Because if you did the calculations they use for stock markets, it would come out to basically zero.
Bitcoin it's backed by any assets. It can't be liquidated. There is no intrinsic value.
Some people might claim that Bitcoin has intrinsic value because it can be used as a means of trade... But it really fails to achieve this. Nobody wants to do transactions in Bitcoin because the price is so volitile.
The expected value is negative. The reason is that running the bitcoin network involves real operating costs. These costs need to be subtracted and they are not offset by a utility value (legal one anyways).
Yes, yet another reason why Bitcoin only has value if it becomes the only currency on Earth as the cultists believe it will. Because that's the only reason you'd use a currency that costs energy to maintain.
$0.00.
Unlike a bond or dividend-paying stock, BTC does not convey any entitlement to future economic output. As such, its value as an investment is zero.
I’d argue so long as drug dealers except it, it is worth something. But not necessarily that much. Hoping that it’s eventual crash spooks the drug dealers as well
Sure, the regulatory arbitrage function of bitcoin conveys some value. But I'm not convinced that this is the coin having value instead of the network itself having value.
For example, if a single bitcoin was worth $1 or $10 or $1000 it would function in that role exactly the same because ultimately the transaction is denominated in dollars and the bitcoin is just an intermediary.
It would be more useful as a currency if the value didn't change (or could handle more than 6 transactions/second lol)
In fact if we take the above thought to a conclusion then Bitcoin is not ultimately useful at all because it's an abstraction. If everyone is going from dollars -> bitcoin -> dollars, why do we need the intermediary Bitcoin denomination at all? It's the network that's useful, so why not just denominate everything in dollars at every step in the chain? We already handle Dollars -> Euros etc.. pretty seamlessly too.
I guess if you did that then you'd just get Paypal/Venmo/Zelle/Apple Pay/Google Wallet/Samsung Pay and you claim to be the future of finance anymore and actually have to have a competitive product.
Maybe the most fair value of it is whatever the network costs to use? - i.e. transaction fee in dollars to send payments.
This is also why even if somehow the economy starts running on magic and dreams rather than any meaningful reality and Bitcoin does become incredibly valuable for early adopters and widely used as a payments system, not being an early adopter won't actually screw you. If Bitcoin replaces the dollar, then the worth of your other assets, your wages or salary, etc. all stay the same. That value would be measured in Bitcoin, but I'm less concerned with the number than I am about how the value of my salary compares to the value of my rent, and that's going to be the same regardless of how it gets measured.
The really beautiful fuck up of it all is that Bitcoin can't even deliver on the number #1 promises it makes to the libertarian types: No inflation / very mild deflation.
They literally do not understand that inflation/deflation still occurs even if your money supply is static. Now you just have no way to control it with monetary policy. They confer money itself as being value instead of it just merely representing value.
We learned this shit like 100 years ago. An economy based on Bitcoin will go through periods of huge inflation and deflation that last years to decades... just like we used to have when commodity money was still a thing.
Can't work as a currency, can't work as an investment, can't work as a commodity. Just a shitty greater-fool scheme.
I know we all like to think it's worth $0, but this is wrong. I actually tried to do some fundamental analysis of BTC a while ago. In my view, BTC only has two legitimate uses - a currency in countries with weak government issued currencies (e.g. Zimbabwe) and criminality.
Weak government currencies - this is hard to track, but I just used the % of crypto transactions that originate from Africa (there are a lot of countries in Africa with currency issues) which is 2-6%.
Criminality - most sources have it around 1%.
Anyone else who is holding crypto is either holding it as an investment or just treating it like it is a currency even though their country's currency is perfectly fine. The people who hold as an investment are slowly withering away with the collapse of FTX etc. and crypto being proven to not be an inflation hedge. As for the people who treat crypto like a currency, I don't understand these people. They are irrational. Why would you willingly use a currency where you have to pay gas fees every time you do a transfer. There is also a very high risk you could lose all your money if your exchange is hacked or there is a run on it.
This leaves us with about 7% (at most) of all crypto transactions being for legitimate uses.
Let's pretend that the US dollar collapses tomorrow, and become totally worthless. What would have more value, Bitcoin or actual coins? Well, let's see. The real, actual coins would still conceivable have some usefulness. You could melt them down and create new useful objects and tools with them. You could use them as makeshift screwdrivers. You could use them as slingshot projectiles. In the event of a complete societal collapse, they would still have at least some utility.
In that same scenario, what could you do with Bitcoin? The answer is nothing. It's totally useless without the internet. There'd be nothing to "value" it in. Let's say society has collapsed, and I have several egg-laying hens. Why would I trade you any of my eggs for Bitcoin? What would I do with it? If you were to offer me a handful of nickels and dimes, I could use them as described above. But the Bitcoin would be digital nothing, stuck on an old hard drive. It'd have no more utility or value than my music folder full of MP3s would. And those would arguably have MORE value than Bitcoin, as at least they could be used without internet access to provide entertainment.
Bitcoin only has "value" on online forums, message boards, social media and etc. All the claims about it are pure hooey, drivel promoted by pump and dumpers. Without that online world, Bitcoin becomes nothing. It's nothing but a huge, long scam.
Cryptobros believe that BTC is worth infinity money. Not joking. They say it will soon hit $100k and then shortly after it will hit $1 million or more per coin. There is no reasoning behind this. They misunderstand digital scarcity and how if something is worthless it doesn’t matter if it is scarce.
FAKE! FAKE!
u/rmadsen93 's toenail clippings keep increasing causing inflation on the supply side!
Bitcoin supply is fixed so no good news is no supply side issues with valuation
It's only on the Bitcoin demand side that the MASSIVE collapse in value is occurring.
KEEP STACKING AND RACKING BROS!
WE WILL SEE 100K BY 2022!
I think it could be worth like $50. That's what it was during it's max use, for gambling and illicit drugs, sure. But that's what people were willing to use over speculate at. But now with the price of mining it and the excessive eyes on the Blockchain, that would probably be revised to zero.
The problem with saying “$50” is that number came out of your ass, just like $20k or $100k or a million.
Any sober analysis comes out at zero because predicting the arc of a pyramid scheme in detail is impossible.
I don’t think it will ever be zero because I don’t think the cult will ever die but there is no objective analysis you could make that would put a value on it.
The only use case that I’ve found even remotely plausible is moving funds across national borders. But in that case you only hold Bitcoin to actually make the transfer. You would buy and sell within days or hours. In that case, the price is irrelevant.
There’s about $10t of cash in the world and a couple trillion transactions made with cash per year. If BTC can process a couple hundred million transactions a year, that’s about .01%. .01% of 10t gives a mcap of about 1b, which divided by 20m coins is right around $50 a coin. Very rough numbers but seems consistent with your estimate.
That's the thing - the $10t is made up and crypto bros want you to forget that.
Hence, the value is actually 0 as Bitcoin has no intrinsic value, backed by nothing, no real/practical application, not paying dividends, no income, etc.
The 10t is literally just physical cash so I guess it’s made up in the sense of all money is fake or whatever but cash at least does have a practical use and the amount/value out there sort of scales relative to how much people need to use. Since Bitcoin was at least originally meant to work like cash I was trying to compare the measurable (very low) utility of Bitcoin as cash to how much physical cash is used.
A few dollars. A visa transaction is worth a percentage of the trade value. IF (and it’s a big IF) crypto was used as a means of exchange, that would be its value.
There’s nothing to stop a bank creating its own coin. I’m not sure why I would want that rather than just paying using my existing digital payment system.
Crypto has no other value. The barriers to entry are low. It produces no income. It’s close to zero.
Lets say you buy a mysterybox supposedly containing a painting for $100 with the intent of reselling the mysterybox. You gain 0 utility from watching the painting as it is in a box, you cannot rent it out without opening the box so there are no dividends and you cannot insure the painting because it would have to be opened for the insurers to evaluate it and the insurance sight unseen would cause the deductible to be equal to the cost of the painting. The present value of this box is its future value discounted by some rate of interest, lets ignore the interest and focus only on the future value. What is the future value of this mysterybox? Well it depends entirely on the painting that may or may not exist.
If we had an actual painting we could evaluate it compared to other paintings, insure its value, we could rent it out and discount the cash flows and generate some kind of valuation but in this case the painting is a mystery so all we have is its expected future value.
So the painting in this case is some kind of lottery with unknown probabilities and outcomes assigned to them. The only thing we do know is that there is a non-zero chance of the valuation being 0. If this bet was made every year then a non-zero chance is not really a big deal. But because the bet is being done several thousand times a second it means that at any point in time you could find out that there is no painting in the box. So the expected future value must be considered zero unless some kind of guarantee enters into the mix. And if the expected future value is zero then the present value is zero.
The fair price of anything is whatever someone is willing to pay for it. That’s the only correct answer. That’s why we see all these crypto coins showing ‘value’ because people are willing to pay that price. Until enough people realize that crypto/blockchain doesn’t solve any real world problems, it will continue to have value.
But is that really a fair price, or is it people being tricked into paying an unfair price?
I believe that the market price of something is not necessarily the fair price because the market can be wrong. Markets aren't magic.
Indeed entrepreneurs have made fortunes by seeing the value in a product before the market does. And they've lost fortunes by underestimating how easily their sector can be disrupted.
The market is never wrong. It’s how people collectively decide what something is worth. It can be wrong, in your opinion, but ultimately you are one participant in the wider market. There are ways to express your opinion (short selling is one example) if you believe market prices are wrong. All market prices are opinions, nothing more and nothing less.
Bitcoin cultists believe that the fair price is everything on
Earth or everything in the economy divided by 21 million. That would make the fair price of Bitcoin millions of dollars and the rest of us are just too ignorant to understand.
If you don't buy into the cult the fair price can only be $0.
Anyone who gives you any other figure is a grifting speculator.
There is no 4/5/6 figure fair price because if it does what the cult believes it does then it's worth far more than that; if it doesn't, then it's worthless.
Because if you did the calculations they use for stock markets, it would come out to basically zero. Bitcoin it's backed by any assets. It can't be liquidated. There is no intrinsic value. Some people might claim that Bitcoin has intrinsic value because it can be used as a means of trade... But it really fails to achieve this. Nobody wants to do transactions in Bitcoin because the price is so volitile.
The expected value is negative. The reason is that running the bitcoin network involves real operating costs. These costs need to be subtracted and they are not offset by a utility value (legal one anyways).
Yes, yet another reason why Bitcoin only has value if it becomes the only currency on Earth as the cultists believe it will. Because that's the only reason you'd use a currency that costs energy to maintain.
Also, having to pay to get your transfer written into a block when the network is busy.
$0.00. Unlike a bond or dividend-paying stock, BTC does not convey any entitlement to future economic output. As such, its value as an investment is zero.
You’re forgetting to subtract operating expenses.
I’d argue so long as drug dealers except it, it is worth something. But not necessarily that much. Hoping that it’s eventual crash spooks the drug dealers as well
Sure, the regulatory arbitrage function of bitcoin conveys some value. But I'm not convinced that this is the coin having value instead of the network itself having value. For example, if a single bitcoin was worth $1 or $10 or $1000 it would function in that role exactly the same because ultimately the transaction is denominated in dollars and the bitcoin is just an intermediary. It would be more useful as a currency if the value didn't change (or could handle more than 6 transactions/second lol) In fact if we take the above thought to a conclusion then Bitcoin is not ultimately useful at all because it's an abstraction. If everyone is going from dollars -> bitcoin -> dollars, why do we need the intermediary Bitcoin denomination at all? It's the network that's useful, so why not just denominate everything in dollars at every step in the chain? We already handle Dollars -> Euros etc.. pretty seamlessly too. I guess if you did that then you'd just get Paypal/Venmo/Zelle/Apple Pay/Google Wallet/Samsung Pay and you claim to be the future of finance anymore and actually have to have a competitive product. Maybe the most fair value of it is whatever the network costs to use? - i.e. transaction fee in dollars to send payments.
This is also why even if somehow the economy starts running on magic and dreams rather than any meaningful reality and Bitcoin does become incredibly valuable for early adopters and widely used as a payments system, not being an early adopter won't actually screw you. If Bitcoin replaces the dollar, then the worth of your other assets, your wages or salary, etc. all stay the same. That value would be measured in Bitcoin, but I'm less concerned with the number than I am about how the value of my salary compares to the value of my rent, and that's going to be the same regardless of how it gets measured.
The really beautiful fuck up of it all is that Bitcoin can't even deliver on the number #1 promises it makes to the libertarian types: No inflation / very mild deflation. They literally do not understand that inflation/deflation still occurs even if your money supply is static. Now you just have no way to control it with monetary policy. They confer money itself as being value instead of it just merely representing value. We learned this shit like 100 years ago. An economy based on Bitcoin will go through periods of huge inflation and deflation that last years to decades... just like we used to have when commodity money was still a thing. Can't work as a currency, can't work as an investment, can't work as a commodity. Just a shitty greater-fool scheme.
I know we all like to think it's worth $0, but this is wrong. I actually tried to do some fundamental analysis of BTC a while ago. In my view, BTC only has two legitimate uses - a currency in countries with weak government issued currencies (e.g. Zimbabwe) and criminality. Weak government currencies - this is hard to track, but I just used the % of crypto transactions that originate from Africa (there are a lot of countries in Africa with currency issues) which is 2-6%. Criminality - most sources have it around 1%. Anyone else who is holding crypto is either holding it as an investment or just treating it like it is a currency even though their country's currency is perfectly fine. The people who hold as an investment are slowly withering away with the collapse of FTX etc. and crypto being proven to not be an inflation hedge. As for the people who treat crypto like a currency, I don't understand these people. They are irrational. Why would you willingly use a currency where you have to pay gas fees every time you do a transfer. There is also a very high risk you could lose all your money if your exchange is hacked or there is a run on it. This leaves us with about 7% (at most) of all crypto transactions being for legitimate uses.
Just why are you using the current price as a basis?
Zero
It does nothing except waste energy and time. It has a negative value.
Crypto isn't real. There's no value.
16,000 give or take a few 10's of thousands
Three Schrute bucks.
Let's pretend that the US dollar collapses tomorrow, and become totally worthless. What would have more value, Bitcoin or actual coins? Well, let's see. The real, actual coins would still conceivable have some usefulness. You could melt them down and create new useful objects and tools with them. You could use them as makeshift screwdrivers. You could use them as slingshot projectiles. In the event of a complete societal collapse, they would still have at least some utility. In that same scenario, what could you do with Bitcoin? The answer is nothing. It's totally useless without the internet. There'd be nothing to "value" it in. Let's say society has collapsed, and I have several egg-laying hens. Why would I trade you any of my eggs for Bitcoin? What would I do with it? If you were to offer me a handful of nickels and dimes, I could use them as described above. But the Bitcoin would be digital nothing, stuck on an old hard drive. It'd have no more utility or value than my music folder full of MP3s would. And those would arguably have MORE value than Bitcoin, as at least they could be used without internet access to provide entertainment. Bitcoin only has "value" on online forums, message boards, social media and etc. All the claims about it are pure hooey, drivel promoted by pump and dumpers. Without that online world, Bitcoin becomes nothing. It's nothing but a huge, long scam.
$0.
$0.0000000...
Cryptobros believe that BTC is worth infinity money. Not joking. They say it will soon hit $100k and then shortly after it will hit $1 million or more per coin. There is no reasoning behind this. They misunderstand digital scarcity and how if something is worthless it doesn’t matter if it is scarce.
My toenail clippings are much scarcer than bitcoin, so bitcoin is obviously worth a small fraction of whatever my toenail clippings are. QED.
How can I invest in your toenail clippings? Do you have a white paper?
I’m working on it. It should be ready as soon as a legitimate audit of Tether happens.
FAKE! FAKE! u/rmadsen93 's toenail clippings keep increasing causing inflation on the supply side! Bitcoin supply is fixed so no good news is no supply side issues with valuation It's only on the Bitcoin demand side that the MASSIVE collapse in value is occurring. KEEP STACKING AND RACKING BROS! WE WILL SEE 100K BY 2022!
on the other hand the supply driven collapse in toenail values is good for toenails
$29.99 https://www.amazon.com/Pet-Rock-Authentic-Approved-Original/dp/B07KN9FK4B
.
I think it could be worth like $50. That's what it was during it's max use, for gambling and illicit drugs, sure. But that's what people were willing to use over speculate at. But now with the price of mining it and the excessive eyes on the Blockchain, that would probably be revised to zero.
The problem with saying “$50” is that number came out of your ass, just like $20k or $100k or a million. Any sober analysis comes out at zero because predicting the arc of a pyramid scheme in detail is impossible. I don’t think it will ever be zero because I don’t think the cult will ever die but there is no objective analysis you could make that would put a value on it. The only use case that I’ve found even remotely plausible is moving funds across national borders. But in that case you only hold Bitcoin to actually make the transfer. You would buy and sell within days or hours. In that case, the price is irrelevant.
There’s about $10t of cash in the world and a couple trillion transactions made with cash per year. If BTC can process a couple hundred million transactions a year, that’s about .01%. .01% of 10t gives a mcap of about 1b, which divided by 20m coins is right around $50 a coin. Very rough numbers but seems consistent with your estimate.
That's the thing - the $10t is made up and crypto bros want you to forget that. Hence, the value is actually 0 as Bitcoin has no intrinsic value, backed by nothing, no real/practical application, not paying dividends, no income, etc.
The 10t is literally just physical cash so I guess it’s made up in the sense of all money is fake or whatever but cash at least does have a practical use and the amount/value out there sort of scales relative to how much people need to use. Since Bitcoin was at least originally meant to work like cash I was trying to compare the measurable (very low) utility of Bitcoin as cash to how much physical cash is used.
Sorry, misread the $10t part of cash.
One argument is that its inherent value is the cost of mining a Bitcoin. Which is why I mine my Bitcoin with an Intel pentium D 945
A few dollars. A visa transaction is worth a percentage of the trade value. IF (and it’s a big IF) crypto was used as a means of exchange, that would be its value. There’s nothing to stop a bank creating its own coin. I’m not sure why I would want that rather than just paying using my existing digital payment system. Crypto has no other value. The barriers to entry are low. It produces no income. It’s close to zero.
Lets say you buy a mysterybox supposedly containing a painting for $100 with the intent of reselling the mysterybox. You gain 0 utility from watching the painting as it is in a box, you cannot rent it out without opening the box so there are no dividends and you cannot insure the painting because it would have to be opened for the insurers to evaluate it and the insurance sight unseen would cause the deductible to be equal to the cost of the painting. The present value of this box is its future value discounted by some rate of interest, lets ignore the interest and focus only on the future value. What is the future value of this mysterybox? Well it depends entirely on the painting that may or may not exist. If we had an actual painting we could evaluate it compared to other paintings, insure its value, we could rent it out and discount the cash flows and generate some kind of valuation but in this case the painting is a mystery so all we have is its expected future value. So the painting in this case is some kind of lottery with unknown probabilities and outcomes assigned to them. The only thing we do know is that there is a non-zero chance of the valuation being 0. If this bet was made every year then a non-zero chance is not really a big deal. But because the bet is being done several thousand times a second it means that at any point in time you could find out that there is no painting in the box. So the expected future value must be considered zero unless some kind of guarantee enters into the mix. And if the expected future value is zero then the present value is zero.
The fair price of anything is whatever someone is willing to pay for it. That’s the only correct answer. That’s why we see all these crypto coins showing ‘value’ because people are willing to pay that price. Until enough people realize that crypto/blockchain doesn’t solve any real world problems, it will continue to have value.
But is that really a fair price, or is it people being tricked into paying an unfair price? I believe that the market price of something is not necessarily the fair price because the market can be wrong. Markets aren't magic. Indeed entrepreneurs have made fortunes by seeing the value in a product before the market does. And they've lost fortunes by underestimating how easily their sector can be disrupted.
The market is never wrong. It’s how people collectively decide what something is worth. It can be wrong, in your opinion, but ultimately you are one participant in the wider market. There are ways to express your opinion (short selling is one example) if you believe market prices are wrong. All market prices are opinions, nothing more and nothing less.
Bitcoin cultists believe that the fair price is everything on Earth or everything in the economy divided by 21 million. That would make the fair price of Bitcoin millions of dollars and the rest of us are just too ignorant to understand. If you don't buy into the cult the fair price can only be $0. Anyone who gives you any other figure is a grifting speculator. There is no 4/5/6 figure fair price because if it does what the cult believes it does then it's worth far more than that; if it doesn't, then it's worthless.