Silk Road forums

Discussion => Silk Road discussion => Topic started by: Damod78 on February 06, 2012, 02:08 pm

Title: Bitcoin deflation
Post by: Damod78 on February 06, 2012, 02:08 pm
I just saw in a 48 hour period the exchange rate from mt. gox go from $6.10 to $5.50.
Whose dumping all these coins?
And are vendors going to increase their prices because of this?
Title: Re: Bitcoin deflation
Post by: kewlbluecronic on February 06, 2012, 02:27 pm
Is that all?  You should go to http://bitcoincharts.com/ and look at some past jumps in prices.

As for your questions; 

1. It's most likely pro traders dumping these coins.
2. I'm pretty sure most vendors peg their prices at a dollar amount and SR does all the exchanges automagicly.

FYI - The act of a currency losing value is called "Inflation".

Straight from Wikipedia:
Quote
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.  When the general price level rises, each unit of currency buys fewer goods and services.  Consequently, inflation also reflects an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy.
Title: Re: Bitcoin deflation
Post by: Damod78 on February 06, 2012, 03:25 pm
yeah i guess it is inflation.
who the hell are pro traders though?  it's not like wall street is in on this currency.
i always felt that of the millions of bitcoins out there, there are a cabal of basement dwellers with like 50% of all the bitcoins in circulation.  then one day whenever they decide (probably when the exchange rate favors them) they will dump everything and the bitcoin will crash.
Title: Re: Bitcoin deflation
Post by: anarcho47 on February 06, 2012, 03:40 pm
I'll step in and just let you know that inflation and deflation are both terms that actually measure the quantity of money, not the value.  Price changes are an effect of inflation.  Inflation is actually the increase in the total amount of money, deflation being a contraction of the same.

The result in inflation is rising prices because more digits exist to represent the same amount of goods.  Supply and demand.  Delfation is the opposite.

Bitcoin is constantly "inflating" in that there are more coins generated into existence daily than the previous day.  The offset to this is more and more merchants and customers using them to exchange goods.  The value is so insane right now because it does not take that much capital to move the market in a huge way.

Also, the most likely source of these huge swings is miners selling off their coins, which they have generated and weren't previously accounted for in the bitcoin economy.  When they are sold they put downward pressure on the prices.  What we really need is an exchange to work with a bitcoin float and start allowing short selling - this puts a strong bid on any significant declines and shorts cover.  If you watch large financial markets, I always cringe when short-selling on a particular stock or commodity is outlawed to keep the price up (shows what the political class know about how markets work).  Usually you see MAJOR drops right after, because nobody HAS to buy to cover and lock in profits.  It's a falling knife at this point.  Recent good example are Euro bank stocks - short selling was banned and they took another 20% haircut FAST.
Title: Re: Bitcoin deflation
Post by: Damod78 on February 06, 2012, 03:51 pm
"that moment you realize you should of payed more attention in econ101"

so most of your post went flying above my head but would what your saying be hard to implement into the market?  i already see that mt. gox and tradehill have buy and sell orders available, could the powers that be change the market so resembles something more like a common exchange like nasdaq?

sidenote - i just saw the one year graph and want to know what the hell happened last june when the price went up to $28?  was this the result of the gawker article and a whole new flock of buyers coming into the market or something else.
Title: Re: Bitcoin deflation
Post by: bitcoin loan on February 06, 2012, 04:06 pm
I loaded up on coin before all of this happened hmm lucky me............
Title: Re: Bitcoin deflation
Post by: kewlbluecronic on February 06, 2012, 04:34 pm
I'll have to disagree with anarcho47 on one point, I doubt that miners suddenly decided to sell 120k bitcoins yesterday.  Even if that entire amount was sold at the low for the day ($5.45 USD) that would equate to approximately $654,000.  Looking at Mt. Gox directly it looks like there were 3 major spikes in volume yesterday for 17k, 26k, and 30k.  I don't know anyone who mines that is sitting on anything near that quantity of BTC.
Title: Re: Bitcoin deflation
Post by: anarcho47 on February 06, 2012, 05:22 pm
Oh, I'm not discounting traders at all.  But I personally know a couple of people who have run guzzling mining rigs since the early days, and one of them is still sitting on about 150k coins from that.  He dumps them off as they hit certain price targets, so one of those very well might have been him.  Or a seller on here cashing out.  who knows.
Title: Re: Bitcoin deflation
Post by: MagicMan on February 06, 2012, 05:47 pm
What we really need is an exchange to work with a bitcoin float and start allowing short selling

Bitcoinica allows short selling on the clear net
Title: Re: Bitcoin deflation
Post by: N2DEEP on February 06, 2012, 05:54 pm
SuperBowl related BitCoin Gambling perhaps?
Title: Re: Bitcoin deflation
Post by: OldGuard on February 06, 2012, 05:55 pm
What we really need is an exchange to work with a bitcoin float and start allowing short selling

Bitcoinica allows short selling on the clear net

MM is correct, if you want to know who the pro traders are just go here and read up and you will learn alot about what moves the value of bits.

https://bitcointalk.org/ 
Title: Re: Bitcoin deflation
Post by: LexusMiles on February 06, 2012, 06:10 pm
http://bitcoincharts.com/charts/mtgoxUSD#rg10zig2-hourztgSzm1g10zm2g25zv             

^ 10 day / 2 hourly chart

My speculation:

[-] If "the manipulator" didn't have a hand in it...
[-] Last week we had the media exposure, we had the SR weekend sale, therefore significant increase in buy/volume. = RISE.
[-] The weekend sale is over, vendors cashing out coins, buyers trading their spare coin back to cash.
[-] Speculators who had their finger on the pulse *also* perpetuated the wave because they made the very same prediction. = FALL.
[-] So between the speculators and the SR, enough volume was traded to case the rise and fall.

The $5.40 -> $6.10 -> $ 5.40 wave is not a new phenonema.. and by no means is it a huge fluctuation.

I *almost* started a speculation thread before the weekend sale to talk about this very prediction. But decided against it because such talk only serves to perpetuate the cause.

^ sure that can never be known for sure, but as speculation goes...
Title: Re: Bitcoin deflation
Post by: anarcho47 on February 06, 2012, 08:01 pm
does bitcoinica have anything close to the volume of Gox though?  I dont' use gox much anymore, and I've thought about doing some on bitcoinica, but how's the liquidity over there?