Bitcoin Forum

Hi guys

Just wanted to see why the price is justified with Bitcoin? Because its a very high price right now, $27.00

Bitcoin at the end of the day has no intrinsic value. Its not a tangible thing like gold. Its just some bits in a computer. If one day everyone decided that it was a total waste of time and had no value, the value of it would go to $0 and everyone who bought the coins would loose their money.

Uhhh....yeah....welcome to Bitcoin and to the forums.

I'm afraid the rest is gonna hurt...

Thanks but actually I've been registered here since 2011, just didnt post much

 ;)

If one day everyone decided that gold was a total waste of time and had no value, the value of it would go to $0 and everyone who bought the gold would lose their money.

bitcoins ... how the hell do they work?

Gold is so old school...Manganese is the new commodity. Get it now while you still can.

They're used to buy and sell drugs.

Other things too, but mostly drugs :P

you forgot the pic...

http://slacktory.com/wp-content/uploads/2011/08/f-ing-bitcoins-how-do-they-work.jpg

Why do people have such a hard time with "tangibility?!"  Some sort of cognitive bias?

question i have to ask, what monetary system outside of direct barter HAS a substantial intrinsic value?
Gold can be used for making electronics... and plating stuff as a non-reactive coating... that is about it.
Silver is a bit more useful.
paper money.. uh.. can line your house with dollar bills if the banks ever crash again?

Bitcoin may not have any physical backing aside from power consumption but its right up there with the rest in 'intrinsic value' which is a medium of exchange which is accepted somewhere.

ironically this should mean that they don't place any value on their own thoughts

because thoughts aren't tangible

Justified?

Because enough people have decided that it's worth that price, for a number of reasons. Considering things are only worth what people will pay for them (absent coercion) I'd say the market price is its own justification.

As to why it's being valued so highly now, my opinion, it's just increased demand brought about by more people finding out about bitcoins and realizing how useful they are and will be. I don't see that demand diminishing any time soon; while I don't think it's all that likely, a price of $100 by the end of the year wouldn't shock me.

And if it did I would still bank on it going even higher.

If you think it has no value at "the end of the day" then 1 cent ought not surprise you any more than $27. Maybe it is the years of unbroken positive value that should perplex you?

http://en.wikipedia.org/wiki/Economic_bubble

Bitcoin's strength is in its intangibility.  This is it's intrinsic value. It cannot be confiscated and it cannot be stopped at a border. Xray scans and body searches cannot find it. You can store it in your head, and then spent it when needed. Only destruction of the internet can stop it.  It cannot be controlled by any nation or bank.

As long as it continues to meet the other 5 essential requirements of a currency, it can survive:
Durable
Consistent
Divisible
Convenient
Limited quantity

It could not exist before the internet, but in today's world where Big Brother is watching, it may be more valuable than gold.

Bitcoin has value because it's scarce and we say it has value.

Gold has value because it's scarce and we say it has value.

TF2 Hats have value because they're scarce and we say it has value.

These three are different than the following.

WoW Gold has little value because it's not scarce and we base its value on how annoying it is to get.

Dirt has little value because it's the opposite of scarce, but it can be a pain to haul in large quantities if you need to get some dirt in a place that doesn't have any (which wouldn't really price the dirt, but the effort it takes to move it)

The dollar has negative value because it's not only the opposite of scarce, but can be produced on a whim, and we have no say in its value, which is always negative.  We use this because it's common and the gov said so, and what the gov says is as good as God's word.

Some people believe Bitcoin's value directly represents the Dollar's actual value, which is less than dirt.  It's value increases based on how many people realize this.  But if you're implying Bitcoin shouldn't have value because it does nothing, you should bury your money in a hole and see what it does at the end of the day.

The following is a list I've comprised of things you can do with paper money that you can't do with Bitcoin.

1. Use it for campfire fuel
2. Sew it into an ineffective blanket
3. Wipe your ass
4. Snort crack
5. Blow your nose
6. Paper ball for office hoops
7. Create a public diversion when running from the popo
8. Fold to expose 9/11 was a hoax
9. Draw a mustache on great American historical figures

However, with the advent of paper Bitcoin money, this list is/will be moot.

Blame the web.   Let me tell you why.

There are at least two ways someone can learn about bitcoin.

1.  you are concerned about the global economy and monetary policy so you do some personal research about currency and modern alternatives.  Then eventually you find out the Wikipedia page about bitcoin.

2.  you find an article about it on your preferred website.  It's pure chance as this website usually don't speak about this kind of stuff in particular.

If you were in the first case, there is no reason why many people should have learnt about bitcoin in the same time as you.  Because you learnt about if from your initiative.  So if you start buying bitcoins it won't change the price much.

In the second case, it's very different.  An army of registered readers will suddenly learn about bitcoin more or less in the same time.  Even if only 10% of them think it is a good idea, it is still a lot of people.  And of course, they will all rush to buy a few bitcoins.  And here you have an effect in the price.  Had those people stretched their purchase on a slightly larger period of time, the price would probably not have been affected.   But no, they had to act all together, like a hurd.


http://memecrunch.com/meme/FKHN/bitcoin-and-sheep/image.png


It's not our fault if people behave like cattle.

I feel like that hand expects to break a solid glass sphere with that needle. Poor confused hand.

Go home hand, you are drunk.

All there is to it is psychology. The value of something is set by supply and demand (in a free economy). There is no universal meaning or value to anything, thus value is as real as we think it is. You can argue why the masses believe in Bitcoin, but the fact that they do makes its value what it is. As of now, the value of 1 BTC is ~$27. The future value is another story, however.

I'm not sure how well established the EMH is now days, but it is an interesting read: http://en.wikipedia.org/wiki/Efficient-market_hypothesis

Bitcoin doesn't have a high price, it is incredibly cheap. Get some while you can.

because bitcoin is awesome and everyone wants it.


That's true. cool story bro!

 Every currency is worth exactly as much as people are wanting to pay for it. Be it Bitcoin, USD, Euro, cattle, flowers, stones or some weird porn movies, doesnt matter as long as people are willing to exchange it for something else :D

Hah! fooled you.. its not solid glass its plastic!

High price you say..??!!

If you take an needle and point it at your house on a world map, then u can see how small minded you(we) are...now lets take BTC and put it on the worldmap.. Still very small but if Btc gets worldwide adoption ( whitch is happening as we speak) it will work like an lever system it will takeoff like a rocket ...meaning to say that in four year from now you will look back and see what i meant...$27,- is nothing.. If you have the guts u can still make money buying btc as we speak.. ,,, !!! Or miss the boat,,, :D :D ;) It´s small minded to think $27,- is much...

1gr of gold is something like $45,-  1 fucking GRAM and there is plenty of gold but not plenty of BTC

In my usual style:


 ;D

No, please not the supply and demand fable again: prices are set only partially by supply and demand but principally by bargaining positions.
We know that since Aristoteles !
Capitalism and makets are two opposite forces. Capitalism unbalanced by market forces tend to build barriers to entry and monopolies.

The result is an ugly caricature of capitalism, called hypercapitalism. Markets are completely distorted and manipulated by a few.
This is the state of the world economy today, far from a "free economy".
A free economy requires capitalism balanced by markets.

The bargaining positions are supply and demand. Someone wants some thing at time x for a price of y. Someone must be willing to sell that thing at time x for price y. Supply and demand.

This got me thinking.  What does it mean to be "more valuable than gold"?

I mean, that makes sense when comparing two materials - like "more valuable PER OUNCE".  But how do you compare two things of completely different make-up?  It's like comparing Computers and Oranges.  (see what I did there?)

It doesn't make sense to compare the price of one ounce of gold vs. one whole bitcoin, and say one is more valuable than the other, because the counter-argument would be "well let's use millibitcoins or milligrams or tonnes (or whatever)".

It seems like you have to get a common frame of reference between the two different commodities, in order to say one is more valuable than the other, when they each can be bought in divisible quantities.   And I can only think of two frames of reference:

1)  The total value of all of this commodity, at market price (what people refer to as Market Cap).
2)  The generally accepted risk-weighted rate of return for an investment in this commodity.

We can easily calculate #1, and Bitcoin is nowhere near Gold in that category.

Good luck on calculating #2.  I tend to think that Bitcoin has a much higher risk-weighted rate of return than gold at the present time and prices.  On the other hand, apparently every seller disagrees.

value in sense of utility perhaps?
I know there are very few places that actually take gold anymore as currency, thus I have more buying power with my bitcoins.

Good point.  Perhaps SPECIFIC utility, like utility as a currency.

Gold is more valuable that bitcoin in the manufacturing process of circuit boards.

A bicycle is more valuable than one hundred bitcoins in terms of recreational exercise around my neighborhood, but one hundred bitcoins are more valuable than a bicycle in terms of trade or resale.

I can buy 50 bikes with 100 bitcoins... so.. bitcoin > bike? XD
but then again, I only need 1 bike.

The price can be evaluated in a similar way to a stock. Companies which are not growing tend to be priced based on their dividends. ie. the price is a low multiple of earnings, because you evaluate what flow of returns you would get from your investment.

But companies that are still very much growing are based on their expected future potential. Their   price is a much higher ratio to earnings. They're being priced on future earnings. A track record of year over year increases in price are an indicator that the companies has met expectations.

I don't have a formula that can tell you what the bitcoin price should be based on fundamentals. But the price has increased each year quite significantly and someone looking at this might project that it would continue doing well and want to own some. Many people coming to that conclusion are going to be buyers in a market where not that many owners are selling.

In fact, most owners selling now are probably thinking they can buy back in at a lower price. I know I've made that mistake a couple times. Selling now is a gamble as much as buying because unknown future demand could easily mean these prices are never seen again and then when will they buy back in? Or demand could vanish in a panic and they've done well.

An ongoing series of positive news articles is not hurting demand right now.

Facebook, eBay, and most service oriented businesses are valuable because they have a large user base.  If everyone decided that the service they provided was useless, the value of the company would be worthless.  The technology they use is meaningless without the users.  So based on the OPs logic, nobody should invest in or use these companies because the user base may someday vanish.

You are right, Bitcoin do not have a tangible format, but you could try cacasius coin and see if it makes you feel better  ;)
https://www.casascius.com/

And it is produced by mathematical calculation which is extremely hard. Try to hash a block with a pen and a paper by yourself and you will understand why $27 is almost nothing compared to the amount of effort involved (and energy/heat used) in generating a bitcoin

People's value changes over time depends on technology and environment change. 200 years ago, if you dig out some petroleum, it worth very little, but now people spend huge amount of resource searching for it...

I'll pay double for a coin if you show your work on paper.

Because some people like me beleive that's a "so better than any alternative" to use to exchange value, that they (I am) still willing to buy at that price.  Buy to use, to hoard, to speculate..

Bitcoin are both a currency AND a paiement processor...  That's so wonderfull, modern.. I'm not alone to think like that !  I know because the price is'nt sustained only be me ;)