Would crypto gain full intrinsic value?

DrBeer

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Quote from: dbc23 on October 26, 2021, 06:16:23 PM

With the high level of volatility and constant fluctuation in market capitalization on crypto currencies would there ever come a time we would trade crypto based on the value it has in it's self and not in exchange for fiat currency. Many countries has now adopted crypto as mode of payment but we are still faced with the issues of price irregularities. If we decide to adopt crypto fully as a global legal tender how do we deal with this price fluctuation.

This is the edge fiat and centralized currencies have over crypto and this has made so many shy away from doing legal business transaction using some crypto most especially during bear market. Can this issue get a remedy?

The answer is both very simple and at the same time difficult. As soon as the cryptocurrency is an element of the expression of value, for example, the gross product, how does the same fiat currency work in every country. More precisely, something like this with its own nuances

But then the question arises - what products / services will form this value, and even considering that cryptocurrencies are decentralized? Perhaps you need to look for another "ruler" to measure cryptocurrencies. The classic, fiat approach is most likely not feasible

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Quote from: dbc23 on October 26, 2021, 06:16:23 PM

This is the edge fiat and centralized currencies have over crypto and this has made so many shy away from doing legal business transaction using some crypto most especially during bear market. Can this issue get a remedy?

That's prolly an edge fiat has over crypto, but there are other advantages a cryptocurrency like Bitcoin has over fiat, it's a hedge against fiat devaluation, it gives its users freedom and control of their funds, thus making them be their own banks etc, why I'm highlighting this is that the network can't be totally impeccable, just as it has its own problems, so does fiat, and just as people have reasons to pick Fiat over Bitcoin, so do many other people have numerous reasons to select Bitcoin over fiat. Mind you that a coin like Bitcoin hasn't been around for so long for you to expect its volatility to just disappear, the network is definitely heading for mass adoption, and I think until then, spontaneous volatility will be a part of the network, and tbh, it's not so much of a problem as people make it seem.

syedzakir

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It's very difficult for crypto to gain the full intrinsic value because crypto needs a lot more effort to become among everyone. Similarly the fluctuations in its price are the actual problems as the price of different products changes on daily basis so in order to do that a lot more had to be done. Some standards had to be made in order to fix a price while the ratio of profit should also be fixed

LUCKMCFLY

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Quote from: marilynmanson21 on December 08, 2021, 08:50:11 AM

Quote from: dbc23 on October 26, 2021, 06:16:23 PM

Can this issue get a remedy?

it's a little complicated to calculate product prices based on bitcoin or cryptocurrency, unless we pay for the product directly into fiat during transactions, if we have to hoard bitcoin every transaction there is a possibility it will drop from the initial price due to market corrections, the seller will experience losses and it's difficult to turn over capital
then in my opinion it is difficult for crypto to be used as a means of payment like fiat

It is very difficult to try to give an intrinsic value, since we take into account that for this we must do a kind of capital appreciation, and this is actually very complicated, because the sources are supply and demand, data must be sought directly from the Exchanges and the Exchanges do not give or publish these data, since in most of them they appreciate all their history with their respective KYC and they will not risk giving such sensitive information, and on the other hand the criteria of the person who If you have to do that appraisal you have to have a good idea of how the market moves, it is something that turns out to be very difficult, not impossible, but very difficult. If it were a case that you had to do, you would charge a lot to do it.

jaberwock

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Quote from: ven7net on November 16, 2021, 02:37:52 PM

Unfortunately, it is unlikely that this problem will be solved in the foreseeable future. You probably noticed that the prices of cryptocurrencies are not controlled by the demand and the community and the big players, the same big crypto exchanges and investors. Based on this, they are unlikely to give up the opportunity to constantly make a profit, both with an increase in the price of cryptocurrencies and with their fall. To solve this problem, it is necessary that there are no large holders, and the cryptocurrencies themselves are distributed as much as possible around the world. Then the price may appear and will depend on the value of a particular cryptocurrency.

There will always be large holders, this is not NFT that you can limit what people are doing or how they are profiting. This is why I believe that we should definitely focus on making as much profit as we can and hold as long as we can and ignore all those whales and manipulators. Sure it is a hard thing to achieve when you see your entire life savings go down 80%, but if you do not wait then you can't make a profit.

Let's assume you had 10k, and bought at 20k during 2017 December period, wrong move? I do not think so, and the price went to 3k, so your 10k became 1.5k dollars, lost 85% of your entire life savings and you should sell it before it goes to zero right!! Well wrong. If you waited and sold at the top, which is nearly 70k, then your 10k would have turned to a little close to 35k dollars. So forget about manipulators, and forget about panic selling, in the long term you make a profit.

marilynmanson21

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Quote from: dbc23 on October 26, 2021, 06:16:23 PM

Can this issue get a remedy?

it's a little complicated to calculate product prices based on bitcoin or cryptocurrency, unless we pay for the product directly into fiat during transactions, if we have to hoard bitcoin every transaction there is a possibility it will drop from the initial price due to market corrections, the seller will experience losses and it's difficult to turn over capital
then in my opinion it is difficult for crypto to be used as a means of payment like fiat

ven7net

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Quote from: dbc23 on October 26, 2021, 06:16:23 PM

With the high level of volatility and constant fluctuation in market capitalization on crypto currencies would there ever come a time we would trade crypto based on the value it has in it's self and not in exchange for fiat currency. Many countries has now adopted crypto as mode of payment but we are still faced with the issues of price irregularities. If we decide to adopt crypto fully as a global legal tender how do we deal with this price fluctuation.

This is the edge fiat and centralized currencies have over crypto and this has made so many shy away from doing legal business transaction using some crypto most especially during bear market. Can this issue get a remedy?

Unfortunately, it is unlikely that this problem will be solved in the foreseeable future. You probably noticed that the prices of cryptocurrencies are not controlled by the demand and the community and the big players, the same big crypto exchanges and investors. Based on this, they are unlikely to give up the opportunity to constantly make a profit, both with an increase in the price of cryptocurrencies and with their fall. To solve this problem, it is necessary that there are no large holders, and the cryptocurrencies themselves are distributed as much as possible around the world. Then the price may appear and will depend on the value of a particular cryptocurrency.

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Quote from: 19Nov16 on November 16, 2021, 05:39:10 AM

With the strength of the crypto community, public recognition and trust will continue to increase, currently there are too many FUDs from various sources so that crypto growth is hampered, but I believe that the future of crypto will continue to shine and this will make the value of crypto reach full intrinsic value.

I can't guarantee something like that just based on what people want. Popular voting for "free healthcare" in USA is above 70% right now, a topic that is supported by more than 70% of the citizens of that nation, guess what the politicians are doing about it... nothing, absolutely nothing.

It is not even about population or popularity or voting with your ideas and nothing like that, you could have 70%+ support for one topic but if the companies are bribing politicians enough then anything that is even as high as 70% supported won't be put into place because politicians are getting more profit this way and both isle is faulty there. These type of things happen in every nation, there are situations where we literally end up with something popular and everyone wants and they still don't do it. Crypto "could" become something like that, it is not like that and it may not become like that but I can't guarantee anything.

19Nov16

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With the strength of the crypto community, public recognition and trust will continue to increase, currently there are too many FUDs from various sources so that crypto growth is hampered, but I believe that the future of crypto will continue to shine and this will make the value of crypto reach full intrinsic value.

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Quote from: Semar Mesem on November 05, 2021, 05:44:10 AM

The price is determined by stock and demand, bitcoin has 2 things that make bitcoin valuable, bitcoin stock is fixed and the number of users or high demand makes prices continue to skyrocket and this is the basis for bitcoin's value.

These can be just some criteria to determine the intrinsic value of BTC or any crypto, but it is not that simple, obviously the first thing to analyze is supply and demand, how it behaves in quarterly periods or as best established, it should also be It is considered that the volume of BTC and crypto are not consolidated, that the volume shown in some exchanges is specific and that all the volumes of most exchanges are taken from the most dominant, in 2017 it was taken from the volume of Bitfinex, currently can be taken from Binance, there are also other things to take into account such as blockchain, mining, all this must be taken into account to give an intrinsic value and this is something that can turn out to be something very complicated because everything would depend on criteria.

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Quote from: mu_enrico on November 08, 2021, 11:13:13 AM

Quote from: Betwrong on November 08, 2021, 05:44:18 AM

I like how you put it. Imo those are two main factors too. But regarding to Bitcoin, although utility is there and scarcity is definitely there too, it is still so hard, almost impossible, I'd say, to say even roughly, is it trading below its "intrinsic value" right now, for example.

Well, if you ask many economists including Dr. Nouriel, he'll say the intrinsic value of Bitcoin is zero Grin

They aren't lying tho since the intrinsic value approach is not correct.

You can use a different approach, let's say VISA ($469.22B) + Mastercard ($344.99B) at least Bitcoin market cap is $814.21B <= utility only from payment processing. There are other payment networks, so you can incorporate it into your estimation. Or if you think there are other utilities other than payment, you can add it as well.

I have this hobby: Once in a while, once per half a year, maybe, I google "How much money is there in the world?". Right now they say "There is approximately US$ 40 trillion in circulation: this includes all the physical money and the money deposited in savings and checking accounts. Money in the form of investments, derivatives, and cryptocurrencies exceeds $1.3 quadrillion."

Then I devide the highest number(keep in mind that each time I check it's different) by the total number of BTC possible

1,300,000,000,000,000÷21,000,000 = 61,904,762

And today we can get around $62 million from such calculation. I consider this as the upper limit for Bitcoin price: $62 million per 1 BTC. If someone would tell me that BTC could cost $100 million one day, I'd say, no way.

Lotus

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It might not happen soon, or even for current cryptos. However, it's not really a stretch to imagine a unified currency ruling the world in the near future. It will, by necessity, be decentralized since no country will willingly accept another's control over its economy. It has to happen organically, otherwise current rich countries would have no incentives to "allow" competitors on their turf. However, if it penetrates the world sufficiently, the transition would eventually happen because the need exists. It's only blocked by policies.

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Quote from: BernyJB on November 08, 2021, 02:31:54 PM

One might argue that "intrinsic value" is kind of an oxymoron...
Nothing really has intrinsic value. the value of "anything" relates to what you can buy with it, or what you can exchange it for.
Before currency was created, salt was used as a means of payment (that's what the word "salary" comes from).
Then, fiat currencies were born as nothing more than documents in which the central financial authority of each country promised the beholder they'd exchange the document for its value in gold upon request. Now, you'd be hard pressed to find a gold ring inside a vault on any central bank in the world.
Will cryptocurrencies' price stabilize? Maybe. It can also be argued that's the purpose of stablecoins.

I agree, the concept of intrinsic value is mistaken, nothing has value by itself, the value of something derives from what humans can do with it.

A good example of this is oil, for a very long time people made holes on the ground to find water and if they found oil then they will curse their luck, then people learned how to do something useful with it and now if someone found oil then they will be happy as they know they will earn a lot of money, and then if at some point in the future we could find a replacement for oil that was way better then oil will lose its value and people will curse their luck once again.

BernyJB

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One might argue that "intrinsic value" is kind of an oxymoron...
Nothing really has intrinsic value. the value of "anything" relates to what you can buy with it, or what you can exchange it for.
Before currency was created, salt was used as a means of payment (that's what the word "salary" comes from).
Then, fiat currencies were born as nothing more than documents in which the central financial authority of each country promised the beholder they'd exchange the document for its value in gold upon request. Now, you'd be hard pressed to find a gold ring inside a vault on any central bank in the world.
Will cryptocurrencies' price stabilize? Maybe. It can also be argued that's the purpose of stablecoins.

sana54210

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Quote from: Ozero on November 08, 2021, 06:31:01 AM

We can only judge the value of a cryptocurrency by comparing it with the price of fiat. There are no other methods for assessing value in our world. When there was no fiat, there was exchange in kind, but it was found to be cumbersome and ineffective.
There will always be price volatility in cryptocurrency. This is a feature of this market and cannot be eliminated in any way. Therefore, we say that cryptocurrency can only exist alongside fiat. On the other hand, states will not allow their national money to disappear.

Unfortunately you are right. If the world was a peak crypto world, then we would have things all in crypto and not pegged to fiat, how do you know an apple should worth 1 dollars? It says on the price tag, that is exactly how the world could have been.

Imagine there is a minimum salary requirement with crypto prices, like 0.001 bitcoin or whatever, imagine a world where you buy everything with bitcoin and sell everything with bitcoin. In that world we wouldn't need to actually work for fiat, there won't be a fiat, it would all be in bitcoins and in that world there is no need to peg anything to fiat. Obviously this is a pipe dream that will never happen, but it would definitely be possible as well.

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Quote from: jostorres on November 05, 2021, 04:47:03 PM

It is not "outdated", it is just not something that works in most places and in regards to most things.
~
So, you need to find a way to understand what it works on and what it doesn't work on. Obviously it is "outdated" like you said in things like crypto, if you are looking for Bitcoins IV then you are going to not end up with something that is profitable, because it doesn't really have any at all.

Intrinsic value is an old concept that basically says the value "in itself" Thus in stocks it's the underlying company or firm's value. It's obvious, stock value = firm's value. However, in modern education, they (the professors) often link the term to teach present value of cash flows approach, which is flawed, thus outdated IMO. It still uses historical cash flows analysis + cash flows forecast. Give the task to 1000 people to determine the intrinsic value of a stock and they'll come up with 1000 different numbers.

In Bitcoin, the intrinsic value concept is even more strange. What's the value "in itself" of Bitcoin. The coin doesn't have underlying company and cash flows. You can use the approach of cost/work tho, but it doesn't give an excellent answer either.

Quote from: Betwrong on November 08, 2021, 05:44:18 AM

I like how you put it. Imo those are two main factors too. But regarding to Bitcoin, although utility is there and scarcity is definitely there too, it is still so hard, almost impossible, I'd say, to say even roughly, is it trading below its "intrinsic value" right now, for example.

Well, if you ask many economists including Dr. Nouriel, he'll say the intrinsic value of Bitcoin is zero Grin

They aren't lying tho since the intrinsic value approach is not correct.

You can use a different approach, let's say VISA ($469.22B) + Mastercard ($344.99B) at least Bitcoin market cap is $814.21B <= utility only from payment processing. There are other payment networks, so you can incorporate it into your estimation. Or if you think there are other utilities other than payment, you can add it as well.

yananda

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that's the importance of liquidity in each new project to make it more valuable, maybe many ignore or even don't care but that's a start that makes crypto a special concern at this time

Ozero

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Quote from: dbc23 on October 26, 2021, 06:16:23 PM

With the high level of volatility and constant fluctuation in market capitalization on crypto currencies would there ever come a time we would trade crypto based on the value it has in it's self and not in exchange for fiat currency. Many countries has now adopted crypto as mode of payment but we are still faced with the issues of price irregularities. If we decide to adopt crypto fully as a global legal tender how do we deal with this price fluctuation.

This is the edge fiat and centralized currencies have over crypto and this has made so many shy away from doing legal business transaction using some crypto most especially during bear market. Can this issue get a remedy?

We can only judge the value of a cryptocurrency by comparing it with the price of fiat. There are no other methods for assessing value in our world. When there was no fiat, there was exchange in kind, but it was found to be cumbersome and ineffective.
There will always be price volatility in cryptocurrency. This is a feature of this market and cannot be eliminated in any way. Therefore, we say that cryptocurrency can only exist alongside fiat. On the other hand, states will not allow their national money to disappear.

Betwrong

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Quote from: mu_enrico on November 05, 2021, 09:48:40 AM

^S2F fanboy Cheesy

Anyway, the concept of "intrinsic value" is outdated. What does it mean? The value in itself? The labor? The cost?
Even in stocks, the concept is flawed since it's the present value of all future cash flows. It means that you must forecast the firm future cash flows. Except you are Nostradamus, you just can't calculate it correctly. In the end, it's more of your belief of the firm's future cash flows.

Belief is a nice segue to the subjective theory of value. Basically, scarcity and utility are the best predictor for valuation.

I like how you put it. Imo those are two main factors too. But regarding to Bitcoin, although utility is there and scarcity is definitely there too, it is still so hard, almost impossible, I'd say, to say even roughly, is it trading below its "intrinsic value" right now, for example.

Lotus

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Quote from: adzino on November 05, 2021, 05:25:55 PM

The volatility isn't because of this.

How is that? If crypto was used to directly buy goods and services, then there would be little pressure on it to be volatile!

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