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Take a look at Bitcoins historical prices. I call what we’re experiencing right now the “Third Rise.” At the beginning of each, I thought there was no way the

Take a look at Bitcoins historical prices. I call what we’re experiencing right now the “Third Rise.” At the beginning of each, I thought there was no way the price would double or triple. Yet each time it did. I’d suggest if looking at history before you make such strong statements about Bitcoin’s price possibilities.

ben_w 9y ago
Is there any price, any price at all, where you would say “bitcoin is not worth this much, I should cash in before it goes down”? Σ(all bitcoin) = 0.1% world money supply? 1%? 10%? 100%? Even more? At some point it will go down. If you have a rational model for what value is too high, great! But if you don’t, you’ll gamble yourself into poverty, like so many other speculators over so many centuries.
- logicallee 9y ago
  I think a fair market cap target to work with is $7.7 trillion market cap for all of bitcoin. This probably seems high but there are a lot of lost bitcoins. This is 27x the current market cap so if the current price is $16704 a good target is $451,008. Prices above that would seem excessive to me. I shared some of my reasoning here: https://news.ycombinator.com/item?id=15840591 https://news.ycombinator.com/item?id=15840591 You are not going to get 1000x higher prices than the current price, my opinion. It's not justified. On the other hand, 3x, 5x and so forth prices are easily justified given what bitcoin "is" and the role it can serve. This remains so even if transaction prices are very high, the blockchain is very slow, and there are more liquid and easier alternatives. This is because bitcoin serves as a kind of "gold" for various usages of that term. The only difference is that when you hold a piece of gold in your safe, there is no physical possibility that due to a coding error in the fabric of the universe, it disappears from your safe. However there is a very large possibility of bitcoins disappearing entirely, due to a coding error. It is very important to hedge against this or account for this possibility.
  - akvadrako 9y ago
    Your analysis seems very reasonable, but John McAfree thinks it will go to $1 million. And the reason I think it's not impossible is that only a very small percent of the float is actively traded, so the total market cap really doesn't matter that much. The higher it goes the less the people invested in it need to sell at all, because they don't have anything better to do with the money.
    - logicallee 9y ago
      >The higher it goes the less the people invested in it need to sell at all, because they don't have anything better to do with the money. But you could say the same thing about gold. I don't have a fantastic historical understanding, but I thought that the price of gold tends to spike as there are issues with fiat currency (war, hyperinflation, and so forth). On this front there are vast differences: investors in gold and investors in bitcoin are just hugely different groups of people. Switzerland doesn't have a bitcoin reserve the way it has a gold reserve, nor does any other state. so the comparison is kind of premature on my part, still, if we want to have a price target we need to base it on something.
  - Tepix 9y ago
    The average transaction fee was more than $40 today¹. I think a transaction fee of more than $1000 could be a problem. I also believe that the bitcoin core developers have painted themselves into a corner where (urgently necessary) hard forks are super hard. Every hard fork by them will have a huge risk of a group of people staying on the old branch and calling themselves "the true bitcoin" and the forked instance a "shitcoin" or "altcoin" or "not the real bitcoin". Thus, unable to change and adapt, bitcoin is likely to stagnate and eventually die. -- ¹ according to https://bitinfocharts.com/comparison/bitcoin-transactionfees.html#3m https://bitinfocharts.com/comparison/bitcoin-transactionfees...
    - logicallee 9y ago
      I don't see any problem with any transaction price around the prices you're talking about. (Obviously if it were millions of dollars per transaction that would be an issue.) Storing or transporting any amount of gold must be ridiculously expensive and inconvenient security-wise.
- oelmekki 9y ago
  [sincere question] aren't cryptocurrencies creating new money supply, though? I often hear "market cap raised by X billions", but it's not just that fiat billions are used to buy bitcoins, it's also that existing bitcoins are gaining value against fiat. Am I making any sense?
  - Tepix 9y ago
    The market cap is merely a metric that you get by multiplying the circulating supply by the price last paid for a single unit. It's the same as with stock. If people today pay $1000 more per bitcoin than yesterday, it doesn't change the circulating supply.
  - grenoire 9y ago
    Market cap is not what you think it is. If there are X amount of bitcoins with the last one traded at price P, then the market cap is X * P. However, if people attempted to liquidate these bitcoins into 'real' currency, P would continuously go down. Market cap hence is not the amount of 'real' money that's contained within the bitcoin ecosystem.
- scotty79 9y ago
  Assume that certain yellowish metal is worth nothing. It's pretty much useless. It's pretty but there are prettier materials. Has some nice physical properties (also some bad ones) but you can't use it in mass produced items in large quantities because it's too rare. That is redeeming quality though. It's rare so you can be pretty sure people won't dig out 10 as much so its value won't drop rapidly. It's durable so it won't corrode away, combust or fly into space if you don't handle it carefully. You can hold it in your pocket or under your materace. This makes it excelent store of value. Not perfect though. If you own it you need to keep it physically secure. If you buy it you need to know how to not get duped. To sell it or buy it you need to physically meet with the buyer or a third party you both trust. Risk of all those operations grows with the value of your holdings. Now this new thing comes up. It's also rare. You can store it perfectly securely without anyone knowing that you do. You can sell any fraction of it to highest bidder on Earth, from your home and that only requires you trusting sigle third party (that you can choose out of few) that trades over billion dollar's worth of this stuff every 24h. I think you can easily see that half of value that humanity currently keeps in gold is very safe bet for bitcoin max market cap.
  - ben_w 9y ago
    > Now this new thing comes up. It's also rare you, can store it perfectly securely without anyone knowing that you do. That doesn’t describe bitcoin > You can sell any fraction of it to highest bidder on Earth, from your home and that only requires you trusting sigle third party that trades over billion dollar's worth of this stuff every 24h. That describes gold — depending on what you count as a “single third party”. That said, at least it is a number… just one I don’t agree with, because at $7.5 trillion I think that makes Bitcoin so valuable that it becomes worthwhile doing anything to gain 51% control, including high-altitude nuclear EMPs over everyone who isn’t you.
    - scotty79 9y ago
      >> Now this new thing comes up. It's also rare you, can store it perfectly securely without anyone knowing that you do. > That doesn’t describe bitcoin. Yes it does. You can buy it on exchange (or buy a miner and mine it yourself paying with electricity) and transfer it to your wallet. Encrypt the wallet and put it in multiple places online with cryptic name. If you ever need money you can download it, decrypt it, send btc to exchange, sell it and get the money. My point is that between the moment you buy bitcoin and moment you need the money nobody knows you have any bitcoins. Exchange or mining pool will know of course if you got your bitcoin from them but that's about it. Also you can mine other cryptocurrency with just your own hardware even just GPU that you conceivably could have bought to play games (no need for mining pool) and exchange it anonymously, then nobody knows you have any BTC. >> You can sell any fraction of it to highest bidder on Earth, from your home and that only requires you trusting sigle third party that trades over billion dollar's worth of this stuff every 24h. >That describes gold — depending on what you count as a “single third party”. Please elaborate. Let's say you are a student from Isfahan and have a gold coin under your materace. How would go about selling 1/10 of it and how it compares to process of cashing out 1/10th of 1 BTC in cold storage?

ben_w 9y ago

Is there any price, any price at all, where you would say “bitcoin is not worth this much, I should cash in before it goes down”? Σ(all bitcoin) = 0.1% world money supply? 1%? 10%? 100%? Even more? At some point it will go down. If you have a rational model for what value is too high, great! But if you don’t, you’ll gamble yourself into poverty, like so many other speculators over so many centuries.

logicallee 9y ago
I think a fair market cap target to work with is $7.7 trillion market cap for all of bitcoin. This probably seems high but there are a lot of lost bitcoins. This is 27x the current market cap so if the current price is $16704 a good target is $451,008. Prices above that would seem excessive to me. I shared some of my reasoning here: https://news.ycombinator.com/item?id=15840591 https://news.ycombinator.com/item?id=15840591 You are not going to get 1000x higher prices than the current price, my opinion. It's not justified. On the other hand, 3x, 5x and so forth prices are easily justified given what bitcoin "is" and the role it can serve. This remains so even if transaction prices are very high, the blockchain is very slow, and there are more liquid and easier alternatives. This is because bitcoin serves as a kind of "gold" for various usages of that term. The only difference is that when you hold a piece of gold in your safe, there is no physical possibility that due to a coding error in the fabric of the universe, it disappears from your safe. However there is a very large possibility of bitcoins disappearing entirely, due to a coding error. It is very important to hedge against this or account for this possibility.
- akvadrako 9y ago
  Your analysis seems very reasonable, but John McAfree thinks it will go to $1 million. And the reason I think it's not impossible is that only a very small percent of the float is actively traded, so the total market cap really doesn't matter that much. The higher it goes the less the people invested in it need to sell at all, because they don't have anything better to do with the money.
  - logicallee 9y ago
    >The higher it goes the less the people invested in it need to sell at all, because they don't have anything better to do with the money. But you could say the same thing about gold. I don't have a fantastic historical understanding, but I thought that the price of gold tends to spike as there are issues with fiat currency (war, hyperinflation, and so forth). On this front there are vast differences: investors in gold and investors in bitcoin are just hugely different groups of people. Switzerland doesn't have a bitcoin reserve the way it has a gold reserve, nor does any other state. so the comparison is kind of premature on my part, still, if we want to have a price target we need to base it on something.
- Tepix 9y ago
  The average transaction fee was more than $40 today¹. I think a transaction fee of more than $1000 could be a problem. I also believe that the bitcoin core developers have painted themselves into a corner where (urgently necessary) hard forks are super hard. Every hard fork by them will have a huge risk of a group of people staying on the old branch and calling themselves "the true bitcoin" and the forked instance a "shitcoin" or "altcoin" or "not the real bitcoin". Thus, unable to change and adapt, bitcoin is likely to stagnate and eventually die. -- ¹ according to https://bitinfocharts.com/comparison/bitcoin-transactionfees.html#3m https://bitinfocharts.com/comparison/bitcoin-transactionfees...
  - logicallee 9y ago
    I don't see any problem with any transaction price around the prices you're talking about. (Obviously if it were millions of dollars per transaction that would be an issue.) Storing or transporting any amount of gold must be ridiculously expensive and inconvenient security-wise.
oelmekki 9y ago
[sincere question] aren't cryptocurrencies creating new money supply, though? I often hear "market cap raised by X billions", but it's not just that fiat billions are used to buy bitcoins, it's also that existing bitcoins are gaining value against fiat. Am I making any sense?
- Tepix 9y ago
  The market cap is merely a metric that you get by multiplying the circulating supply by the price last paid for a single unit. It's the same as with stock. If people today pay $1000 more per bitcoin than yesterday, it doesn't change the circulating supply.
- grenoire 9y ago
  Market cap is not what you think it is. If there are X amount of bitcoins with the last one traded at price P, then the market cap is X * P. However, if people attempted to liquidate these bitcoins into 'real' currency, P would continuously go down. Market cap hence is not the amount of 'real' money that's contained within the bitcoin ecosystem.
scotty79 9y ago
Assume that certain yellowish metal is worth nothing. It's pretty much useless. It's pretty but there are prettier materials. Has some nice physical properties (also some bad ones) but you can't use it in mass produced items in large quantities because it's too rare. That is redeeming quality though. It's rare so you can be pretty sure people won't dig out 10 as much so its value won't drop rapidly. It's durable so it won't corrode away, combust or fly into space if you don't handle it carefully. You can hold it in your pocket or under your materace. This makes it excelent store of value. Not perfect though. If you own it you need to keep it physically secure. If you buy it you need to know how to not get duped. To sell it or buy it you need to physically meet with the buyer or a third party you both trust. Risk of all those operations grows with the value of your holdings. Now this new thing comes up. It's also rare. You can store it perfectly securely without anyone knowing that you do. You can sell any fraction of it to highest bidder on Earth, from your home and that only requires you trusting sigle third party (that you can choose out of few) that trades over billion dollar's worth of this stuff every 24h. I think you can easily see that half of value that humanity currently keeps in gold is very safe bet for bitcoin max market cap.
- ben_w 9y ago
  > Now this new thing comes up. It's also rare you, can store it perfectly securely without anyone knowing that you do. That doesn’t describe bitcoin > You can sell any fraction of it to highest bidder on Earth, from your home and that only requires you trusting sigle third party that trades over billion dollar's worth of this stuff every 24h. That describes gold — depending on what you count as a “single third party”. That said, at least it is a number… just one I don’t agree with, because at $7.5 trillion I think that makes Bitcoin so valuable that it becomes worthwhile doing anything to gain 51% control, including high-altitude nuclear EMPs over everyone who isn’t you.
  - scotty79 9y ago
    >> Now this new thing comes up. It's also rare you, can store it perfectly securely without anyone knowing that you do. > That doesn’t describe bitcoin. Yes it does. You can buy it on exchange (or buy a miner and mine it yourself paying with electricity) and transfer it to your wallet. Encrypt the wallet and put it in multiple places online with cryptic name. If you ever need money you can download it, decrypt it, send btc to exchange, sell it and get the money. My point is that between the moment you buy bitcoin and moment you need the money nobody knows you have any bitcoins. Exchange or mining pool will know of course if you got your bitcoin from them but that's about it. Also you can mine other cryptocurrency with just your own hardware even just GPU that you conceivably could have bought to play games (no need for mining pool) and exchange it anonymously, then nobody knows you have any BTC. >> You can sell any fraction of it to highest bidder on Earth, from your home and that only requires you trusting sigle third party that trades over billion dollar's worth of this stuff every 24h. >That describes gold — depending on what you count as a “single third party”. Please elaborate. Let's say you are a student from Isfahan and have a gold coin under your materace. How would go about selling 1/10 of it and how it compares to process of cashing out 1/10th of 1 BTC in cold storage?