Silk Road forums
Discussion => Newbie discussion => Topic started by: J0HNC0NN0R on March 20, 2013, 04:22 am
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Ok. I've read all the explanations about how BTC doesn't affect the price of buying drugs on the road as the prices are hedged to the dollar. BUT I PRESENT YOU WITH THIS SCENARIO (that I just can't seem to reconcile).
Let's say a few weeks ago when the price of 1 Bitcoin = $15, you went out and bought 2 Bitcoins for $30 and planned to buy 1 Roxy pill (worth $30).
But then let's say you logged off and never bought that 1 $30 dollar Roxy and forgot about it. Remember, there are "2 bitcoins" sitting in your account.
Then you log back in today when the price of 1 Bitcoin = $60 dollars. Now remember, you had 2 Bitcoins in your account. They're still there. But now those 2 Bitcoins you have are worth $120.
You can now buy 4 Roxies?
How in pluperfect hell is this possible?! Is this some loophole of time and space? Or am I missing something?
Any economic wizards care to explain this?
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Haha loophole of time and space. I like the name too "John Connor".
Anyways.. that 1 Roxy pill that cost 2 Bitcoins a few weeks ago (@ $15 dollars a Bitcoin) is still worth $30.. only now it's Bitcoin value is .5.
You will not get rewarded 3 free Oxys by the Gods of Tor for fancying yourself as the Warren Buffet of Silk Road. It's not a loophole.
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no he is right. Prices are hedged to the us dollar but your bitcoin can still fluctuate. Yes in your scenario you technically earned 45 through your investment in bitcoin.
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Oh shit. Wait, so you're saying in his scenario..his initial investment of $30 dollars to allow him to purchase 1 Oxy pill.. now he has enough funds to purchase 4?
So who "takes the hit"? As in, that $30 he initially invested for 2 Bitcoins .. those 2 Bitcoins are worth $120. Where did that $90 come from? Who paid the price for his 4x gain?
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Okay, I'm gonna try to explain this the best way I can. If you know anything about currency trading it will make it easier to understand.
All the vendors prices are based on US Dollars for the most part, that means the price of their drugs will stay the same regardless of how the bitcoin fluctuates. BUT, because the prices of bitcoins varies, if you buy bitcoins and don't purchase what you want to buy right after you buy them from the market, their price could either jump up or down if you were to wait. Think of Bitcoins as something like an investment.
Now in regards to the OP's scenario, yes, he is lucky that he bought them at at a low price and they jumped up in price. Because of that and the price of product staying the same in US Dollars he is actually able to buy more product. Now you also have to realize that an extreme negative reaction could occur where you buy Bitcoins at a high price and the price of a Bitcoin drops down the road, this would result in you not even having enough for what you wanted in the first place.
tl;dr If you don't want to lose money, buy whatever product you want off SR right after you purchase your coins. If your feeling lucky, invest in Bitcoins and sit on them if you think the price is going to go up.
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Okay, I'm gonna try to explain this the best way I can. If you know anything about currency trading it will make it easier to understand.
All the vendors prices are based on US Dollars for the most part, that means the price of their drugs will stay the same regardless of how the bitcoin fluctuates. BUT, because the prices of bitcoins varies, if you buy bitcoins and don't purchase what you want to buy right after you buy them from the market, their price could either jump up or down if you were to wait. Think of Bitcoins as something like an investment.
Now in regards to the OP's scenario, yes, he is lucky that he bought them at at a low price and they jumped up in price. Because of that and the price of product staying the same in US Dollars he is actually able to buy more product. Now you also have to realize that an extreme negative reaction could occur where you buy Bitcoins at a high price and the price of a Bitcoin drops down the road, this would result in you not even having enough for what you wanted in the first place.
tl;dr If you don't want to lose money, buy whatever product you want off SR right after you purchase your coins. If your feeling lucky, invest in Bitcoins and sit on them if you think the price is going to go up.
Yep wickid is right on point. Bitcoin is a currency just like any other, and in that instance a smart one. Bitcoins are relatively early in its existence stance and has been preforming quite well as a currency which is why its values vary by so much.
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And this is why I always leave all my leftover and inflated BTCs sitting in my account.
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8)Someone always takes "the hit" currency trading is, after all, a "zero sum game" i.e. profits by one party are always at the expense of the opposite party..
Whoever you bought your bitcoins from lost a 50% profit, which does beg the question, why would anyone sell you a bitcoin?
I thought I would be really clever and put a large chunk of my savings into bitcoins, why leave it in ZOPA @ 9% when I could put it in BC and double my money in a matter of weeks?????
doo bee doo dee doo be dooo.....
because I got higghhh...
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8)Someone always takes "the hit" currency trading is, after all, a "zero sum game" i.e. profits by one party are always at the expense of the opposite party..
Whoever you bought your bitcoins from lost a 50% profit, which does beg the question, why would anyone sell you a bitcoin?
I thought I would be really clever and put a large chunk of my savings into bitcoins, why leave it in ZOPA @ 9% when I could put it in BC and double my money in a matter of weeks?????
doo bee doo dee doo be dooo.....
because I got higghhh...
Again its profitability come at the expense of other currency like the USD or the EURO. People sell you bitcoin because its illiquid and people need a liquid asset like cash frequently and sell there bit coin at exchanges. and while you cant double your bitcoin in a matter of week you can (and i have) increased the amount of your investment by 15-20 percent. Look up bitcoin mining if you wanna get even more technical.
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:P
The question was rhetorical. You'd be crazy to sell something that is increasing in value so fast. You'd also be crazy to spend it on nose candy, but hey-ho..