Quote from: odolvlobo on October 02, 2014, 12:46:42 AM

Quote from: Noblezim711 on October 01, 2014, 11:41:03 PM

My best attempt to explain it is this:
If their only existed 100 1 gram gold nuggets, and 1000, 1 gram silver nuggets; than a trade of 1 gold nugget should equal 10 silver right?

Unfortunately, no. Price depends on supply and demand. The demand curves for gold and silver are not the same, so simply scaling the supply curve by a factor of 10 will give you different results, even assuming the supply curves are also the same.

Just look at the actual numbers for gold and silver. Silver is 17 times more abundant than gold, yet gold is worth about 50 times silver.

You just said the same thing as I did, and I do know that the value of Bitcoin is dependent on many factors. This calculator will take into account as many factors, and variables as possible. This calculator takes into account the many sources of information now currently available, then it inputs the information into a series of algorithms. This calculator will aim to compare the price of buying a Bitcoin at its value against the effort required to manufacture those coins. This will help to balance the Bitcoin economy, as the exchange rate should be more stable. This is just one example of the output; again the program will run multiple algorithms. These algorithms are against current and historical data, then this information will be fed into another plotting algorithm. The plotting program will attempt to estimate the value. Again this is only an estimate, it does not mean that the exchange rate will not rise or fall. There are many factors to take into account when estimating the value Bitcoins. I can guarantee that with as large as the network as grown, the amount of money required to maintain that speed will grow. With the block halving of the network two things will happen: 1. Miners will soon begin to rely more heavily on transaction fees, as the system intended. This will require more users to move their Bitcoins, in order to pay the added cost.(Not likely if I have 1000 BTC that I'm holding onto until the price rises. I mean why should I throw away money right?) or 2. Bitcoin prices will rise to makeup for the larger required cost to maintain the network.

There are many more things that could happen, but those are the most likely in my opinion. Lets face it, people will be turning off their miners. But unless some larger network members go bust, they won't be turning theirs off anytime soon.

Noblezim711

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