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Topic: Why Does Bitcoin Have Value? - page 8. (Read 2857 times)

sr. member
Activity: 1190
Merit: 255
March 25, 2020, 07:11:09 AM
#73


The community adds value to the currency like BTC. Besides BTC is in the market where we all contributes as to how much bitcoin's value is when we participate in bidding. The intrinsic value of a coin is base on the market.  But what makes BTC better than those coins that also needs resources for mining is that BTC is accepted by huge pool of companies and merchants making it easy to liquidate.
legendary
Activity: 2268
Merit: 18748
March 25, 2020, 06:26:42 AM
#72
Gold, petroleum, energy, they are all much more objective, and energy being the most precise one
Energy is the least precise one. A kilogram of gold is worth more or less the same regardless of where it is, or if it is flat or brick shaped, or if it is stored as 10x 100g bars. Conversely, a KWh of energy stored in a hydrogen fuel cell is worth a vastly different amount to a KWh of energy stored in broccoli. They are not comparable.

A good example is bitcoin, you could judge its value buy the power used to mine it.
You keep repeating this but it simply isn't true. If it were true, then price would follow the difficulty or the hashrate, which it doesn't. When bitcoin was $20k, the hashrate was 15 EH/s. When bitcoin fell 85% to $3k, the hashrate more than doubled to 40 EH/s. More energy was being used to generate less valuable bitcoin.
legendary
Activity: 1988
Merit: 1012
Beyond Imagination
March 24, 2020, 05:48:51 PM
#71

It's not so much that I believe in supply and demand theory. It's that we don't have an objective measure for value.

It's a factual observation that people socially decide on a unit of account for value. Currently, fiat money fits that role. If inflation of the money supply is too extreme, and high enough price inflation or hyperinflation results, people will drop fiat money for something that more reliably holds value.

If price inflation stays low enough, then people will ignore the problem. It reminds me of the boiling frog analogy. People will continue believing in fiat money until something drastic happens.

That is why I promote to move away from using fiat money as an objective measure of value. In old time people use gold, but I think in modern time people can use KWH.

A good example is bitcoin, you could judge its value buy the power used to mine it. The power used to produce those ASIC chips might be bit difficult to calculate, but for majority of the chips that is no longer profitable, the power is converted directly to coins. There is a reason that people prefer to exchange energy to bitcoin, since that does not need KYC, you get original coin without tx history, and the energy can be from anywhere. In this case energy has worked more like a world wide fiat money
legendary
Activity: 1988
Merit: 1012
Beyond Imagination
March 24, 2020, 05:38:55 PM
#70
All the valuation is done by energy input or cost
That's my point. It is utterly impossible to accurately and objectively place a value on something in terms of its energy cost, which means the value has to be a subjective estimate, which means it is no different to using fiat at present.

It's a very big difference that you use something that can not be created out of thin air at will. Gold, petroleum, energy, they are all much more objective, and energy being the most precise one

If you insist on using fiat, then why using USD instead of Zimbabwe dollar? IMO, it is just US banks are much better at manipulate KPI, so that anything in KPI does not get their USD injection
hero member
Activity: 742
Merit: 507
March 24, 2020, 04:28:44 AM
#69
Bitcoin is so much old coin and this coin will change the life of the peoples whihc will invest in it at the start and now they are billionaire, So many peoples will invest their money and they just wait for the bull and also almost peoples will deal i the Bitcoin than the other ALT coins and they trust on just the Bitcoin in the crypto market.
At current cost, in order to have a billion dollars in bitcoins, you need to have almost 154,000 BTC. I strongly doubt that there are many people who possess such amounts. I would venture to suggest that there are no more than 5, well, maybe even 10, but no more.
hero member
Activity: 2114
Merit: 603
March 23, 2020, 11:15:23 PM
#68
Or maybe Satoshi made it with the thought of having value!

As you described in your post regarding its networking ability and transferring of data (well digital payment info) it means people are actually buying these assets for real with fiat on one end and converting them into cryptographic form on the blockchain.

This is it I guess, it's simplest explanation for it.

~HOWEVER~

I do have another thought, you guys might wanna comment on the same.

Well over the period we have overlooked bitcoin as real payment system. Rather, we have looked at it as way of earning money, trading asset, or method to store our assets.

May be this has caused crypto world to turn into investment center. Now, that investment which is made over the time has given it tremendous value (demand and supply) and thus we experience the change in it everyday.
legendary
Activity: 1666
Merit: 1196
STOP SNITCHIN'
March 23, 2020, 06:09:13 PM
#67
Is that a valuable metric, if it doesn't line up with actual market prices?

What is market price if there is no fiat money like USD or EUR? And now FED has decided to print unlimited fiat money, what that market price reflect is the supply and demand of fiat money, not the actual goods. It is relatively easy to understand, if you don't do anything to a product, its value should be relatively stable over night, however, FED can change anything's market price by 50% over night, given their unlimited money supply ability

Those economy books that I read 20 years ago, I slowly realized that all those books are just like bible, just strengthen people's belief on fiat money, unconsiously. Since if you believe supply and demand theory, you will need a tangeble unit of account for value, then fiat money automatically fit into that slot and you get skrewed by supply and demand of fiat money forever

It's not so much that I believe in supply and demand theory. It's that we don't have an objective measure for value.

It's a factual observation that people socially decide on a unit of account for value. Currently, fiat money fits that role. If inflation of the money supply is too extreme, and high enough price inflation or hyperinflation results, people will drop fiat money for something that more reliably holds value.

If price inflation stays low enough, then people will ignore the problem. It reminds me of the boiling frog analogy. People will continue believing in fiat money until something drastic happens.
legendary
Activity: 2268
Merit: 18748
March 23, 2020, 04:13:21 PM
#66
All the valuation is done by energy input or cost
That's my point. It is utterly impossible to accurately and objectively place a value on something in terms of its energy cost, which means the value has to be a subjective estimate, which means it is no different to using fiat at present.

For example, if 1 USD can buy you 10 KWH on energy market yesterday, it will be roughly the same today
But again, not all KWhs are the same. 10 KWh of energy as grid electricity, as batteries, as hydrogen fuel cells, as oil, as gas, as petroleum, all have vastly different values, never mind trying to compare things like potential energy to chemical energy. Any system will have to be subjective, which is exactly what fiat does.

You don't have to tell me how ridiculous the fiat system is, but the system you are proposing doesn't fix it.
legendary
Activity: 1988
Merit: 1012
Beyond Imagination
March 23, 2020, 02:36:12 PM
#65
If you adopt an energy coin that always equal to 1KWH to measure value, then things will be priced like 1 ENE, 100 ENE, etc.
Impossible to quantify. Let's take a car for example. How can anyone possibly calculate accurately the energy expenditure required to take that from design to being driven out the showroom? The energy output of the engineers who design it? What about the energy required for the computers they design it on? What about the raw materials of those computers? What about the machinery used to mine those raw materials? What is the lifespan of that computer, and so what percentage of the energy cost can be attributed to this car? Already we are in an unsolvable situation and we haven't even reached the drawing board yet.

The best we can do is a subjective estimate of the value of each individual component, process, material, person, etc., which is exactly what USD does. An objective measurement is impossible.

All the valuation is done by energy input or cost, in short term, fiat money can be used to estimate the value of each component, since they are inter-exchangeable to same amount of energy anytime. For example, if 1 USD can buy you 10 KWH on energy market yesterday, it will be roughly the same today

However, in the long run, and especially during some extreme situation like we are having now. The exchange rate is no longer stable. 40 USD can buy one barrel of oil weeks ago, and now 2 barrel of oil, maybe next week it can buy you only 1 barrel of oil again due to unlimited QE started

Let's take another example, suppose that 1 million Zimbabwe dollar can buy you one barrel of oil yesterday, and now it can buy you 2 barrel of oil today, is it Zimbabwe dollar value doubled or the oil value decreased? Most possibly you will consider Zimbabwe dollar value increased: If you don't have any idea about fiat money's value, then energy would be a much more objective measure of value

Value is driven by supply and demand, but price is driven by supply and demand of fiat money

Just saw this news that reflected how absurd today's fiat money system is:
https://www.commondreams.org/news/2020/03/21/two-1-trillion-coins-rashida-tlaib-proposal-calls-us-treasury-fund-coronavirus
legendary
Activity: 1988
Merit: 1012
Beyond Imagination
March 23, 2020, 02:15:57 PM
#64
Of course that is also a personal thing, it would be opposite for vegetarian person, that feeling is subjective.
Yes, it's an oversimplified example, but your point only seems to reinforce that valuation is subjective -- based on supply and demand, not the cost of production.
Yes, that's why using supply and demand model is too abstract and flexible, it does not give you any scientific measure about the value of the object.

Of course it's not scientific. No economic model is scientific -- there are too many variables to consider, none of which can be isolated and tested in an empirical way. It would be nice if we could fit things into scientific models like a labor theory or cost-based theory of value, but we can't. Market pricing simply is not predictable, which is why we just shrug and say "supply and demand."

So I think in this case, an objective measure will be the energy input (e.g. cost) required to make the food. Using energy as unit of account will make the valuation more objective, since no amount of fiat money printing can change the energy input of making a beef filet, thus its value (measured by energy content) is not affect by the supply and demand of fiat money

Is that a valuable metric, if it doesn't line up with actual market prices?

What is market price if there is no fiat money like USD or EUR? And now FED has decided to print unlimited fiat money, what that market price reflect is the supply and demand of fiat money, not the actual goods. It is relatively easy to understand, if you don't do anything to a product, its value should be relatively stable over night, however, FED can change anything's market price by 50% over night, given their unlimited money supply ability

Those economy books that I read 20 years ago, I slowly realized that all those books are just like bible, just strengthen people's belief on fiat money, unconsiously. Since if you believe supply and demand theory, you will need a tangeble unit of account for value, then fiat money automatically fit into that slot and you get skrewed by supply and demand of fiat money forever
sr. member
Activity: 2030
Merit: 323
March 23, 2020, 12:46:12 PM
#63
Yes you’re right about that, Bitcoins value comes from the utility and scarcity, but not when there are no people who are making use of it, so the community are like the core that’s pushing this thing. From the start Bitcoin was not worth anything as what it is now, but as time goes on and more and more people kept recognizing and adopting it, that’s when the value started to increase and it reached a high price.

Utility is part of it as it was what attracted people to be making use of it. I’m even looking forward to more adoption, though I do wonder how miners will make profit when all the coins are mined (well now is not the right time to think of that, since the time is still far).
hero member
Activity: 2464
Merit: 519
March 23, 2020, 07:43:17 AM
#62
It is a simple yet not easy question to answer: why does bitcoin have value?

The answer, we believe is summarized in this video: https://www.youtube.com/watch?v=Vv2-6KDlZSE

Bitcoin has value because it has both scarcity and utility. It is a limited and useful resource. It is important to note that something must be BOTH in order to command a market value, NOT either.
It doesn't sound right to me anyway. Bitcoin has value because people put it in it because people trade it at certain prices. I don't think it has an inherent value, perhaps just a bit of it that comes from what's needed to generate BTC (electricity, equipment, maintenance), but that's not how we measure the value of money these days anyway. You're talking about scarcity I'm sure there are many scarce things on the planet nobody cares about. As for utility, it's kind of dubious because you can't really do anything with Bitcoin apart from generating it and making transactions... I mean, in terms of utility something like animal skin which used to be money about a thousand years ago had way more utility. But in terms of being money Bitcoin is kind of useful, I agree with that.
I think you might need to look at it as a currency. Dollar gain value, has utility and very scarce, which is an essential feature of money as legal tender. You might need to help yourself with this simple term to stop expecting and comparing the utility of animal skin to money. Animal skin can be consumed with no other form of exchange. Except for destruction of money it will continue to exchange for anything, this is the utility we are talking about, that is the main purpose of money. Money is scarce and not available to everyone that why some are poor and some are rich. Only a rich man can understand this concept and that why they are good managers of money, poor dont know money is scarce they just suffer from it. Dont get this complicated please
legendary
Activity: 2268
Merit: 18748
March 23, 2020, 06:50:22 AM
#61
If you adopt an energy coin that always equal to 1KWH to measure value, then things will be priced like 1 ENE, 100 ENE, etc.
Impossible to quantify. Let's take a car for example. How can anyone possibly calculate accurately the energy expenditure required to take that from design to being driven out the showroom? The energy output of the engineers who design it? What about the energy required for the computers they design it on? What about the raw materials of those computers? What about the machinery used to mine those raw materials? What is the lifespan of that computer, and so what percentage of the energy cost can be attributed to this car? Already we are in an unsolvable situation and we haven't even reached the drawing board yet.

The best we can do is a subjective estimate of the value of each individual component, process, material, person, etc., which is exactly what USD does. An objective measurement is impossible.
legendary
Activity: 2968
Merit: 3684
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March 23, 2020, 05:10:45 AM
#60
Bitcoin is so much old coin and this coin will change the life of the peoples whihc will invest in it at the start and now they are billionaire, So many peoples will invest their money and they just wait for the bull and also almost peoples will deal i the Bitcoin than the other ALT coins and they trust on just the Bitcoin in the crypto market.

This kind of attitude is what's going to get you in trouble, my friend. If you see Bitcoin as a get-rich-quick scheme, ask the many people who jumped headfirst since the end of 2017, putting their house and shirt off their back, going all-in on Bitcoin. Telling their friends and family the same.

Learn about it first. Put in what you can afford to lose. And use it as much as possible throughout. Only your using of it, and encouraging others to do the same, while believing in it, can help it get to the value it should be at.
legendary
Activity: 1666
Merit: 1196
STOP SNITCHIN'
March 22, 2020, 05:44:20 PM
#59
Of course that is also a personal thing, it would be opposite for vegetarian person, that feeling is subjective.
Yes, it's an oversimplified example, but your point only seems to reinforce that valuation is subjective -- based on supply and demand, not the cost of production.
Yes, that's why using supply and demand model is too abstract and flexible, it does not give you any scientific measure about the value of the object.

Of course it's not scientific. No economic model is scientific -- there are too many variables to consider, none of which can be isolated and tested in an empirical way. It would be nice if we could fit things into scientific models like a labor theory or cost-based theory of value, but we can't. Market pricing simply is not predictable, which is why we just shrug and say "supply and demand."

So I think in this case, an objective measure will be the energy input (e.g. cost) required to make the food. Using energy as unit of account will make the valuation more objective, since no amount of fiat money printing can change the energy input of making a beef filet, thus its value (measured by energy content) is not affect by the supply and demand of fiat money

Is that a valuable metric, if it doesn't line up with actual market prices?
member
Activity: 728
Merit: 24
March 22, 2020, 04:51:26 PM
#58
Bitcoin is like money in my thought, you can see the characteristic of money and you can compate them. One thing that I know bitcoin have a value it was because its unique, since the price of bitcoin based on supply and demand then if there is people who know the ins and out of it then they buy it and use them as the wish. This is why bitcoin price reach the price as of now. The people will not buy bitcoin if there is no an unique thing, and it will be like anither shitcoin other digital curreny that was created like the coin who has created by facebook.

Bitcoin is simply the most popular of the existing coins and therefore it has such a huge demand and its value is greater than that of other coins. The point is not at all its uniqueness, namely, that her PR is a great labor-intensive event. This must be understood and taken into account.
full member
Activity: 658
Merit: 103
March 22, 2020, 08:21:28 AM
#57
When there is a currency being invented and people using it more and more , it increase the value of that Currency after a long period of time.

With time when people realize it is worth something and can be used beneficially it does become more popular, the more people buy it , the more the value rises.

If there are 10 coins and 10 people want to buy it , 1 coin will go for 1 x

If there are 10 coins but this time 100 people , the value will increase substantially , I don't think the demand and supply rule is abstract.

It's like you are asking why do stocks or gold has a value ?

Bitcoins are not generated out of thin air without any external interference.
It is simply because there are people who want to patronize it and that is why it has value. The demand is continue to grow over the years while its popularity is also increasing. There are also many uses of bitcoin and there are many people who became interested to it. I'm a bitcoin fan since 2017 and I use it in price appreciation and also in some utility uses like paying bills and buying load.
full member
Activity: 1028
Merit: 144
Diamond Hands 💎HODL
March 22, 2020, 08:01:39 AM
#56
It is a simple yet not easy question to answer: why does bitcoin have value?

The answer, we believe is summarized in this video: https://www.youtube.com/watch?v=Vv2-6KDlZSE

Bitcoin has value because it has both scarcity and utility. It is a limited and useful resource. It is important to note that something must be BOTH in order to command a market value, NOT either.

Bitcoin is limited to the software-imposed hard limit of 21,000,000 bitcoin units ever in circulation. It is useful because it allows payment information to be secured by a decentralized computing network backed by magnitudes of raw hashing power. That raw hashing power is energy (electricity) converted into digital utility. Each transaction must compete (fee market) to be included in the next block of transactions which has a limited [block space] due to the block size limit (2MB) imposed on each ~10 minute block.

We can expect both the value to increase and the number of users to increase exponentially so long as the current technology maintains itself and remains both useful and in a limited abundance.

Bitcoin will always retain market value so long as miner nodes are actively contributing their hashing power to secure the network (proof of work).

Learn more about bitcoin at http://diginomics.com
It was just owning something that you don't really have since it is a digital currency and it was just portray by a numbers in your bitcoin wallet. The bitcoin have its value was just pretty simple, it was just depending it the supply and demand of bitcoin that is why it has its own value, but in real life their is no collateral or any assurance of this bitcoin that is going to prove that you have something unlike like for example in the stock market of a company somehow you have a part of the company that is yours. It is the opposite in bitcoin since you don't really have something meaning you could just lose your bitcoin at any moment since it could lost its value at any time.
sr. member
Activity: 1498
Merit: 374
Leading Crypto Sports Betting & Casino Platform
March 22, 2020, 07:47:28 AM
#55
Bitcoin is like money in my thought, you can see the characteristic of money and you can compate them. One thing that I know bitcoin have a value it was because its unique, since the price of bitcoin based on supply and demand then if there is people who know the ins and out of it then they buy it and use them as the wish. This is why bitcoin price reach the price as of now. The people will not buy bitcoin if there is no an unique thing, and it will be like anither shitcoin other digital curreny that was created like the coin who has created by facebook.

Bitcoin is the same like the fiat currency because it is converted j to digital currency still it has the same process or method of payment but the difference is it is faster and secure than the traditional way of earnings and still we are looking forward to the more use of it because today still there are some people does not want to use it because they are doubting the use of it a there are a lot of people support the use of bitcoin to becomes more profitable and popular. Slowly but surely the bitcoin is gaining a lot of popularities today because it is more convenient than the traditional way.
legendary
Activity: 3248
Merit: 1402
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March 22, 2020, 07:15:27 AM
#54
It is a simple yet not easy question to answer: why does bitcoin have value?

The answer, we believe is summarized in this video: https://www.youtube.com/watch?v=Vv2-6KDlZSE

Bitcoin has value because it has both scarcity and utility. It is a limited and useful resource. It is important to note that something must be BOTH in order to command a market value, NOT either.
It doesn't sound right to me anyway. Bitcoin has value because people put it in it because people trade it at certain prices. I don't think it has an inherent value, perhaps just a bit of it that comes from what's needed to generate BTC (electricity, equipment, maintenance), but that's not how we measure the value of money these days anyway. You're talking about scarcity I'm sure there are many scarce things on the planet nobody cares about. As for utility, it's kind of dubious because you can't really do anything with Bitcoin apart from generating it and making transactions... I mean, in terms of utility something like animal skin which used to be money about a thousand years ago had way more utility. But in terms of being money Bitcoin is kind of useful, I agree with that.
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