Bitcoin's value: From Network or Scarcity?

[DooMAD]

Who cares?  When a coin gets delisted from exchanges because the figurehead of that coin is creating drama and causing friction, that coin is obviously useless.

Set aside the judgment of value and personal opinion, a product goes beyond than just its "Founders" or "Public Face".
If some Exchanges are playing politics instead of remaining neutral, it is their own positioning.

Bottom line:  If the public figurehead can't stay neutral, expect consequences.  They are a central point of failure, which not only does the coin not require, but would actually function better without.  In comparison, Bitcoin is arguably more resilient as a result of satoshi's departure.  Faketoshi Wright's antics can (and do) damage BSV's acceptance, which affects utility and resulting value.  This is a flaw they refuse to remedy.

Why would a sensible person consider using a coin that people might refuse to accept because they recognise that flaw?

[avikz]

Is it Scarcity --> Network --> Price ?

Or Scarcity --> Price --> Network ?

These are all inter- dependent! If anyone falls out, the entire system will be in jeopardy! So it is impossible to give the entire credit to a single factor behind bitcoin's price.

Scarcity definitely plays a big role in deriving bitcoin's price but the entire thing wouldn't work without a robust network. Also the freedom factor comes into play big time. When the Banking system is showing its weaker side and severe dependency on government, people are more keen to move to a non- controlled environment which gives them a power to control their own funds!

So, many factors come into play in reality!

[TradingBull.io]

Is it Scarcity --> Network --> Price ?

Or Scarcity --> Price --> Network ?

I think that both of the above are wrong.The correct one is:

Network-->Scarcity-->Price

The price is just a result of many factors,including scarcity,market supply and demand,the current state of the network,FOMO,etc.We can't put the result of an equation in the middle of the equation.The result is always at the end.
The Bitcoin Core blockchain has some value, but it would be quite difficult to measure that value.
Without Bitcoin as an asset and a medium of exchange, the value of the Bitcoin Core blockchain is questionable.

Tend to agree with this, wanted to see if we could come up to it through the discussion.
Bitcoin is a particular case as the network is exclusively applied to BTC.

In the case of networks with a broader utility as networks, it becomes actually more visible that value is coming from the network itself.

[TradingBull.io]

https://twitter.com/i/status/1339980041531387905

[hatshepsut93]

The main use case for the database is BTC (transactions). Exclusive usage in the case of Bitcoin.
Ethereum is a way more useful network than Bitcoin (as a database and a network), for example, yet isn't as strong (in terms of computing power). MCap wise neither.
More networks to come will be more optimized and allow more and more use cases as DB/Network.

But BTC is a symbol, and has the stronger network so far (computational power)

Ethereum tries to be a currency and a "world computer" at the same time - this is not going to work, the "world computer" part will compromise the currency, and the currency will be holding back the "world computer". Ethereum is only getting more and more centralized because of their bloated blockchain, centralized development and now PoS consensus. And the new coins like TRON are borderline scams, because all they do is make loud statements without achieving anything.

[ChrisPop]

Bitcoin supply is limited by design OR in other words it is "scarce by design". The network incrementally contributes to the value of this cryptocurrency. As time passes and the network is proven to be robust, people will gain more trust in it. Thus I'd say the correct sequence is: Scarcity --> Network --> Price.

[TradingBull.io]

Ethereum tries to be a currency and a "world computer" at the same time - this is not going to work, the "world computer" part will compromise the currency, and the currency will be holding back the "world computer". Ethereum is only getting more and more centralized because of their bloated blockchain, centralized development and now PoS consensus. And the new coins like TRON are borderline scams, because all they do is make loud statements without achieving anything.

That's an interesting statement if we keep TRX aside for now.

Though we should probably separate each networks from their application(s):

- Bitcoin network is exclusively applied to BTC the currency
- Ethereum network is applied to ETH the currency + to storing and running dynamic programs on top of the network.

Now, regarding (de)centralization, there are actually 2 main types of it:
- Of the network via the validators and consensus (51%)
- Of the (circulating) supply (which bring us back to scarcity)

Then how allowing programs to run on top of Ethereum Network is having a negative effect on its decentralization (and its ETH currency), in practice ?
As far as I understand, ETH 2.0 Beacon is designed to improve transactions speed and volume by transiting through a PoS sidechain, also reducing tx fees.

[TradingBull.io]

Bitcoin supply is limited by design OR in other words it is "scarce by design". The network incrementally contributes to the value of this cryptocurrency. As time passes and the network is proven to be robust, people will gain more trust in it. Thus I'd say the correct sequence is: Scarcity --> Network --> Price.

Pushing this mind process a step further:

- The network doesn't lead to scarcity;
- Neither scarcity build the network (a continuous supply would have, probably not as fast, but still)

Then both the scarcity and the network actually lead to the price.
Can also eventually add the utility on top of it.

So Network + Scarcity + Utility = Price

Can we mathematically price each of these components individually ?

Network = Active addresses (AA)
Utility = Transactions (Tx)
Scarcity = 1/Supply (S) (1/ as if supply decreases, price increases)

If we consider the time dependency, then it should be a derivative function:

d(AA)/dt + d(Tx)/dt + d(1/S)/dt = dP/dt

The trick is in Tx, as there is a good volume of it off-chain (Centralized Exchanges transactions).

Decentralization being a necessary and required (boundary) condition for public chains: If not meet then P --> 0

[acquafredda]

You can play with variables, numbers, conditions, whatever you want to put in the mix but once somebody recognizes the true value proposition of bitcoin then you need no formulas.
Bitcoin is one of the most revolutionary technologies of our time, the best synthesis of decades of cryptographic technology and research with some of the brightest minds working on it.
I am so glad I put my money in it when it was early enough.

[TradingBull.io]

You can play with variables, numbers, conditions, whatever you want to put in the mix but once somebody recognizes the true value proposition of bitcoin then you need no formulas.
Bitcoin is one of the most revolutionary technologies of our time, the best synthesis of decades of cryptographic technology and research with some of the brightest minds working on it.
I am so glad I put my money in it when it was early enough.

Not denying that.
It is indeed an amazing invention and has started a whole industry with broader use cases for the blockchain technology.

Just trying to rationalize a valuation methodology here.
Companies, stocks, products... Everything has valuation models.

There is still the Stock to Flow but it is probably a bit reductive (it only considers scarcity, not utility).