Silk Road forums
Discussion => Security => Topic started by: duhwinning69 on August 15, 2012, 05:45 pm
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I'm new & have a question. I have left over currency in my account. Over the last couple of days my account balance has been slowly increasing due to the cost of the bitcoin price going down I guess right? But... when I click on my account, why does my available btc amount show the same originally & has not increased? Would it adjust if I bought something else at checkout?
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I'm new & have a question. I have left over currency in my account. Over the last couple of days my account balance has been slowly increasing due to the cost of the bitcoin price going down I guess right? But... when I click on my account, why does my available btc amount show the same originally & has not increased? Would it adjust if I bought something else at checkout?
OK, well I had my settings to show dollar amount & this was what I was seeing increase. I changed it to show Btc & now it shows the same amount as what it shows being available. It still seems like the dollar amount increasing that it would reflect back on the available btc number.
Example if it's 0.88 wouldn't it increase at least to 0.89 or 0.90 sometime soon? I feel stupid for asking but I'm trying to learn.
At least it isn't decreasing in value,at least not yet.
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BTC is the primary currency used on Silk Road. Therefore, the amount of BTC you have on your account won't change until you make a purchase. i.e. spend some BTC.
If you have your prices displayed in dollars, the dollar amount will go up and down as the price of the BTC fluctuates. Hence the adjustments to the amount of dollars visible on your account.
If you want to calculate how much each BTC is worth, divide the number of dollars you have by the number of BTC you have (Dollar / BTC).
Hope this explains what you are asking :)
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OK, well I had my settings to show dollar amount & this was what I was seeing increase. I changed it to show Btc & now it shows the same amount as what it shows being available. It still seems like the dollar amount increasing that it would reflect back on the available btc number.
Example if it's 0.88 wouldn't it increase at least to 0.89 or 0.90 sometime soon? I feel stupid for asking but I'm trying to learn.
At least it isn't decreasing in value,at least not yet.
Hi duhwinning69,
There's no such thing as a stupid question - we were all new here once. :)
As psychedelicmind has said above, Bitcoin is the actual currency used on Silk Road. The option is there to show the equivalent US dollar value in order to make it easier for the buyer to see how much something actually costs in fiat currency (the Dollar / Euro / Pound sitting in his or her pocket.)
Most vendors peg the prices of their products to the value of the dollar, so the Bitcoin value of their listing will fluctuate depending on the current BTC to USD exchange rate. However, the amount in your account is not dollars - it's Bitcoin.
A simple way to think of it is as follows:
In America, you use the Dollar as your currency. But for the sake of this explanation, let's pretend you live in Silkland and use Bitcoin as your currency.
If you want to travel to America, you'll need to exchange the Bitcoin in your pocket for US dollars.
Let's assume that on Monday, ฿1.00 Bitcoin and $1.00 USD are equal in value, so ฿1.00 = $1.00.
You go to your bank on Monday and tell them you're taking a vacation in America next week and want to exchange ฿100.00 for USD so you can buy things.
We're assuming that the two currencies are equal in value, so the teller behind the counter takes your ฿100.00 and gives you $100.00 back.
You go home happy and go to bed.
When you wake up, the value of Bitcoin has increased overnight so now when you go back to the bank on Tuesday to exchange another ฿100.00 for $100.00 USD, the teller hands you more USD than the day before - now ฿100.00 gets you $120.00, because the value of Bitcoin went up, and each Bitcoin is now worth $1.20 USD instead of $1.00 USD.
The AMOUNT of Bitcoin you hand the teller hasn't changed, but it's VALUE has changed.
Getting back to reality, Bitcoin is currently appreciating in value, which means that how many dollars 1 Bitcoin is worth is increasing.
As Bitcoin is the currency used on Silk Road, the corresponding VALUE of dollars in your Silk Road wallet increases but the AMOUNT of Bitcoin does not.
However, most vendors peg their prices to the dollar. This means that the amount of Bitcoin that each item costs changes depending on the value of Bitcoin but the amount of dollars it costs does not change.
If they decide to peg their prices to Bitcoin, the amount of Bitcoin that each item costs never changes, but the amount of dollars that it costs does.
An example of this is a hypothetical situation where an identical item is being sold by 2 different vendors, for the exact same price, both pegged to the dollar:
Both vendors are charging $100 USD for a gram of weed, which currently amounts to ฿8.04. because ฿1.00 = $12.43 USD, so ฿8.04 = $100.
One of the vendors (Vendor B) decides to peg his price to Bitcoin instead.
The value of Bitcoin increases overnight so that ฿1 = $13.00 - so the next day the vendors prices will no longer be identical.
Vendor A (who is still pegged to the dollar) is still charging $100 USD for a gram of weed, but it now only costs ฿7.69, because ฿7.69 now equals $100 as Bitcoin has appreciated (gone up) in value.
Vendor B (who is now pegged to Bitcoin) is still charging ฿8.04 for a gram of weed, which (because of the Bitcoin value increasing) now equals $104.52, again, as Bitcoin has appreciated in value.
When the price is pegged to dollars, the amount of Bitcoin that you see it costing will change, but the amount of dollars it costs will stay the same.
When the price is pegged to Bitcoin, the amount of Bitcoin that you see it costing will stay the same, but the amount of dollars it costs will change.
Sorry if this is a bit long and drawn-out; I'm notoriously bad at explaining things!!
If you need any clarification or help with anything, feel free to PM me. :)
- grahamgreene
EDIT: Having just re-read what psychedelicmind wrote, he explains it perfectly (and in about a million words less than it took me! :P)
But this took me fucking ages to type out so I'll leave it here! :P
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Thank you both for explaining. I do understand now. And I'm glad you went further to explain grahamgreene about the vendors pegging to the dollar or bitcoin. I just expected to see that btc number to go up along with that dollar amount. But I now understand that the numerical value stays the same for the bitcoin, only the dollar amount will determain how much that bitcoin is worth, in my case the usd dollar.
:)
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Thank you both for explaining. I do understand now. And I'm glad you went further to explain grahamgreene about the vendors pegging to the dollar or bitcoin. I just expected to see that btc number to go up along with that dollar amount. But I now understand that the numerical value stays the same for the bitcoin, only the dollar amount will determain how much that bitcoin is worth, in my case the usd dollar.
:)
You're very welcome! :)