Bitcoins

[Himse]

Keitan / Gesh purchased like 2/3 coins at the all time high of like $230 each, adamant he would make a profit.

I lol'd when I just read they'd dropped to $54 the other day. Seems a little too far fetched to be worth it.

 

[DaGaffer]

Well it does have a worth, actually. It costs electricity and compute power to generate a bitcoin. You can work out the fundamental value without too much trouble if you had the basic figures to hand:
efficiency of flops/watt for every year they've been in circulation
cost in flops for every tranche of bitcoins (the rate at which you can mine them slows over time to force deflation)

With that, 30 seconds in excel would give you a lower limit in terms of the price in real terms of making them. The difference between that price and what people pay is the fiat bit. I'd go so far as to say that if it drops below the fundamental price, you might as well pile in. I suspect it's pretty low, though, <$10 at a guess.

I thought the whole point of bitcoins was there was a finite supply? So the cost of production is less relevant than the cost of demand that drives the value?

 

[Chilly]

I thought the whole point of bitcoins was there was a finite supply? So the cost of production is less relevant than the cost of demand that drives the value?

Indeed, but while the supply is still available, the price of a bitcoin is going to be linked to production cost. Once the currency is 100% floated, it will transition away from having any intrinsic value to being the same as any modern currency: ie a scam

 

[Gumbo]

Who decides how the quantity of bitcoins are made available?

I read that back and I'm not sure it's even English. Who controls the quantity of bitcoins in the market?

 

[Chilly]

Who decides how the quantity of bitcoins are made available?

I read that back and I'm not sure it's even English. Who controls the quantity of bitcoins in the market?

It's part of the maths of the system, if I recall. I looked into it a few years ago when it was first publicized but have forgotten most of the detail. The main point is that it's completely decentralised.

 

[Scouse]

Who decides how the quantity of bitcoins are made available?

The maths.

We give them their value.


Edit: Gah Chilly

When you download the bitcoin system you get the entire transaction log with it. The openness helps prevent fraud - if you're dumb enough to get a virus someone hacks your PC and steals your bitcoins you can go and search for them and find the account they were transferred to yourself.