Topic: Why Does Bitcoin Have Value? - page 9. (Read 2857 times)

Animals never need gym, gym is a higher level demand that reduce the energy loss of human body: less sick, longer life. The biggest energy loss is desease or die

There is also no direct link between dollar and value, but people get used to it. So it will be the same, as long as people get used to it, energy will work the same as USD. 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...

Bitcoin is not a good unit to measure value, since its production cost rises too quick thus its value changes too fast. Energy on the other hand, is like Lbs, Foot or Second, it is very objective and stable. In some other theories, labor time like man hour had also been considered a good unit of value, but it is not very objective, since different people have diffrent ability

The scarcity is base on demand, if there are no demand it cant be qualified scarce. I also think it is a global means of exchange with the internet, which provide a wide variety of traders and investors. The value is also in the portability and volatility. The scarcity and utility helps the volatility, volatility of bitcoin is so attractive to increase and keep millions traders

It doesn't matter. You can't say energy is directly linked to value. A sirloin steak and a month of gym membership might both cost $20. They have the exact opposite effect on the person in question in terms of energy input and output, yet both have value. The energy required to create a product, or the energy the product provides or uses, are not directly correlated with its value.

I understand what your theory is. My point is that it doesn't hold up as I've explained above. There is no direct link between energy and value.

I would love to move towards more things being priced solely in bitcoin, but this does not require your energy theory to do so. 1 bitcoin = 1 bitcoin is all that is required.

Op provided a pretty technical explanation. In a simpler perspective, I see quite a lot of psychological strategies that are implemented in bitcoin marketing. By utilizing a system that is different from conventional systems, bitcoin becomes controversial with a decentralized system, providing the freedom that has been restricted by third parties in the transaction process. This is attractive to some people who want freedom. On the other hand, the limited amount, the halving system, makes the BTC price development more unpredictable. Economically, the presence of interest will definitely lead to demand, right? that's what makes up the price of bitcoin.

Why? are you that lazy?

I hate TLDR people.

Too long to read/watch but not too long to comment?

I wish that it can achieve this economic independence but for now we're still far from it (depending on stocks, government policies, fiat prices, the Internet).

You are giving an example to disaffirm the basis of mainstream economy theory: Rational person hypothesis. I don't think those people intentionally want to get fat. Of course there are some economists that deny the rational person hypothesis, but that will also mean the supply and demand curve will not work, since any irational banker would suddenly buy anything in the market and raise their price for magnitues, and crash it in the next minute

My theory does not diviate too much from the classical supply and demand theory but I just do not use fiat money to measure the supply and demand, but using energy instead, that is the fundamental difference. In fact fiat money is also exchangeable to energy, but the difference is that it is highly manipulative


Maybe you are only seeing the energy wasting part, which is a small part of whole picture. The overall result might still be plus on energy, otherwise the activity is not happening. You can just exchange energy to USD, if that fits your habit


You still want to sell the coin for USD, so USD is still your biggest religion, that is what I'm seeing, and all my theory is just to avoid this religion

The demand is not from the exchange, but from the people that need bitcoin, even there is no USD in this world. My point is that people should get rid of the habbit of using fiat money to measure value, otherwise they will not see the real demand but a demand that is manipulated on exchanges by whales that is full of fiat money, very speculative

Another example, now oil price crashed to less than 20USD a barrel, but the energy content remains unchanged. In my model, the value of one barrel of oil remains unchanged, while USD's value doubled. And if you use oil as a standard unit of value, then many things' value actually get pumped a little bit

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.

So what about all the obese people in the world. It is a massive waste of energy to work extra hours to buy all that extra food, it is a huge waste of energy to do simple tasks while significantly overweight, and it is a huge increase in potential energy loss by suffering a heart attack or diabetes.

What is procrastination if not wasting energy? The majority of social media wastes time and impacts negatively on mental health. What a massive waste of energy, and yet a hugely valuable industry. Your analogy does not hold up.

But it won't. That's the point I'm making. It doesn't matter how much energy is used to create or build something. What matters is how much demand there is for that thing. I could create an altcoin which requires $10,000 of electricity to mine a single coin. That doesn't mean a coin is worth $10,000. If all I can sell a coin for is $1, then it's only worth $1, regardless of how much energy was used to create it.

The price of bitcoin is based on the supply and demand of the market, and not on the hashrate or the difficulty.

Entrophy is always going to increase, that is the underlying inefficiency in the universe. You can fight this trend by input lots of energy. Human are complicated living being, since we have brain, and the brain coordinate all our behavior. Many of the human's behavior, seems like a waste of energy, but improve some efficiency. Going to gym for example, will make you much less likely to be sick and in hospital. That is a huge reduce of the potential energy loss. Of course brain can do missjudgement (like gambling), but generally it tries to make wise decisions based on your own energy requirement, that is also the basic assumption in modern economy. If human have a tendency to waste energy instead of getting energy or reduce energy loss, then the theory of modern economics will never work


Demand is the basic prerequisite, then scarcity decide the level of competition


I do hope so. Imagine that there is no exchange, the only way to get bitcoin is through mining, then mining cost will be a very good indicator of the bitcoin value. But unfortunately since most of the people are using fiat money to measure the value, and bitcoin is traded against fiat money, then bitcoin's value will be heavily affected by the supply and demand of fiat money

And the reason I want to use energy to measure value is trying to get rid of the affect of fiat money supply, that might increase its price stability a lot

What inefficiencies? You are suggesting that watching a moving somehow makes the human body more efficient at metabolizing glucose? Ok, what about a gym membership then? That doesn't help to reduce energy loss - in fact, the exact opposite. It promotes energy loss. Why is that valuable?

You are mistaking scarcity for demand. When there is demand for a product, its price increases. Scarcity alone is meaningless. There is only one pair of dirty socks I wore yesterday in the whole world. Only one! It would take a huge amount of energy for someone to track me down, break in to my house, fight me, and steal the only pair of my dirty socks in the whole world. None of this makes them valuable in any way.

If this were the case, that the price of an object was driven entirely by the amount of energy required to obtain said product, then the price of bitcoin would directly correlate with the hashrate.

If you look at it closely, it always fall into two of the above categories. This is because, human as a living being, require constant energy input to maintain its activities throughout its life, so anything that contains usable energy or reduce the energy loss is of value to human

Entertainment for example, is used to reduce energy loss: Although they don't directly provide energy, but they reduce the inefficiencies inside your body, thus makes your mental status more healthy. You can compare with another case: The same energy input but pure loud noise through speakers, that will make you tired and lose energy quickly. A high level of mental status can come from reduced energy loss, which can be caused by drugs, drinks, luxury goods, holiday, etc...



True, supply and demand do affect the price of goods and services, but that can also be explained with energy theory

The paint art's value does not only decided by the original production energy input. When it is scarce, the energy input to acquire it in open market competition will become prohibitively high. It is the same for bitcoin, its value now increased mainly due to the increase of energy input in competition

It is similar for the toilet paper example. A demand surge in a short time increase the energy input for end consumer to get the goods because of competition, but in the long run it is the energy input in making of the product decide its base value, or cost. And that cost is not easily changed by supply and demand, thus relatively stable

It is intereting that in bitcoin's case, that the constant competition in mining makes the energy input higher and higher, so its value is purely driven by the competition, it does not have a base value, or the least amount of energy input to make the product.

And this explained the phenomenon that there are always people asking the question like "Why does bitcoin have value", since they just can not see that base value component in bitcoin, and they feel uncertain

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.

This is far too simplistic a way to look at things. There are plenty of very expensive things out there which do neither of things. Pretty much the entire entertainment industry (television, cinema, music, video games) neither contains useful energy nor reduces energy loss (in fact, they all use up energy and increase energy loss, without a tangible "benefit"). Drugs, including things such as alcohol and nicotine, also don't fit in to your definition, despite being the second largest market in the world. Luxury goods, sports cars, watches, jewelry, precious metals, the list goes on.

But the scientific measure of the value of an object is irrelevant if nobody is willing to pay that. Look at a sports car, for example. Thousands of dollars in design costs, in raw materials, in production and manufacturing costs, in testing, in labor, etc. which is reflected in its price. But then look at a Jackson Pollock painting - a few hundred dollars for a canvas and some paints, sells for over $100 million. The "scientific cost" means nothing.

Just look at what's going on at the moment. Toilet paper, with a production cost of maybe 30-40 cents per roll, is being sold for $30-40 dollars instead. Supply and demand is all that matters.

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.

If I'm a banker, and willing to pay 100 dollar for a can of bean, but only 10 dollar for the beef filet, that does not make the bean worth more than beef filet. You must also count the supply and demand of the money itself in the equation, but no economy book tell you that

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

I think Bitcoin has value because of its proven technology and narrative. It's mainly a Store of Value. It has a 21M supply cap, a small block size, minimal features. The technology is designed to be minimal to fulfill this narrative.

Bitcoin has minimal utility to be a Store of Value. It supports storing and transferring. If you believe or want Bitcoin to have more utility than that, you're going into Bitcoin maximalism. You'll go down the rabbit hole with people who think Bitcoin will eat all other currencies and assets.

I've written some posts on this.

https://bitflate.org/post/2020/03/17/bitcoin-is-a-store-of-value.html
https://bitflate.org/post/2019/11/24/bitcoin-will-not-be-a-medium-of-exchange.html

How do you quantify that, knowing that people can still survive off canned beans? If they can't afford steak, they'll buy beans. That's a function of demand, not a function of production inputs.


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.


Isn't that a more accurate description for value? It's the price that people actually pay.

If demand for meat falls, producers will follow suit and supply will fall until the market reaches a new equilibrium. It's just like gold -- when demand falls, so does price, which forces unprofitable mines out of business. This causes a decline in production.

In your example of beef vs bean, the beef's benefit falls into second category: It reduces your energy loss more than a can of bean do, it makes you feel fresh and have more nutrition, all makes you more energized. Of course that is also a personal thing, it would be opposite for vegetarian person, that feeling is subjective. So eventually the value will be decided by the production energy input: Beef takes much more energy to make, e.g. it contains more energy input, thus become more valuable

But if you take a supply and demand approach, then the price of beef and bean will be decided by who has more money: Meat eating person or vegetarian person. Then it get distorted

To pit everything jn a nutshell, bitcoin has a certain value we regard of because we implied a value for it. We implied and calculated using the amount of technology used to create and support it along with the equipments and manners as to how bitcoin is obtained. We have trusted bitcoin's value and bitcoin's credibility that why even if it doesn't exist in the physical world, we are still able to respect it's value. If we hadn't regarded of bitcoin's value as something of significance then it would not have any monetary value, regardless if they used ultra-powered equipment to mine it.

Bitcoin has value because arround the world people accepted this.they are dealing in bitcoins.when you have limited supplied in the day by day growing community price will go higher.I am sure about bitcoin price that as many people comes in this field price will go boom high. One day bitcoin price will be very big then anybody thinks.
So bitcoin is money of future,money of internet,money of new generation,money of smartness that why bitcoin have value.

Bitcoin has value because people trust it. They either trust it as a decentralized system that's transparent on numbers and transactions or they trust it as a solid investment option that's limited in supply. The value is not given by anyone but the users, people considered it as a buyable thing at $10K and considered a sellable thing at $5k just after a week. So, it's the market and sentiments that determine the value.