hixidom wrote:I wonder how the value of bitcoins is calculated. When I look at the cost of things on the deep web, the prices seem to be pretty stable. What does it really mean for a currency to be unstable if the products you can buy with it remain at the same price? I'd be curious of who is tracking this instability and whether or not they have a motive for detering people from using bitcoins instead of the usual currencies.
The price is calculated by what the market demand/supply is on the various excanges at any given time.
The demand is fluxuating and spiking due to political/economic/social events at the present time, and the publication of articles that reach a wide audience who rush to "get in on the bitcoin goldrush".
The supply is derived by-
A) sellers (big & small) and if they want to sell at what price the coin is trading at at the time.
B) The profitibality of miners to run their rigs and the associated energy costs, if they aren't making $, they wont be mining, and the rate at which new coins are created will slow, and demand will exceed supply, and a correction will fix that problem.
C) A fixed rate increase in the difficulty of block finding by miners, to ensure the currency base cannot be increased/decreased artificially without due hashing and the energy costs associated with it. Plus theres a cap on how many coins will ever be created, but that is semi-irrelevant once its established as a fiat (or not?) currency, with semi-stable value long term. A coin will just increase in value until the reach (for the sake of hypotheticals $1000+), and we'll be conducting transactions in fractions of bitcoins instead of whole coins like in the good old days.
Theres also conspiracy/valid theorys that large players with a vested interest in controlling monetary policy, and the currency base, are manipulating the market by high volume transactions for the sake of sabotaging the bitcoin. State entitiys have been theorized to be behind such antics as well, not suprizingly. But in all reality if that was the case, the state entity would be acting on behalf of a powerful economic player, like the private banks at the Fed Reserve not wanting their house of cards to collapse, so they use their proxy "private" financial institutions to manipulate the cost of currency trading. Not exclusive to bitcoins either, theres factual evidence it happens with metals, fiat currency, stocks, futures, etc.
"let those who have talked to the elves, find each other and band together" -TMK
In a society in which nearly everybody is dominated by somebody else's mind or by a disembodied mind, it becomes increasingly difficult to learn the truth about the activities of governments and corporations, about the quality or value of products, or about the health of one's own place and economy.
In such a society, also, our private economies will depend less upon the private ownership of real, usable property, and more upon property that is institutional and abstract, beyond individual control, such as money, insurance policies, certificates of deposit, stocks, etc. And as our private economies become more abstract, the mutual, free helps and pleasures of family and community life will be supplanted by a kind of displaced citizenship and by commerce with impersonal and self-interested suppliers...
The great enemy of freedom is the alignment of political power with wealth. This alignment destroys the commonwealth - that is, the natural wealth of localities and the local economies of household, neighborhood, and community - and so destroys democracy, of which the commonwealth is the foundation and practical means.โ - Wendell Berry