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Well, I wouldn't say that things need to come to purchasing water with crypto because the mainstream adoption will be much greater if banks get approval to be a Bitcoin custodian, fair value accounting, and if the spot Bitcoin ETF is approved. This is the most valuable thing Bitcoin will ever get because BlackRock revised their ETF application, so big banks such as JPMorgan, and Goldman Sachs may now accumulate Bitcoin (if the ETF is approved) and have Bitcoin on their balance sheet.
If we tap into "buying water with crypto," it's already in place in third countries such as more than half of Africa, Latin America, etc. They are already using the Lightning Network (LN) to purchase goods and services. Even a chicken from the neighbor can be bought with LN. That is why you also see growing crypto payments in Africa, and a lot of countries there don't have a good internet connection like we do here in the EU or the USA, etc. So, this is not even a problem because nowadays applications can be used for crypto payments without an internet connection.
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Thank you for providing such valuable information. I am interested in LN but first need to learn more about it and the information you provided is really valuable.
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Filling bags because of the halving is not the right approach, better to use mathematical formulas that backed your strategy when buying Bitcoin. Typically Halving didn't make a new ATH but the sentiment behind the people and mining companies, the use of Bitcoin, and the mass adoption bring Bitcoin price to a new ATH. It can be seen from the charts that half of the year to one year later from the halving day price gets to motion, so halving itself should not bring higher prices, but the release of Bitcoins into the market and the mass adoption, ETF, banks as custodian, Fair value accounting, etc. can bring new ATH in Bitcoin price.
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Let me first thank you for the chat. I would also like to congratulate you on being a part of the Bitcoin community.
Each person who invests in any financial asset has their own methodology or investment strategy. In your case, it's called DCA (Dollar-Cost Averaging), a basic strategy where you monthly invest a certain amount you are willing to put into the Bitcoin market.
Note that you are not late; at the moment, the crypto market is small, with approximately 500 million people in the crypto space. According to Statista, by 2027, a new wave of 500 million people will enter the crypto space.
We know different, more advanced DCAs backed with technical analysis, but this takes time to understand and implement into your methodology.
It's important to note that all those price predictions are not 100% correct, and many of them were actually incorrect, as evident from the current price of Bitcoin compared to their predictions. Nonetheless, people's mentality is constant growth in knowledge, price, and the number of products they are focusing on. So, it's reasonable to anticipate that the future price of Bitcoin will go up. Any investment made today is positioning yourself in the market at a certain price. If you already bought and keep buying Bitcoin, it means you are in the market, and you haven't missed anything.
If you expect to make millions from your investment, I'm sorry, but this kind of thinking is not in place. What matters most is to invest an amount you are willing to psychologically accept if it is lost. The value received is not measured by wealth but by percentages of the income of the investment.
Another question you need to ask yourself is, if you can or will become a millionaire or whatever from Bitcoin profits, what will you do with your money? Would you sell Bitcoin to cash out and invest in something else, like real estate or other financial assets? The real question you need to ask yourself is why are you buying Bitcoin and why do you want to sell it?
My personal opinion is that I will never sell my Bitcoins no matter what because the background is too interesting for me (retail) and for many people who are whales. I will buy Bitcoin even if the price reaches $120k. Of course, we are in the middle of major Bitcoin events, so first, we will see how this will develop, but it won't stop me from buying Bitcoin.
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Thank you for sharing the song; I enjoy supporting artists like this one. Embracing Bitcoin goes beyond posting tweets; creating a song has a more profound impact on people's minds, especially when the frequency is positive. |
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Well written poems! Since the history of Bitcoin is included, it makes more sense, even though some of the points may just be conjectured rather being actual facts. However, I'm worried—were you the only one who wrote this? Maybe came from a poem about Bitcoin space bar clicker It's sound familiar with the Bitcoin and bank poems some lines a related though not too solid. There seems to be no connection between your poems and the time and date in the title. Actually, this ode was written by coretechs back in December 2011: https://bitcointalk.org/index.php?topic=54386.msg648360#msg648360 |
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I guess everyone, poet or not should give an ode to Satoshi himself. And talking about poems, I remember some of our members as well with their own version like, by @Mia Chloe- My poem; Bitcoin oh ye wonderfulAnd this classic: A poem.I just love those poems, thank you for sharing. |
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Nice poems!
It makes more sense since the history of Bitcoin is attached though some point may not be true fact but assumption.
But my concern is, did you write this on your own? Or got from one of the Bitcoin poems? It's sound familiar with the Bitcoin and bank poems some lines a related though not too solid.
The date and time in the title seems not to be connected with your poems.
Actually, this ode was written by coretechs back in December 2011: https://bitcointalk.org/index.php?topic=54386.msg648360#msg648360 |
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It was a winter day on December 12, 2011, and at 07:39:42 PM an ode was released by coretechs.
In the year of the bailouts, 2008,
the bankers were printing more debt for the state
the dollar grew weaker, the big picture clear
as they fed the hangover more Keynesian beer
World leaders debated, directing the blame
but with no real solutions, just more of the same
regulation, mark-to-market, housing costs for the poor
the fixes don't work, but they still give us more more
Who's to blame, is this caused by desire for wealth?
when perhaps the real problem is money itself!
the idea isn't new, maybe everything's tanking
'cause society is built on fractional reserve banking
And so called "investment" and attempted control
may soon spiral fiat into a death roll
as elected officials looked dumber and dumber
others started to put their faith into numbers...
On one cold winter day, a crypto-genius arrived
with some rock solid code, picked up by the hive
audited and improved, then released to the wild
Bitcoin had been born, Satoshi's brain-child
One day bankers and fascists may look back with scorn
on the day when the genesis block was born
like a clock set in motion, with springs that are wound
by the hackers who joined, mining blocks to be found
Securing the payments of those who believe
that middle-men shouldn't be there to receive
more than a small fee to perform a transaction
with privacy options when taking the action
This idea is a fantastic and easy to spread
through incentives devised in the crypto-man's head
the ball started rolling, but Satoshi grew quiet
soon thereafter began the first speculative riot
Had he lost faith, become scared, or retired?
maybe he was a banker himself but got fired?
AI from the future or a corporate plot?
or was "he" a "them", or had he been shot?
The answers to these, may never be known
so we'll make it a feast, so that you can be shown
how thankful we are for what you have built
as we sew our transactions on this open-source quilt
And we hope that you're lurking, with smile and a glow
as your world-changing software continues to grow
if you need some advice on this day, what to do?
please dump some some of your coins, I have bids in at $2
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Interesting perspective! While it's true that the crypto industry has evolved, I believe Bitcoin still plays a crucial role as the backbone, ensuring security and stability. The comparison to a window in the past technology era is intriguing, but Bitcoin's robustness and widespread adoption make it a unique and essential element in the crypto ecosystem.
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Come on, JP Morgan is losing its power, and clients are pushing them, trying to get answers. Jamie doesn't know what he is talking about. Definitely, they are providing analysis for crypto; they even created their coin, etc. This gives a clue that all this is info is for manipulation.
They want to outperform Bitcoin, but they can't!
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Burning Bitcoins or stored Bitcoins in practically lost wallets can be a hidden gem for Bitcoin's price. With a lower circulating supply and a growing demand year after year, the dynamics are set for something remarkable. Imagine a decade or two from now when people proudly share stories of acquiring Bitcoin at five figures, reminiscing about the golden age of crypto.  |
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This is actually a very good idea. I saw a man holding a school book in his hands, and it seems his kids are learning about Bitcoin in school. I recommend this because kids are our future. If we are aware that Bitcoin is the future, why not teach it in schools? Actually, nobody taught me in school how to make money (maybe because it's financial advice  ), but this is something I missed in the school system. |
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APPROACH 1: TOTAL ADDRESSABLE MARKET
The most popular approach to value cryptoassets is to estimate their addressable markets and compare that estimate with their current market capitalization.
For instance, many people believe that bitcoin is competing with gold as a nonsovereign store of value. At current prices of roughly $1,762.00 per ounce, the total stock of gold held above ground amounts to approximately $13 trillion.
As we have noted, the maximum number of bitcoin that will ever be available is 21 million. And so, the thinking goes that if bitcoin matches gold as a nonsovereign store of value, each bitcoin would be worth roughly $620,000 (on a fully diluted basis); if bitcoin captures 10% of the gold market, each bitcoin would be worth roughly $62,000; and so on. With its current market capitalization of roughly $400 billion bitcoin captures less than 4% of the value stored in gold.
The clear advantage of this approach is its simplicity. It is easy to understand and provides a solid framework for considering order-of-magnitude comparisons between cryptoassets and the markets they address.
This approach also makes introducing additional use cases easy. For example, one can consider that bitcoin is going after not only the gold market but also the entire “store-of-value” market. In that case, one can add offshore assets, parts of the real estate market, art, negative-yielding bonds, and other potential markets to the mix. This would increase bitcoin’s target market by multiple tens of trillions of dollars.
However, while directionally helpful, this type of back-of-the-napkin valuation exercise falls short in many ways. To start, it provides at best a rough estimate of the order of magnitude of value that a cryptoasset might attain. It also supposes that bitcoin will create a new store-of-value market, above and beyond the existing gold market.
Additionally, beyond bitcoin and other store-of-value use cases, comparative valuation metrics hold little meaning. If Ethereum is going after the programmable money use case and competing with the broader financial industry, how do you estimate the size of that market? Even for the payments use case, this calculation is significantly challenging.
APPROACH 2: THE EQUATION OF EXCHANGE (MV = PQ)
A widely discussed alternative valuation model was proposed by Chris Burniske, a crypto researcher and partner at the venture capital firm Placeholder Ventures, and Jack Tatar, managing partner of Doyle Capital, in a book called Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond.
Burniske and Tatar’s framework is widely referred to by the monetary equation of exchange that drives its calculation:
MV = PQ.
The equation is borrowed from traditional models of valuing currencies and is based on the assumption that a currency’s value is related to the size of the market it supports and to its velocity as it moves through that market. The definition of M, V, P and Q in both traditional monetary economics and cryptoasset markets.
These numbers can be estimated for some point in the future for a mature market and then discounted into present value. As an easy example using round numbers, let us assume bitcoin will process 100 billion transactions (Q) of $100 each (P) per year. Then P × Q= 100 billion × $100 = $10 trillion per year. If on top of that we assume that bitcoin has a velocity of 5 (in other words, on average, one bitcoin changes hands five times per year), we arrive at a potential market capitalization of $10 trillion per year/5 per year = $2 trillion. If we divide this number by the fully diluted amount of bitcoin outstanding (21 million), it yields a price target of $2 trillion/21 million, or $95,238 per bitcoin. If we assume further that this level will be achieved in five years, we can discount this amount by an appropriate rate and arrive at an estimated present value.
One important challenge with this approach is that it requires estimating velocity, which is notoriously hard to do—even for a stable currency such as the US dollar—and velocity has historically varied significantly over time. According to data from the Federal Reserve,one key measure of money velocity (MZM) has ranged between 0.9 and 3.5 over the past 30 years; cryptoasset velocity is likely to vary more. Small changes in this estimate can lead to very large changes in proposed valuations.
APPROACH 3: VALUING CRYPTOASSETS AS A NETWORK
A third approach to valuing cryptoassets is borrowed from “Metcalfe’s law,” a popular theory in technology that states that the value of a network is proportional to the square of the number of participants. If you consider a social network, such as Facebook, Instagram, or LinkedIn, for instance, its value when it has a single user is zero. If, however, a second user is added, the network becomes valuable. As more users are added, the network’s value grows.
A key part of Metcalfe’s law is that the value of the network is not linearly related to the number of users but is instead related by a square function. In other words, if the value of the network of two users is expressed as “4” (2 squared), the value of a network with four users is 16 (4 squared)-four times as large.
Metcalfe’s law has been used to value social networks with some degree of accuracy.Ken Alabi first proposed applying Metcalfe’s law to the valuation of cryptoassets in his 2017
paper “Digital Blockchain Networks Appear to be Following Metcalfe’s Law. Using the number of active daily users participating in the network, Alabi showed that the valuation differences between certain cryptoassets (he used bitcoin, Ethereum, and Dash) can be explained with a high degree of accuracy.
The Metcalfe valuation method makes intuitive sense, given that daily active users are a proxy for interest in and adoption of a cryptocurrency. Among its key limitations is that it is appropriate only for relative valuations between cryptoassets or for proxying current valuations on the basis of historical analogs. Another potential drawback is that it gives equal weight to each participant, which is less true in financial settings than in advertising-driven social networks. For example, the decision by Paul Tudor Jones II in May 2020 to allocate 2% of his portfolio in bitcoin (and to promote that allocation heavily in his investor letter) is exponentially more important for valuation purposes than a new retail client at Coinbase buying her first $100 of bitcoin.
On top of that, given the large historical volatility of cryptoassets—bitcoin, for instance, has had six bear markets of more than 70% in its history—the choice of the starting point can have a dramatic impact on the suggestion for current valuations.
APPROACH 4: COST OF PRODUCTION VALUATION
The “cost of production” valuation thesis was first proposed by Adam Hayes in 2015 and has been expanded upon by multiple researchers since. The theory holds that crypto, just like any commodity, is subject to traditional pricing challenges on the supply side. Crypto miners the computers that process transactions and are rewarded with the underlying cryptoasset spend fiat money to produce each marginal cryptoasset, through both energy and hardware expenditures.
Hayes and others suggest that, viewing bitcoin as a commodity and according to traditional microeconomic theory, the cost of producing each marginal bitcoin should align with the price of that bitcoin. After all, if bitcoin mining were to become unprofitable, miners could simply turn their attention to another cryptoasset or exit the market altogether. As a result, the value of each bitcoin can be estimated by examining the marginal cost of mining (specifically, the electricity burned in running the computations as part of mining) versus the expected yield of new bitcoin.Empirical backtesting shows a relatively strong alignment between bitcoin’s price and the marginal cost of production, lending some credence (thought no directional causality) to this approach.
The “cost of production” analysis, however, involves some significant challenges. For one, it is circular in its reasoning because the decision made by miners to enter or exit the market is driven by the cryptoasset’s price. Using two necessarily cointegrated variables to value one another has very little predictive or explanatory power. The model also fails to account for or explain the massive short-term volatility of bitcoin’s price or the fact that bitcoin’s mining difficulty is programmatically adjusted on a biweekly
basis depending on the level of effort miners have focused on it.
Beyond that, many cryptoassets use a consensus mechanism different from that of bitcoin, one that does not lend itself to this kind of analysis. In proof-of-stake systems, for instance, little or no energy is consumed in mining; instead, miners lock up assets in escrow in exchange for securing the network. For these markets, no direct concept of the cost of production exists.In the end, although cost of production has aligned roughly with prices for some cryptoassets in the past, the cause-and-effect relationship is not clear and its predictive value for the future is very much in question.
APPROACH 5: STOCK-TO-FLOW MODEL
A fifth approach, dubbed the “stock-to-flow” model, was first published in the 2019 paper “Modeling Bitcoin Value with Scarcity” by PlanB, a pseudonymous crypto quant researcher. The stock-to-flow model states that bitcoin’s price is a reflection of its scarcity and that scarcity can be measured by the stock-to-flow ratio—the relationship between the extant value of bitcoin and the amount of new bitcoin being produced each year. The paper showed that the price of bitcoin has historically been tightly correlated with increasing scarcity expressed by the stock-to-flow model.
In 2020, PlanB published a new iteration of this model focused on the relationship of the stock-to-flow ratios of bitcoin and other stores of value, such as gold and silver. This new version also accounted for state transitions, or different evolutionary stages in bitcoin’s monetization process.
The stock-to-flow model is intended to apply only to bitcoin and is appealing to some who see scarcity as the dominating characteristic of hard monetary assets. We are skeptical of this approach because it appears to conflate correlation with causation. It is true that one of bitcoin’s strengths is its strictly limited supply, but assuming that this is the only factor driving its price is an overreach. It is also overly convenient for crypto bulls because bitcoin’s stock-to-flow ratio is program-matically increasing over time and, therefore, “predicts” in this model a perpetually rising price for the assets.
Also, given the programmatic nature of the model, many have pointed out that the market (even if only modestly efficient) should price in the impact of bitcoin’s future stock-to-flow ratio, impounding future value today.35 Though widely discussed in some crypto circles, the stock-to-flow ratio is not seriously considered by academic researchers.
CONCLUSION
The unfortunate reality is that none of the proposed valuation models are as sound or academically defensible as traditional discounted cash flow analysis is for equities or interest and credit models are for debt. This should not come as a surprise. Cryptoassets are more similar to commodities or currencies than to cash-flow-producing instruments, such as equities or debt, and valuation frameworks for commodities and currencies are challenging. Cryptoassets add another wrinkle in that they are still extremely early in their development, and we are still uncovering the utility that these assets can provide.
New York University professor of finance Aswath Damodaran has compared cryptoasset valuations with those traditional commodities and currencies. He has noted, “Not everything can be valued, but almost everything can be priced,” pointing out that “cash generating assets can be both valued and priced, commodities can be priced much more easily than valued, and currencies and collectibles can only be priced.”
Commodities, of course, are analyzed from a supply-and-demand perspective, and this is where cryptoassets might have an edge. Imagine that an investor could have real-time access to a transparent ledger that contains a record of every instance in which a single barrel of oil changes hands. Although this is not feasible for oil, it is easily at hand for cryptoassets. In fact, a nascent but burgeoning field of analysis combines data from what is happening in the blockchain (on-chain data) with market data–like prices and volumes (off-chain data). We are optimistic that more-refined modeling techniques looking at these data wells will bear fruit in the years to come.
In the end, most investors approach cryptoassets as some combination of commodity, currency, and early-stage venture capital investment, borrowing techniques from each approach and emphasizing long-term holding periods. This makes precision challenging but might be enough to justify or reject the idea of adding a cryptoasset allocation to a portfolio. We examine the impact of such an allocation in the next section.
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Firstly, he might want to revisit the initial reasons behind his Bitcoin purchase. What motivated him to enter the crypto space in the first place?
Secondly, encourage him to reflect on his life goals. What does he truly desire? Aligning investments with personal objectives can provide clarity.
Lastly, investing is a business endeavor. Remind him to approach it with a strategic mindset—analyze risks, set goals, and make decisions based on a sound business strategy.
If you want to be successful, act as a successful person.
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Constantly checking your seed phrase is not necessary. My personal approach is to write the seed phrase on 2 or 3 papers covered in plastic to protect it from environmental damage. I check my Bitcoin balance once a month because I add some to my hardware wallet.
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There is not yet a green light for the approval of Bitcoin Spot ETF, but if it is approved, the price will skyrocket, as it did with the Gold ETF. However, the real question is, is it good for Bitcoin to be a part of an ETF? Was ETF approval good for Gold?
We will need to see another layer added to Bitcoin Spot ETF to increase gaining percentage among investors. Similar to Gold, it is somewhat stuck where it is. Of course, the supply cannot be measured as it can be with Bitcoin, but the $/Gold oz. price will push higher when crypto payment for Gold is accepted. Until then, we can forget that the price can double in 10 years. The same will happen with Bitcoin; it will skyrocket, but in the next 10 years, the price will establish a top, and it won't move with such force as it will when the ETF is approved (if it is). So, we will need another layer to keep pushing the price up as significantly as it was in the past.
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Definitely, they found something that was not in regulation, but of course, it's the kind of news that we didn't expect. I was asking myself, probably propaganda starts to attack the crypto space. Binance is one of the biggest Bitcoin holders.
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Don't listen to those YouTubers. I don't want to convince you to buy Bitcoin or not to buy it, but I will share my point of view on that topic.
They've said the same for S&P500, Nasdaq, etc., the same for gold and other precious metals, and now for Bitcoin. Remember, if you choose to invest in a financial asset, no matter which one, go and read all about it. It should take you some time to learn about a specific asset, but when you understand its background, you'll be able to make a more confident decision.
Look at the chart from the '70s till now, and you'll find that the sentiment in every person, retail, institutional investor, or owner of the hedge fund, or whatever, is to increase the service, product, and price itself. Gaining on the long run is a fact.
Now, learn about Bitcoin and crypto, or other stuff that suits you best, and then make a decision. But please, don't look to YouTube for answers!
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You wrote very well, but I'd like to emphasize one critical aspect that is essential for both investors and traders – mindset/psychology. In my view, this is the linchpin of success, with about 95% of it reliant on mindset and only 5% on strategy.
As someone who has been actively trading and investing for nearly seven years, I've experienced my fair share of ups and downs. What I've discovered is that psychology plays the most crucial role in achieving success. It involves saturating your mind with the knowledge, experiences, and aspirations related to your goals.
My journey in trading was initially marked by high levels of stress. However, I managed to transform my performance when I learned to control my emotions, improve my lifestyle, maintain a balanced diet, stay hydrated, and more.
On the other hand, investing felt more manageable for me because I could exercise patience and avoid the impulsive actions that often accompany trading.
In my opinion, many traders also have an investor side to them, and conversely, most investors do not actively engage in trading.
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