Topic: Bitcoin priced as a function of net human capacity (Read 916 times)

If Bitcoin was the only medium of exchange that might make sense... but unfortunately, I don't think we can take the value of all labor on earth and assign that value to Bitcoin. It might be a good theoretical point to estimate Bitcoin's value if it did replace all other mediums of exchange.

There are easier ways to estimate the potential value of a bitcoin. One way is to assume that all money in the world is replaced by bitcoins.

The monetary base of the world is somewhere around $15 trillion (my rough guess), so if all the money in the world is replaced by bitcoins today, then the value of a bitcoin would be $15 trillion / 13 million, or about $1 million (with lots of hand-waving).

I am partial to Edison's original currency idea. Set the price to the value of a basket of goods and services in as decentralized a way as possible so that no one sector can manipulate the price. 

interesting idea

i would like to see bitcoin as a percentage of total potential human productivity

and see how it increases over time, as adoption of bitcoin increases

better than comparing bitcoin vs ever increasing fiat

Well no, that's the theory behind free markets, that they result in the "fair" equilibrium price that brings the most benefit to the market as a whole (other variables constant, hence the long-term steady state example where all world nations are considered "developed").

This is the 1st fundamental theorem of economics (the 2nd being the theory that forms the basis for communism, where a social planner can theoretically know to set production levels and prices ahead of time to start from equilibrium rather than reach it through the action of free markets).

Impossible to get consensus without legislation.

Labor market is variable.  Doctors paid more than laborer, etc..

So essentially, you mean price it based on the global GDP?  That's a theory that I've had before, that in steady state, the world population will invest a fixed percent of its wealth in BTC, yielding on average a 3% annual return for holding it as the world economy continues to grow.

What if we were to price BTC in terms of the net human work capacity available? Everything that is done, produced, made etc.... is a result of human work. Even if it was a robot that did the work, the initial work in building that robot was human.

Could we value BTC as a formulae such as: (World Population X Human work potential in a lifetime) / Total BTC in circulation.

Thus we could then say that a BTC would be worth:
(7.162 Billion people X 10 hours a day X 288 days a year X 50 working years)/ 12,000,000 = 8,594,4000 hours of human labour.

As the number of BTC increases or as the world population decreases, the total worth of human labour per BTC would change accordingly.

If it was agreed by a group body what the 'worth' of a BTC is independent of existing fiat currencies (which are frankly worthless), we could then ignore all Fiat completely and create an economy independent of fiat currencies - trading on a mutually agreed value of a BTC.

It might seem then that a Satoshi would be worth about 1 human hour of labour, but once you take into account what it takes to create something it isn't in the realms of unrealistic.

So to sum up: Value BTC as a function of HUMAN LABOUR POTENTIAL.

Bad or good idea?

I believe one of the failing points of bitcoin is that we constantly want to price it against other fiat currencies and present Bitcoin as a fiat currency itself. Although it shares many qualities of a fiat currency, it also shares more qualities of a hard currency like gold yet all we can quantify it is against the total sum of bitcoins in existence and predicted to exist.

Bitcoin needs to ignore all other money and just become a means of transacting value which is its true purpose. We can't look at it in fiat because when the central bank bullshit blows apart and fails catastrophically, nobody is going to give a shit about fiat currency so you won't be able to buy any with a bag full of $$$'s.

So how much should a BTC be worth valued against something intrinsic? How do we value it more precisely? We could say that if it took over all financial markets it would be worth what the current financial market is worth, yet if it did replace existing financial markets you can no longer define it as being worth so much in USD as they won't exist any more.

Instead it makes more sense to value it against something we can all agree on and which is true to bitcoins nature.