中文版 English
Cybtc Portal COMPREHENSIVE NEWS View Content
COMPREHENSIVE NEWS

Freshman Tutorial Serial Part 3:Bitcoin, its value and price

2014-9-11 14:28 | admin

Roundup:Abstract: Even you have learned how to use bitcoin wallet safy, you must need to practice transfer a few times. Why, let us experience the currency value. Only by actual operation, one can realize its ...


Abstract: Even you have learned how to use bitcoin wallet safy, you must need to practice transfer a few times. Why, let us experience the currency value. Only by actual operation, one can realize its value. Even you don't believe, you also must understand, why such a lot of people are so firmly support the currency. 
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Even you have learned how to use bitcoin wallet safy, you must need to practice transfer a few times. Why, let us experience the currency value. Only by actual operation, one can realize its value. Even you don't believe, you also must understand, why such a lot of people are so firmly support the currency. There are so many articles discuss the value of bitcoin in the internet. As a mining machine operator, you could not to believe the currency value, but you must to believe that the currency has its price, it belongs your hard work. So, what the miners need to understand is, whether bitcoin is really has some special properties, which make these people have so strong faithful.

The most valuable feature of bitcoin
Satoshi Nakamoto, Founding of the bitcoin, said it is that "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution."  Clear out the idea; Bitcoin is public account books, which record the transfers between different address(user). By clever techniques, it avoid a sum of money spend two times. By realizes to the decentration (not issuing by financial institution), also provides a limited volume (21000000). The most value of all these properties is that, not the maximum value of currency itself, but it can transfer much fast, no national boundaries, almost zero cost.

As we all know, the maximum value of the Internet is to transmit world information quickly, without borders, almost zero cost. Through the rapid development in the past 20 years, the Internet has already taken over almost all the world's information transmission work. So, we have reason to believe that, in the next 20 years, via development, the Bitcoin should possible to take over most of the world's money transfer course.

Let's have a example: Suppose you are in the China and you are try to transfer $1000 to your USA relatives. You have three choices. 1,By bitcoin, 2,By Paypal and 3,By traditional wire. If you choose 1, the transfer time is about up to 60 minutes, the transaction fee is 0.0001BTC (about $0.05). If you choose 2, it will takes you about 8% fee ($80), transfer time requires a minimum of 1 days. If you use wire, it will takes about $3.5% fee ($35), transfer time requires a minimum of 1 days (rate data reference [1]).

I think this is the most valuable feature of the bitcoin: transfer operation is not only very simple and but also very cheap. To complete a transfer, all you need to do is that just open the multibit bitcoin wallet, select "send" label, fill in the address and the amount, click "send"!  The whole process is as simple as send an email. Try it, even you have nobody to send to, try it between your two wallets. I would like to say; this is the most important feature and experience which make so many bitcoin loyal. They support the currency so much. According to my observation; whose has a word said bitcoin has no value, mostly, whose even have no a bitcoin wallet.

The Bitcoins price is decided by what?
As miners, although maybe we do not believe that the bitcoin has its value, we should believe that it has price. There are a handful of people, they always believe bitcoin has its value! So that we dig out bitcoins and we sell to them for the profit. Since the currency has its price, so, what we need to consider is; What factors decide its price? 

Why miners need to understand what factors determine bitcoin's price? Because a miner is a maker of bitcoins. They are seller too. They hope that bitcoin has high prices so that the business can make money. For any commodity, its price is determined by the buyers and sellers together. The price can not be a party to say. However, there are two exception of such situration. One is a limited number of commodities, namely it is the scarcity goods, it actually belongs to the seller's marketing. Prices are determinant by the seller's say. Since once the seller did not sell, the marketing will trend to hard trading. The prices will go higher and higher until it meet seller's expected value. It will go higher until satisfy the sellers.  Only in this way so that they will start to sell.

Another exception is goods with an unlimited supply. Of course it actually belongs to the buyer's market. The supply exceeds the demand so that its price is determinant by the buyer. Bitcoin, which is undoubtedly belongs to the former, is the scarcity of goods. Which has the seller's market, namely the price is say by the seller. This is why in the history of bitcoins development , its price rarely go down below its cost.

Take the 4.15 event as an example, in the dump prince of the marketing, in freshman's panic, at the currency price fell to 2500 yuan, Zhai Wen Jie bought 3000BTC [2] no matter of whether 4.15 news is true or false. What make him do it as a such firmly hunter?
As I already stated, bitcoin is a valuable, is a scarcity of goods. If you are a bitcoin loyal, you want it. You can only have two choices, or buy, or mining. When the currency price go below cost, the miners will not sell it for dollars. Because they know that you don't have third way to obtain the bitcoin. At this moment you will not go to mining too, because the mining is obviously suffer a deficient. So the only way is that you have to buy the currency and then, rising its prices. You may say, I just do not buy. I just against with the miners. OK, no problem, of course, but you can't stop other loyal to buy the currency. The result is most possibility that all people going but you, that you left behind a considerable, with a empty pocket.

So, the miner is a group of people who always is  most sensitive to the currency price. If the bitcoin price has quickly go down near its cost, you still do not buy, basically you will have badly short. The reason that currency price will not smashed down is, miners do not sell, loyal customer are going to buy. Who will lose? They are these mice in the marketing. 

In short, the bitcoin price, since the date of its birth, is swings volatility, not stop. If you are going to do a miner, you must have the faith in your heart. This belief does not mean that you have to believe in bitcoin's value, but you must believe that bitcoin is belong to a rare marketing. You have to understand, trade bitcoin also has its risk, the miner has greater risk too. If Bitcoin prices fall, trader will leave the marketing by lost selling, while the miners, once purchased the miner machine, almost no way to return. So, this belief, bitcoin has its price, is a basic faith for all miner. To avoid sell your bitcoin, which you had  worked so hard to dig it out, in the lowest point, the faith is must.
 

Reference material.
[1] the currency Economics: the bitcoin transfer advantages and disadvantages
http://p2pbucks.com/?p=6881
[2] DreamColor interview Zhai Wenjie : 75M Litecoin miner machine coming May. 
http://www.cybtc.com/article-802-1.html

Translated from:http://www.cybtc.com/article-832-1.html

flowers

shake hands

shocking

pass

egg

Prev.:Freshman Tutorial Serial Part 2 :Safe use Bitcoin Wallet
Next:Freshman Tutorial Serial Part 4: The cost of bitcoin mining

To Top