So after taking a look at the charts again today, it seems that Primecoin has dropped below $2 USD…
It’s definitely dropping relative to Bitcoin as well, and it all seemed to have started when the difficulty reached 10.
Is this a side effect of the difficulty increase, or just miners being over-reactive? Most importantly, how can we help preserve and raise the value of Primecoin (but not artificially)?
Edit for moderators: I might have put this in the wrong section of the forum, please move it to an appropriate one if necessary (like general discussion)
I’m not sure how the difficulty going up would effect the price relative to bitcoins. When the difficulty was 9.99 you practically had to find a length 10 chain anyways. The rate at which blocks are being found is the same. The only difference is that the same amount of coins is spread over a larger number of miners. I just don’t see why a single person getting less coins for the same amount of work would cause the coin to lose value. If anything it should cause the value to increase.
I think a major contributing factor to the lowering of Primecoin value might be the fact that less people are finding it profitable to mine after the difficulty hike (as we’ve all seen so far, everyone is getting less XPM per hour)…
Personally, I can’t see that what a given miner does, or even a bunch of miners do, has a measurable effect on the spot price of XPM. I don’t have hard numbers, so I’m basing my assumptions on what I see in the BTC and PPC markets – but there just aren’t enough miners out there to influence the price to the degree that we’ve seen since difficulty reached 10. In both the BTC and PPC markets, it is my understanding that there are far more holders of currency who have never mined, and bought their holdings, than there are those who mined for their holdings (or even a portion of those holdings).
Isn’t it equally likely that the difficulty hike only has a small impact on the price of XPM, and the major catalyst is a consolidation of people’s types of holdings due to the massive uncertainty in the market?
If people are nervous about the long-term growth of their Bitcoin investment (which, for better or for worse is still the “gold standard” of crypto), it would reason that they would be more nervous about their other crypto holdings that don’t right now have the marketshare of Bitcoin. If that’s at least partially true, rationally you can expect that those people would be divesting themselves of their non-BTC holdings and either holding fiat until the market turmoil subsides, or, reinvesting in BTC directly.
I think there are more plausible explanations than something related t mining and diff:
Empircally, altcoins all seem to be some kind of lever on bitcoin (rise and fall overproportionally). I have to hypotheses why:
The propability on an altcoins success is dependent on bitcoins success. Price “compiles” from something like the expectation of how many goods you will be able to buy in the future divided by the expected number of coins in the future. If bitcoin succeed, the propability of an altcoins success rises.
When money flows out of bitcoin it triggers sells of altcoins because most of the altcoins are traded with btc.
You apparently don’t see the earthquake happening in BTC/fiat. Chinese government banned transfering of fund into exchange sites. Chinese sites account for more than 50% of cryptocurrency transactions. BTC/USD drops from $800 to <$450 quickly as a result. Almost all altcoins lost value against BTC because there is even less confidence in alt-coins in people looking for quick profits. Mayjor correction is going on. Bubbles burst enmass.
I agree, it doesn’t. Unless more people aren’t mining, less people are mining. Maybe one or two people are just mining a lot with multiple machines. They might be scaring everyone away
The value of all these coins are backed by one thing; Confidence. Bitcoin, being the oldest and most accepted by merchants around the world than any of the coins as a medium of exchange has earned the confidence of investors, speculators and miners alike. A couple of weeks ago, 1 Bitcoin was trading at ~$1200. Suffice to say, when a Tesla was purchased just by using Bitcoins, it made major news and fueled speculations that more and more businesses will soon accept crypto coins as a form of payment. But confidence has been shaken recently by these articles, Zerohedge and Bitcoins Spark Regulatory Crackdown as Denmark Drafts Rules - Bloomberg or http://www.wired.com/wiredenterprise/2013/12/casascius/ and many more articles about govt trying to regulate crypto coins. Since the high of about $1200, the price per Bitcoin has dropped roughly half.
Decreased mining activities have a negligible downward impact on the price or value of any coin, unless ALL miners abandon the coin. In that case, there is nothing to support transactions. That i believe will only happen when the miners lose all confidence in that coin.
More people are mining and the value is going down. It doesn't make any sense.
Increased mining activities will not directly increase the value of the coin. The only way to increase the value of a coin is to have it transacted. Either by trading coin/coin, coin/fiat,
or coin for goods and services. As the activities of trading increase so will public exposure, in turn confidence that the coin is a viable medium of exchange will increase.
I firmly believe that the whole crypto currency economy is one big giant social/economical experiment, will we the early adopters and believers see this baby to its 10th birthday? 20th birthday? or will govt worldwide regulate it to death? or will the daily extreme volatility render crypto coins unsuitable for everyday commerce and causing crypto coins to fade away as a novelty of the internet? We will have to wait and see.
For now, there are many ways support your coin. By mining, you are supporting transactions and securing the blockchain. By introducing and assisting local businesses in accepting coins as payment. By spreading the concept of crypto currencies to friends, family and associates, one easy way of doing this is by starting a club if you are in college (I did this btw and it was interesting and hilarious at the same time, but thats for another post. This one is long enuf already)
i agrre with acorn. to simplifiy, that chain of causality goes like this:
more confidence -> more demand -> higher price -> more profitable to mine -> more mining -> higher diff
diff is the last in chain and has not much impact on anything…it might have some impace on confidence however ^^
the first element in the chain was highly affected by the tragedy happening in china right now. and as i mentioned before: rise and fall in btc always impacts and impacted confidence in all altcoins, not only xpm.
I was also thinking this:
If difficulty goes up, and a handful of miners don’t want to mine anymore and lose confidence in Primecoin, then they will sell their holdings in exchange for something like Bitcoin. Thus, the supply of Primecoin increases dramatically and these sellers are forced to sell at lower and lower prices in order to get rid of their coins.
Good news though (at least temporarily): Primecoin seems to be going back up a bit (just over $2 USD from just under $2 yesterday).
[quote=“alfred, post:13, topic:1191”]That’s a good point.
I was also thinking this:
If difficulty goes up, and a handful of miners don’t want to mine anymore and lose confidence in Primecoin, then they will sell their holdings in exchange for something like Bitcoin. Thus, the supply of Primecoin increases dramatically and these sellers are forced to sell at lower and lower prices in order to get rid of their coins.
Good news though (at least temporarily): Primecoin seems to be going back up a bit (just over $2 USD from just under $2 yesterday).[/quote]
I did actually buy some more XPM yesterday, extreme amounts of Bitcoins have been cashed out now before Christmas.
It will stabilize again in January with another rally right before the chinese new year.
Alot of “desperate” people have cashed out but look at f:ex digitalcoin, some big corp (i guess) bought 1+million DGC on Saturday for up to .0009 when price today is .0003.
On Thursday it was 900% between high/low 0.0001 and 0.0009.
One day or the other JP Morgan or something decide they want some XPM…
another wave of impact to crytocoin is coming. indonesia and korea just announced to stop bitcoin trading in their country today.
once singapore and HK (as trade free country) joining this . sure bitcoin will drop below $400.
china is holding 40~50% of bitcoin nowaday. i dont think US or western will love to see china miner growing wealth from it
primecoin as linked with bitcoin as crystocoin sure will get affected but hopefully not that .
I agree, it doesn’t. Unless more people aren’t mining, less people are mining. Maybe one or two people are just mining a lot with multiple machines. They might be scaring everyone away :'([/quote]
Exactly, as I explain in another thread:
This behaviour is only exhibited in cpu coins. To some lesser extent the GPU coins. It is never exhibited in bitcoin as ASICs still make it profitable.
Historically this has been due to botnets. You can’t deny it. The mathematics don’t even justify it.
Even if the price of primecoin skyrockets, you will still have a lagged effect where it is beneficial for botnet operators to increase payouts for “infected computers” and they will still override any profitability an honest miner can make.
But I am in it for the long run. Price will reach $5 again