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BitHodler

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Quote from: enhu on November 04, 2019, 03:03:01 PM

Security is one reason why BTC price could go up, hashrate makes it more secure and zooming out the chart we'll see that from the beginning BTC is actually rising since 2009. Zooming in to particular time frame in the charts will make it difficult to see where the price can go.

Most buyers aren't really interested in the fundamentals even though it's very important to focus on if you're long term minded. It's just the repetitive nature of this market's cycles that interests buyers.

Hashrate follows price, so as long as we see the price go up, the hashrate will go up too even though there could be a few month delay. Similarly, the hashrate will drop when the price drops because it's no longer profitable to mine.

We saw that happen in 2018 where the hashrate almost halved at one point because the price kept falling consistently for nearly a whole year. It shocked a lot of people because they didn't believe $6k would break.

doomloop

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Quote from: enhu on November 04, 2019, 03:03:01 PM

Quote from: STT on October 30, 2019, 05:44:46 AM

Quote

at 1000ehs, 1 BTC = $100k

Cool idea and why shouldnt the world be this neat but the fly in the soup here is the inclusion of the $ sign. We cant rely on a constant $ value, I guess perhaps we can refer to 2019 $ and account for its variability afterwards. If we do that we might as well go back to 1971 and take the last fixed price for dollar as the measure, in fact we'd take the grams or troy ounces of gold equal at that time as it would translate in a non changing measure physically.

The free market will always set the price with some error up or down and it generally does eventually do a good job of accounting for various inflation and excess supply available. If we could fix BTC to another commodity, it might be energy as that is used to create the price and gold can also be said to have a relationship to the oil price again with energy a large part of the costs to mine gold. So that is the way I'd go to find a constant relationship in the price.

Quote

The security of the blockchain scales directly with the hash rate and so should
the price.

I do think there is some good comparable measure here between blockchains thats fair reflection of approximate worth.

BTC is a currency, the price of it depends to its demand and supply just as fiat currencies which fluctuation can be seen in foreign exchange. If BTC is a currency then price will dip and bounce.

Security is one reason why BTC price could go up, hashrate makes it more secure and zooming out the chart we'll see that from the beginning BTC is actually rising since 2009. Zooming in to particular time frame in the charts will make it difficult to see where the price can go.

Since 2009, we have overall seen increase in the value of bitcoin and also a significant increase has been observed in the number of bitcoin users i.e. both investors and holders. Though the journey of bitcoin is full of pumps and dumps but on the whole, people have observed progress in bitcoin along with altcoins. Even in present situation, we shall simply increase investment in bitcoin and it will pump harder than we are expecting.

enhu

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Quote from: STT on October 30, 2019, 05:44:46 AM

Quote

at 1000ehs, 1 BTC = $100k

Cool idea and why shouldnt the world be this neat but the fly in the soup here is the inclusion of the $ sign. We cant rely on a constant $ value, I guess perhaps we can refer to 2019 $ and account for its variability afterwards. If we do that we might as well go back to 1971 and take the last fixed price for dollar as the measure, in fact we'd take the grams or troy ounces of gold equal at that time as it would translate in a non changing measure physically.

The free market will always set the price with some error up or down and it generally does eventually do a good job of accounting for various inflation and excess supply available. If we could fix BTC to another commodity, it might be energy as that is used to create the price and gold can also be said to have a relationship to the oil price again with energy a large part of the costs to mine gold. So that is the way I'd go to find a constant relationship in the price.

Quote

The security of the blockchain scales directly with the hash rate and so should
the price.

I do think there is some good comparable measure here between blockchains thats fair reflection of approximate worth.

BTC is a currency, the price of it depends to its demand and supply just as fiat currencies which fluctuation can be seen in foreign exchange. If BTC is a currency then price will dip and bounce.

Security is one reason why BTC price could go up, hashrate makes it more secure and zooming out the chart we'll see that from the beginning BTC is actually rising since 2009. Zooming in to particular time frame in the charts will make it difficult to see where the price can go.

STT

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Quote

at 1000ehs, 1 BTC = $100k

Cool idea and why shouldnt the world be this neat but the fly in the soup here is the inclusion of the $ sign. We cant rely on a constant $ value, I guess perhaps we can refer to 2019 $ and account for its variability afterwards. If we do that we might as well go back to 1971 and take the last fixed price for dollar as the measure, in fact we'd take the grams or troy ounces of gold equal at that time as it would translate in a non changing measure physically.

The free market will always set the price with some error up or down and it generally does eventually do a good job of accounting for various inflation and excess supply available. If we could fix BTC to another commodity, it might be energy as that is used to create the price and gold can also be said to have a relationship to the oil price again with energy a large part of the costs to mine gold. So that is the way I'd go to find a constant relationship in the price.

Quote

The security of the blockchain scales directly with the hash rate and so should
the price.

I do think there is some good comparable measure here between blockchains thats fair reflection of approximate worth.

Doell

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If this succeeds will remain like that or it just a coincidence well have you try to look back at previous year do that have anything too? bitcoin prices all real from the beginning until become a big at this moment ,see pull of price bitcoin not on hash as you mean it's only for miner and it's just a coincidence

Wysi

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Quote from: Leyss on October 29, 2019, 01:38:13 PM

Compiling any formulas for determining the price of bitcoin or any other decentralized cryptocurrency will be deliberately erroneous. Such a formula simply does not exist and cannot exist. The price of a decentralized cryptocurrency completely depends on the ratio of supply and demand in the market. These factors cannot be predictable. The actual price of the cryptocurrency is only the one that exists at the moment. In a moment, the real price for it will already be different.

There were no prediction which were made in last one and half years have even reached closer to how the market has been and it will be foolishness to depend of predictions or analysis because we know very well those days are gone when it used to work but since there are too many big players involved in the bitcoin market we cannot predict how they can alter the demand and supply according to their plan which will affect the entire market and we are small fish trying to get benefited by these fluctuations.

Leyss

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Compiling any formulas for determining the price of bitcoin or any other decentralized cryptocurrency will be deliberately erroneous. Such a formula simply does not exist and cannot exist. The price of a decentralized cryptocurrency completely depends on the ratio of supply and demand in the market. These factors cannot be predictable. The actual price of the cryptocurrency is only the one that exists at the moment. In a moment, the real price for it will already be different.

error08

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Quote from: bitmover on October 25, 2019, 12:41:33 PM

Every asset price is determined not only by fundamentals, balance of the company, or whatever metric. The price is determined mostly by investors expectations about the future.

https://www.investopedia.com/terms/m/marketsentiment.asp

For example, even if you metric is correct, but there is a strong felling that energy prices will go down, or that bitcoin will be banned in US, the price will fall.

The metric is necessary to establish a rational base price. Any deviation from the base price is irrational and shouldn't dominate the market.

While your point of view on metrics might be true and I agree if there is a rational base price to avoid massive dump, but it isn't the case for bitcoin price, yes it can be a reference but we know the price mostly defined by the market.
Not only bitcoin, everything in this world, the prices determined by two parties (buyer and seller), even for something precious which holds higher value like a diamond or luxury cars, if no one wants to buy, it means nothing "0" in the market.
If bitcoin price set by hash metric, then its price will always rise up since there always more people who want to become miners and more ASICs add to the network.

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Quote from: Wysi on October 28, 2019, 03:04:19 AM

Quote from: Wexnident on October 27, 2019, 11:15:28 PM

I don't understand how you related hash rates to the current price for BTC. I'm pretty sure that like every other coin out there, BTC price is determined by simple supply and demand though. Even if we do think of Rational Price as something different from normal price, determining it based on Hash rates seems to be wrong. The recent news and events affect supply and demand so if we kind of force it, we can say that it indirectly affects the price and thats quite a legitimate explanation.
Besides, Miners are just like us, speculating on BTC price. I doubt they could set the price of BTC depending on hash rates involved even if they wanted to.

Miners cannot have any affect in the bitcoin price as its as simple as they lend their electricity, Internet and mining device for a small commission and they cannot do much when it comes to pricing and infact users are losing interest in mining as it gives too little profit and I have stopped it as well if more users does then the transaction speed will be reduced that's all. As far as price is concerned it's purely demand and supply and people should get this straight into their head.

Not true. Miners do have impact on Bitcoin price. How would you explain why block halving affects the price so much. Simply it's because miners begin to receive smaller block rewards and they are not willing to sell those bitcoins at the same price anymore. So they don't put their bitcoins on the market until the price rises enough so that mining is profitable again.

daarul50

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Quote from: bitmover on October 25, 2019, 12:41:33 PM

Every asset price is determined not only by fundamentals, balance of the company, or whatever metric. The price is determined mostly by investors expectations about the future.

https://www.investopedia.com/terms/m/marketsentiment.asp

For example, even if you metric is correct, but there is a strong felling that energy prices will go down, or that bitcoin will be banned in US, the price will fall.

strongly agree with your opinion.

it is never easy to make an assumption about something you say as a rational price where in fact that the cryptocurrency nature itself is always moving irrational because of the decentralized system.
besides that factor, it has been pretty popular especially these days when the world economic situation in uncertain position, that fundamentals taking big part on driving crypto price. am i wrong? i don't think so , you can look around in the past few days.
which means you can not talk something rational, something makes sense when it comes to a market where nobody can control thw whole thing.
the price will stay volatile no matter what , nobody can really predicting correctly about the future bitcoin price yes it sounds speculative but it is what it is.

Omega Weapon

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Quote from: SapphireSpire on October 25, 2019, 12:12:21 PM

If supply and demand is influenced entirely by idle speculation and whim then
the market price represents anything but the real price. For the price to be real,
the market must derive the price from tangible metrics. Buyers and sellers may
not always agree on what that is exactly but everyone should have an accurate
approximation, i.e. by using the same or a similar formula based on a tangible metric.

There are many metrics to Bitcoin but the one that all others depend on is the hash
rate. The security of the blockchain scales directly with the hash rate and so should
the price. A pricing formula can be all kinds of sophisticated but it needs to be simple
enough that anyone can do it in their minds. The initial price of this formula needs to
approximate the current market price to make it easier for everyone to adopt.

According to https://www.coinwarz.com/network-hashrate-charts/bitcoin-network-hashrate-chart,
the last recorded hash rate, as of this writing, was 97ehs (exa-hashes per second).
We can generalize it to 100ehs. The price has been moving around $10k so I'll use
these numbers to find a constant that will make it easy to derive the price from the
hash rate.

100 ehs / $10k = $0.01 <--- constant

What's the price of BTC? Simple: (current hash rate ehs / $0.01) = (97 ehs / $0.01) = $9700

Now the price will scale with the hash rate:

   ...

   at 1ehs, 1 BTC = $100

   at 10ehs, 1 BTC = $1k

   at 100ehs, 1 BTC = $10k

   at 1000ehs, 1 BTC = $100k

   ...

Buyers and sellers are still free to trade above or below the real price buy not as much as usual.

This is nothing but the old labor theory of value in which the value of an object is supposedly determined by the work needed to make that good, but the current accepted theory is the subjective theory of value which states the value of something is not determined by anything but the demand coming from individuals, and if you are questioning yourself what is the rational price of bitcoin? The answer is simple, whatever people want to pay for it.

Wysi

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Quote from: Wexnident on October 27, 2019, 11:15:28 PM

I don't understand how you related hash rates to the current price for BTC. I'm pretty sure that like every other coin out there, BTC price is determined by simple supply and demand though. Even if we do think of Rational Price as something different from normal price, determining it based on Hash rates seems to be wrong. The recent news and events affect supply and demand so if we kind of force it, we can say that it indirectly affects the price and thats quite a legitimate explanation.
Besides, Miners are just like us, speculating on BTC price. I doubt they could set the price of BTC depending on hash rates involved even if they wanted to.

Miners cannot have any affect in the bitcoin price as its as simple as they lend their electricity, Internet and mining device for a small commission and they cannot do much when it comes to pricing and infact users are losing interest in mining as it gives too little profit and I have stopped it as well if more users does then the transaction speed will be reduced that's all. As far as price is concerned it's purely demand and supply and people should get this straight into their head.

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Quote from: wajik-tempe on October 28, 2019, 02:35:49 AM

Quote from: khaled0111 on October 27, 2019, 06:55:17 PM

Or maybe it is just the opposite.
Hashrates are being driven by bitcoin price, what about that!
If bitcoin price rises then more miners will join and hashrates will rise, if bitcoin price falls then some miners will leave and hashrates will fall.

It could be like this, but i'm not sure people are only mine it when the price is high.
If based on your opinion, the miners who still mine when the price still low and no other people mine it, they will get much.
And when the price is up, they will sell.
But i think, bitcoin miners will always mine whatever the price will be, so i think the rise of hashrate is not the reason why bitcoin price pump.

According to recent news I heard about mining. Mining hash rate increase after the dump of bitcoin. Meaning that miners is still hopeful about the price of bitcoin ddspite the downtrend of price. This might be some factor to be consider. Seeing miners that still positive gives boost to the investor to invest more. I'm not telling that its the main reason but just a factor to be consider.

wajik-tempe

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Quote from: khaled0111 on October 27, 2019, 06:55:17 PM

Or maybe it is just the opposite.
Hashrates are being driven by bitcoin price, what about that!
If bitcoin price rises then more miners will join and hashrates will rise, if bitcoin price falls then some miners will leave and hashrates will fall.

It could be like this, but i'm not sure people are only mine it when the price is high.
If based on your opinion, the miners who still mine when the price still low and no other people mine it, they will get much.
And when the price is up, they will sell.
But i think, bitcoin miners will always mine whatever the price will be, so i think the rise of hashrate is not the reason why bitcoin price pump.

Wexnident

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I don't understand how you related hash rates to the current price for BTC. I'm pretty sure that like every other coin out there, BTC price is determined by simple supply and demand though. Even if we do think of Rational Price as something different from normal price, determining it based on Hash rates seems to be wrong. The recent news and events affect supply and demand so if we kind of force it, we can say that it indirectly affects the price and thats quite a legitimate explanation.
Besides, Miners are just like us, speculating on BTC price. I doubt they could set the price of BTC depending on hash rates involved even if they wanted to.

khaled0111

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Or maybe it is just the opposite.
Hashrates are being driven by bitcoin price, what about that!
If bitcoin price rises then more miners will join and hashrates will rise, if bitcoin price falls then some miners will leave and hashrates will fall.

exstasie

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Quote from: pixie85 on October 27, 2019, 05:52:57 PM

Quote from: exstasie on October 27, 2019, 04:32:53 PM

Quote from: ?? on ??

It's never wrong to mine for Bitcoin.

Not true. How about if you spend more mining a bitcoin than the market will pay for it? That's why miners were shutting down in November-December 2018, because the crash made them unprofitable. Those miners expected price to rise and they were very wrong.

Nobody said you have to keep selling as you mine it. When you choose to mine you know you're in for the long run.

Anyone can baghold if they want to. That's not the point.

The OP's idea implies miners dictate the market price. That essentially means that miners collectively are always right in their market speculations, and as long as hash rate keeps rising, so will price.

I was just pointing out how that's not true. Therefore you can't extrapolate price or value from the hash rate. Miners are guessing just like the rest of us.

pixie85

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Quote from: exstasie on October 27, 2019, 04:32:53 PM

Quote from: ?? on ??

Quote from: exstasie on October 27, 2019, 02:54:32 PM

Increasing hash rate simply indicates increased mining investments or efficiency improvements. Miners themselves are speculators. They are investing in mining operations because they expect higher prices. Like all investors, they are prone to over-speculation. Simply put, sometimes they are wrong about the market.

It's never wrong to mine for Bitcoin.

Not true. How about if you spend more mining a bitcoin than the market will pay for it? That's why miners were shutting down in November-December 2018, because the crash made them unprofitable. Those miners expected price to rise and they were very wrong.

Nobody said you have to keep selling as you mine it. When you choose to mine you know you're in for the long run. Like hodler who moves his coins out of the exchange and into a wallet generated offline then prints a paper wallet and hides it. He's not going to dig out and compromise his paper wallet every time the price dips below the price he paid. A miner can also keep mining and holding.

10k is a very rational price. We shouldn't put labels on it but it seems fair to pay this much.

exstasie

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Quote from: exstasie on October 27, 2019, 02:54:32 PM

Increasing hash rate simply indicates increased mining investments or efficiency improvements. Miners themselves are speculators. They are investing in mining operations because they expect higher prices. Like all investors, they are prone to over-speculation. Simply put, sometimes they are wrong about the market.

It's never wrong to mine for Bitcoin.

Not true. How about if you spend more mining a bitcoin than the market will pay for it? That's why miners were shutting down in November-December 2018, because the crash made them unprofitable. Those miners expected price to rise and they were very wrong.

exstasie

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Quote from: The Sceptical Chymist on October 27, 2019, 02:42:06 PM

You can create a formula based on hash rate, but it won't be rational to anyone looking at it outside of the crypto community.

It won't be rational, period. Hash rate security obviously underpins Bitcoin's value, but it would be silly to try and produce some mathematical formula like this.

Increasing hash rate simply indicates increased mining investments or efficiency improvements. Miners themselves are speculators. They are investing in mining operations because they expect higher prices. Like all investors, they are prone to over-speculation. Simply put, sometimes they are wrong about the market.

Hash rate had been continually increasing throughout 2018, up until the November crash. Then we had 3 successive drops in difficulty. This clearly shows that miners respond to price, not the other way around. So I think the OP's approach is a bad one.

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