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134 sats \ 29 replies \ @Undisciplined 22h \ on: Fama: Bitcoin is Dead (Promarket/Capitalisn't) econ
Does "fixed supply" annoy you as much as it's beginning to annoy me?
I know that's how "supply" is used when we talk about "money supply", but it's not the same as the "supply" in "supply and demand".
The stock of bitcoin may be more or less fixed, but there's nothing fixed about people's willingness to part with it. Price, therefor, is still driven by both supply and demand.
yup, 100%.
I hadn't really considered it, easily keeping the two concepts (stock vs flow) apart but @Scoresby's post the other week really illustrated to me that this terminology confuses more than it illuminates.
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You rang?
I am sure that I have contributed to this confusion quite a bit. Indeed, I find that I'm am still confused (although hopefully not about the terms any longer -- thanks to you and @Undisciplined).
Unfortunately, I'm stuck on this idea of Voskuill's that selling a coin does not decrease its price.
If a trade increases the supply of one item in the trade, it must also increase the supply of the item on the other side of the trade.
If you dump fork coin for bitcoin your trading partner is dumping bitcoin for fork coin. And if you dump fork coin for dollars, your trading partner is dumping dollars for fork coin.
The result from the position of those who think trading increases supply is that each side of the trade decreases the price of the thing they are selling. But how could both things decrease in price (in terms of each other) simultaneously?
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one way we can see that this isn't a paradox or that there's a flaw in the logic is this:
if, because for every buyer there's a seller and thus "selling a coin does not decrease its price," how could (relative) prices ever move?
How is it that BTC/USD was 101,500 this morning and is 96,000-something now? every single trade that moved the price up, down, sideways and then down during the day had symmetrical buyers and sellers on each side.
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The original confusion reminded me a lot of studying Newton's 3rd Law for the first time and not understanding how any movement can happen.
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I like this analogy!
The apple is pulling on the earth as hard as the earth is pulling on the apple.
But the apple moves because F = ma and the Earth's mass is relatively much bigger than the apple's. For one-sided acceleration to occur, there must be a difference in mass.
Selling btc for dollars exerts the same sell pressure on btc as the person selling dollars exerts on dollars.
But the price of btc goes down only if fewer people want btc and the next offer to sell btc at that level of dollars doesn't have a buyer. For a price change to occur, there must be a difference in buyers.
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That's it... And the relative volumes can be non-equal.
Now, for your Voskuil example, does that imply that differences in sales volume on either side of a trade CAN effect price?
How is it that BTC/USD was 101,500 this morning and is 96,000-something now?
Wouldn't it be that the price has moved because people want less bitcoin than they previously held (or more of something else)?
When these holders of btc wanted to acquire something else they had to look longer/harder/offer more btc to find people who were willing to trade with them.
The trades themselves don't move the price. The change in people wanting bitcoin moves the price.
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...but they display that wanting less/more by acting in the marketplace, ie making trades
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Right, but this is what gets me: supply and demand is really just demand then -- either not demanding as much as you once did (supply) or demanding more than you once did (demand).