Topic: A bitcoin is not only a currency, it's a share (Read 677 times)

Wanted to post this in economic section but I cannot since I am a "newbie".

A bitcoin is a share !

By buying a bitcoin you buy a mean of exchange but also one of the only 21 millions coins that will ever exist and thus you "own" part of the bitcoin payment system.

See it as a currency, yes, but see it also as a share of a financial platform.

The owners of this platform will own between 12 and 21 million coins. How much these coins are worth will depend on how useful the platform is to people and not just coin/share owners.

Bitcoin platform is not about investing, it's about facilitating transactions.

But if you want to have a share in that financial platform, you invest in a BC and hold it and thus hold a share of the platform.

It is not needed to own BC to use BC as a payment system. Transactions can be made from national currencies through exchange rate, these services already exist. People who only want to use BC for transactions purposes will not buy and hold bitcoins but only convert in and from bitcoins. Especially in the early phase when volatility is high.

Bitcoin = decentralized financial platform that owns its own currency and where the value of the platform is equal to the monetary value of its total currency.

For exemple paypal is a financial platform but it does not own any mean of exchange. It is only facilitating transactions of government issued currencies. So it's value comes only from the money it can extract from the commissions on the transactions.

You will say that the BC system does not generate any cash-flow, contrary to paypal, and thus does not pay dividends to shareholders. This is correct, but no dividend does not mean no value. With Bitcoin, the value of the platform remains in the platform in the form of it's bitcoins and cannot be loaned, sold, mortgaged, paid out or anything. There are no "profits" because the system is not extracting commissions from transactions, but there is an undeniable utility and thus a value.

People who say that "bitcoins" have no "intrinsic value" are thus wrong. They are a share of a financial platform that creates economic utility and value and that has the potential to create much much more value in the future for its current and future users. The value of the BC platform is real for the people and organisations that use it, thus a share of that platform represents real value.

If we compare currencies, one could say that they are also "shares" of the mainstream financial platform. But this is not the case. The reason is that national currencies are created out of nothing by banks through fractional reserve and by central banks through monetization. There is no limit to the quantity of currency that they create and that's why all government backed fiat currencies become worthless.

I believe that the price of a bitcoin must reflect the value of the bitcoin platform divided by the amount of bitcoins outstanding.

Today at 500 USD for 12 million BC, that's a valuation for the platform of 6 billions USD. I think this is a fair value for the system today given its use and recognition. Going much further at this stage would bring us to an overvaluation. It is maybe slightly overvalued at the moment given the uncertainties.

As more people use it, more people will be holding BC, so the value of the platform will rise and the bitcoin value will rise in equal proportion.

Calls for a BC at 10 000 USD would mean a valuation of the platform at 120 billions USD. This is not impossible but would require a massive and successful adoption of the BC system around the world without drawback. Some people are calling for a future 400 billions USD valuing the coin at over 30 000 USD. Today it's impossible to say if the bitcoin platform will reach such a socio-economic utility. A huge success of BC around the world could even lead to a valuation of the platform beyond that point. This would not be overstretched if bitcoin could reach a 1% share of the money use/transactions on the planet. If bitcoin would ever reach that stage we would be looking at a valuation of the platform around 800 billions or over 50 000 USD per share or bitcoin (depending on number of shares at that moment).
Probably a top ceiling in case of extreme success of the platform would be to achieve 15% of the worldwide transactions, valuing the platform around 10 trillions.
The other extreme of complete failure is also still possible at this stage, bringing the value of the platform back to 0. It could be for exemple, a quantum leap in technology that allows new quantum computers to break the encryption.