How is Bitcoin worth something in another currency?

DannyHamilton

legendary

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Quote from: AquaticBob on June 22, 2013, 02:55:34 PM

So, how is an online cryptographic currency worth, for example, over $100 US dollars?

I'm sorry, I don't understand your question. Perhaps you could re-phrase it?

The best I can make out of what you've asked is that you are asking:

"So, how can something that is worth something be worth, for example, something?"

I could ask you a similar question:

"So, why would an online cryptographic currency be worth, for example, less than $1000 US dollars?

xxjs

sr. member

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The future value of bitcoins can be stipulated by number of users and their bitcoin holding preferences. Say there will be a billion users, each prefer to hold say 2 month's wages in bitcoin (because it will be the most stable and useful money). You do the math, it will be a hughe number in 2013-dollar equivalents.

Correspondingly we can compute the value now. I believe there are 10000 Silk road users, each holding 100 dollars worth in bitcoins, and only for the duration of a trade, say one week. That means a total value of 10000*100/50 =5000 USD total. Divide by 10 million existing coins, and you get 0.0005 USD per coin.

The difference is that some people, the entrepreneurs, see the former calculation, and drives up the price prematurely by saving in coins.

Call it speculation, but it is necessary to get the system up and going. Besides, everybody speculates. If you go to Argentina these days on vacation, you would convert your dollars in small portions during the stay, but an argentinian visitor to USA would convert his pesos in one lump at the beginning of the stay. That is speculation on both parties. There are uncountable other examples.

xxjs

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Quote from: mprep on June 23, 2013, 04:51:08 AM

Quote from: xxjs on June 23, 2013, 03:48:12 AM

Quote from: MstCoin on June 22, 2013, 09:53:51 PM

I hear, some people have started buying it up, to store wealth, because its safer than a bank/ I myself, I mine it for extra beer money lol

Yes, the tendency towards saveing is strongly individual.

Actually taking bitcoin as sort of a savings account is kind of risky.

Yes, kind of. In my opinion, the reward/risk ratio is far better than bank deposits, or house investment, or any other saving option currently available.

herzmeister

legendary

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Quote from: ktttn on June 22, 2013, 02:59:27 PM

Even more bafflingly,
How is a federal reserve note worth BTC0.01?

Force.

Quote from: AquaticBob on June 22, 2013, 02:55:34 PM

So, how is an online cryptographic currency worth, for example, over $100 US dollars?

Utility.

mprep

global moderator

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In a world of peaches, don't ask for apple sauce

Quote from: xxjs on June 23, 2013, 03:48:12 AM

Quote from: MstCoin on June 22, 2013, 09:53:51 PM

I hear, some people have started buying it up, to store wealth, because its safer than a bank/ I myself, I mine it for extra beer money lol

Yes, the tendency towards saveing is strongly individual.

Actually taking bitcoin as sort of a savings account is kind of risky.

xxjs

sr. member

Activity: 280

Merit: 250

Quote from: MstCoin on June 22, 2013, 09:53:51 PM

I hear, some people have started buying it up, to store wealth, because its safer than a bank/ I myself, I mine it for extra beer money lol

Yes, the tendency towards saveing is strongly individual.

MstCoin

newbie

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I hear, some people have started buying it up, to store wealth, because its safer than a bank/ I myself, I mine it for extra beer money lol

ChazM

newbie

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How is anything worth anything? Because we want it, and we're willing to give stuff away for things we want. It could be Bitcoins, dollars, or just our old junk. If somebody else wants what I'm giving away, that is value.

pepe

newbie

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