Topic: A more rigorous look at bitcoin's fundamental value (Read 4418 times)
actually gold has other properties besides being pretty that are more important. it is fungible and easy to measure the purity of.
ok so it seems everyone has taken the OP's word as "gold" (pun intended) and ran with it.
you have forgot something rather crucial, gold indeed is a way to verify your worth by how much you have. you keep it because it is valuable, and its valuable because it is rare AND in demand. it is NOT in demand BECAUSE it's rare, its in demand because it is a very pretty rock. else people would just use celebrity poop as a rare currency that is valuable and in demand because it's rare and celebrities can only make so much over time.
gold is rare and always will be. gold is always in demand because it makes pretty jewelry. this makes it valuable.
BTC is rare and always will be. BTC is not in demand right now (not like it would be under ideal circumstances).
BTC WILL BE in demand when you are able to USE them. when you can spend them like you can the USD at many places. else you're just trading celebrity poop.
maybe one day people will think gold looks ugly and switch to celebrity poop and i can change a few words in this post for great humor!
basically rarity and cost to produce doesnt create demand or value. else the 89 VW Jetta i restored (esoteric reasons) would be worth a shit ton of money to anyone, not just half of what i put into it to the right guy.
you have forgot something rather crucial, gold indeed is a way to verify your worth by how much you have. you keep it because it is valuable, and its valuable because it is rare AND in demand. it is NOT in demand BECAUSE it's rare, its in demand because it is a very pretty rock. else people would just use celebrity poop as a rare currency that is valuable and in demand because it's rare and celebrities can only make so much over time.
gold is rare and always will be. gold is always in demand because it makes pretty jewelry. this makes it valuable.
BTC is rare and always will be. BTC is not in demand right now (not like it would be under ideal circumstances).
BTC WILL BE in demand when you are able to USE them. when you can spend them like you can the USD at many places. else you're just trading celebrity poop.
maybe one day people will think gold looks ugly and switch to celebrity poop and i can change a few words in this post for great humor!
basically rarity and cost to produce doesnt create demand or value. else the 89 VW Jetta i restored (esoteric reasons) would be worth a shit ton of money to anyone, not just half of what i put into it to the right guy.
As I understand from this chart http://bitcoin.atspace.com/income.html the daily income per Mh/s is decreasing since October 2010, doesn't seem like a bubble to me.
Am I missing something?
Am I missing something?
It's the profit margin of mining that will go down, not the bitcoin value. Growth of the bitcoin supply stays the same.
Do you really think this anomaly of mining for almost free money will continue very long?
Anybody with $700 can start mining for a current cost of $2 per bitcoin and sell it for 13 times the cost.
So yeah it's a bubble.
If you could setup a gold mine today and mine gold for $115 an oz and sell it for $1500 oz how long do you think gold would continue selling for $1500 oz.
Wake up
So yeah it's a bubble.
If you could setup a gold mine today and mine gold for $115 an oz and sell it for $1500 oz how long do you think gold would continue selling for $1500 oz.
Wake up
But bitcoins are not infinit, as gold.
As far as we know...
I'm sure there's a endless supply of people in the world who would be happy to make 30% on their money mining bitcoins. Which means say goodbye to 15 times your cost of productionin the near future. It doesn't matter about the end supply number of bitcoins. Competitive mining is coming which will lower the price of bitcoins.
The Mining forum is full of people saying mining isn't worth it. They're only saying that to discourage people to mine(they want it to themselves) by saying that it encourages people to buy bitcoins which miners are selling to cover their costs.
Keep in mind, that because of the difficulty adjustments, more miners does not mean that the supply will increase at a higher rate. The more miners there are, the less each will get in return, thus making it less economic to generate bitcoins and if anything would increase the price.
The bottom line. Mining is so profitable at the current price it will never sustain it's current ROI long term.
Mining competition is coming at current bitcoin prices and difficulty. And people will invest money in mining until it becomes unprofitable. To me a in a speculative market like bitcoins at the current difficulty 3 times cost of production seems reasonable.
Do you really think this anomaly of mining for almost free money will continue very long?
Anybody with $700 can start mining for a current cost of $2 per bitcoin and sell it for 13 times the cost.
So yeah it's a bubble.
If you could setup a gold mine today and mine gold for $115 an oz and sell it for $1500 oz how long do you think gold would continue selling for $1500 oz.
Wake up
So yeah it's a bubble.
If you could setup a gold mine today and mine gold for $115 an oz and sell it for $1500 oz how long do you think gold would continue selling for $1500 oz.
Wake up
But bitcoins are not infinit, as gold.
As far as we know...
I'm sure there's a endless supply of people in the world who would be happy to make 30% on their money mining bitcoins. Which means say goodbye to 15 times your cost of productionin the near future. It doesn't matter about the end supply number of bitcoins. Competitive mining is coming which will lower the price of bitcoins.
The Mining forum is full of people saying mining isn't worth it. They're only saying that to discourage people to mine(they want it to themselves) by saying that it encourages people to buy bitcoins which miners are selling to cover their costs.
Keep in mind, that because of the difficulty adjustments, more miners does not mean that the supply will increase at a higher rate. The more miners there are, the less each will get in return, thus making it less economic to generate bitcoins and if anything would increase the price.
Anybody with $700 can start mining for a current cost of $2 per bitcoin and sell it for 13 times the cost.
So yeah it's a bubble.
If you could setup a gold mine today and mine gold for $115 an oz and sell it for $1500 oz how long do you think gold would continue selling for $1500 oz.
Wake up
So yeah it's a bubble.
If you could setup a gold mine today and mine gold for $115 an oz and sell it for $1500 oz how long do you think gold would continue selling for $1500 oz.
Wake up
But bitcoins are not infinit, as gold.
As far as we know...
I'm sure there's a endless supply of people in the world who would be happy to make 30% on their money mining bitcoins. Which means say goodbye to 15 times your cost of productionin the near future. It doesn't matter about the end supply number of bitcoins. Competitive mining is coming which will lower the price of bitcoins.
The Mining forum is full of people saying mining isn't worth it. They're only saying that to discourage people to mine(they want it to themselves) by saying that it encourages people to buy bitcoins which miners are selling to cover their costs.
Anybody with $700 can start mining for a current cost of $2 per bitcoin and sell it for 13 times the cost.
So yeah it's a bubble.
If you could setup a gold mine today and mine gold for $115 an oz and sell it for $1500 oz how long do you think gold would continue selling for $1500 oz.
Wake up
So yeah it's a bubble.
If you could setup a gold mine today and mine gold for $115 an oz and sell it for $1500 oz how long do you think gold would continue selling for $1500 oz.
Wake up
But bitcoins are not infinit, as gold.
As far as we know...
The creation of new bitcoins is similar to gold in that it is a small amount relative to those coins already in existence.
~165,000 tonnes of total gold mined (wikipedia), ~2,500 tonnes mined per year = 0.01% increase in gold / year
6,492,950 BTC in circulation, ~2,628,000 will be mined this year = ~40% increase in BTC / year
I wouldn't say 40% is a small amount relative to those already in existence.
Anybody with $700 can start mining for a current cost of $2 per bitcoin and sell it for 13 times the cost.
So yeah it's a bubble.
If you could setup a gold mine today and mine gold for $115 an oz and sell it for $1500 oz how long do you think gold would continue selling for $1500 oz.
Wake up
So yeah it's a bubble.
If you could setup a gold mine today and mine gold for $115 an oz and sell it for $1500 oz how long do you think gold would continue selling for $1500 oz.
Wake up
Bitcoins cost of production are about $1
1.5$ - 2$You forget the extras needed for production, on small scale or large scale bitcoin mining.
Even with a couple of months worth of increased difficulty built into the current price it's current price is a bubble.
What are the barriers to entry a $700 -$1000 machine.
It takes very little knowledge to start mining for bitcoins.
This will end very badly for anyone who has invested in bitcoins in the last 30 days
How long until a bubble is not a bubble anymore? When you start calling it dolar?
Bitcoins cost of production are about $1
1.5$ - 2$You forget the extras needed for production, on small scale or large scale bitcoin mining.
Even with a couple of months worth of increased difficulty built into the current price it's current price is a bubble.
What are the barriers to entry a $700 -$1000 machine.
It takes very little knowledge to start mining for bitcoins.
This will end very badly for anyone who has invested in bitcoins in the last 30 days
Bitcoins cost of production are about $1
1.5$ - 2$You forget the extras needed for production, on small scale or large scale bitcoin mining.
And yes that includes all costs
So any one with (how much?) money can dig up an ounce and sell it for 3x as much? Unless it takes 30 years this kills everything and everyone would do it. There are no free 200% auto-profits sitting there.
The original value of gold was primarily as a status marker. It wasn't tremendously useful for anything but communicating the amount of resources a person could afford to devote to non-essential pursuits.
Bitcoin originated in exactly the same way, basically "nerd points" or status markers that communicated the ability to devote resources (intelligence, time, processing power) to a non-essential pursuit. The obvious difference is that gold accomplished it's transition into money over millennia, while Bitcoin achieved this status over mere months.
The fact that some people (like myself) will also hold Bitcoin for ideological reasons, adds to their value as long as we "fundamentalists" hold to our ideology as well. We are working to make bitcoin more useful and usable for a larger market at the same time, which may speed adoption as well as increase our wealth.
Bitcoin originated in exactly the same way, basically "nerd points" or status markers that communicated the ability to devote resources (intelligence, time, processing power) to a non-essential pursuit. The obvious difference is that gold accomplished it's transition into money over millennia, while Bitcoin achieved this status over mere months.
The fact that some people (like myself) will also hold Bitcoin for ideological reasons, adds to their value as long as we "fundamentalists" hold to our ideology as well. We are working to make bitcoin more useful and usable for a larger market at the same time, which may speed adoption as well as increase our wealth.
The fundamental value of bitcoin is that people want to use it to transport value over time.
No, a lot of people seem to think that, but it's not the case. Bitcoins are a poor long-term store of value.
Their fundamental value is that people want to use it to transport value over space.
Like from the U.S. to Africa. People also want to do it securely, anonymously, and without a central authority.
THAT is the inherent value of bitcoins, folks. Forget it at your own peril.
it isn't secure. bitcoins are like cash.
it isn't anonymous.
large cash transfers can't become a motivation until the market thickens up.
Secure in the sense that cash is. When someone gives it to you, provided you wait for enough confirmations, it's extremely safe from being "recalled".
And no, it's not totally anonymous, but anonymous is what people want, and right now their best bet for transferring value across space and not having the transaction traceable to them is bitcoin.
The fundamental value of bitcoin is that people want to use it to transport value over time.
No, a lot of people seem to think that, but it's not the case. Bitcoins are a poor long-term store of value.
Their fundamental value is that people want to use it to transport value over space.
Like from the U.S. to Africa. People also want to do it securely, anonymously, and without a central authority.
THAT is the inherent value of bitcoins, folks. Forget it at your own peril.
it isn't secure. bitcoins are like cash.
it isn't anonymous.
large cash transfers can't become a motivation until the market thickens up.
The ability to pay for goods and services is the only way Bitcoin will develop into a viable currency.
Im usually not into blog spam but this is a good read.
http://samablog.robsama.com/?p=5559
Basically the tipping point is when amazon accepts bitcoins straightup. I do see this happening in less than a year. What attracts big business to accepting bitcoins is their transaction costs they pay to the credit and debit network dissapears. The transaction network becomes the bitcoin network. I also see bitcoins going onto phones to be transfered over rfid or qr codes...
And yes that includes all costs
So any one with (how much?) money can dig up an ounce and sell it for 3x as much? Unless it takes 30 years this kills everything and everyone would do it. There are no free 200% auto-profits sitting there. Jump to: