes. Then there will be a crash down to its intrinsic value.
I think everyone knows bitcoin is in bubble mode right now, 12B in market cap isn't justified by the amount of transactions that occur, alot of the money in BTC is speculation. The amazing thing about BTC though is that it still has the potential to rise significantly. I could see 10k a coin.
I couldn't care less if a BTC is ever used in a point of sale transaction. There are many investors like myself who only see it as a store of value to be cashed in/out at exchanges.
Why would anyone use bitcoin as a store of value as opposed to precious metals like gold and silver? I think bitcoin has use as a means of moving money between countries, for purchasing items not priced in fiat (ie silkroad), or as a speculative investment.
The truth is those who are in bitcoin for speculative purposes have an endgame plan of holding USD. It is these people who will pump a bubble and sell into a crash.
I think everyone knows bitcoin is in bubble mode right now, 12B in market cap isn't justified by the amount of transactions that occur, alot of the money in BTC is speculation. The amazing thing about BTC though is that it still has the potential to rise significantly. I could see 10k a coin.
I am not sure why any legit banks have got in on it. It seems like there is enough money and potential there to make it valuable. Maybe they are worried about the regulatory aspects of it.