I see a lot of talk around here about the fundamentals of Bitcoin. There is definite positives in the fundamentals but how do they really stack up? Is this price tag of $270 really supported by the fundamentals? Let us see
All prices use the current rate of $270/BTC and assumes someone would market buy the coins necessary to make a purchase.
All prices are at the extreme end of the spectrumThe floating fundamentals (Floating because these will change over time with external events and demand)
@dish network
Figure monthly access is around $130/month. So for
BTC0.5 you can have TV and internet. This 0.5BTC is easily absorbed in either direction at any price. Any Bitcoin price easily supports this service.
@Overstock.com
You can easily spend some loot there. Figure you buy a modest house full of furniture for $30 grand. That is still less than 100 BTC. Again, any price can support this since a million people aren't exactly crawling over each other to make a purchase at overstock using Bitcoin
@newegg
Say you want to build the state-o-the-art top end computing monster. $3-5000 should do it with all peripherals included. Currently ~15-20 BTC to purchase such a machine. Again, this barely registers on the charts and is easily supported by sub-$100 prices where 30-50 BTC would be needed.
@Tesla motors
To buy the latest and greatest tesla has to offer, you'll need to shell out ~$105,000 or
BTC388.88. However, demand for a tesla S still doesn't hold this price up above here since you can acquire these coins with a mere 0.7% slippage. Not a big bump for the market to handle.
@Microsoft
Windows 8 can be bought with
BTC0.4. The Xbox network could provide more demand than that, but it still has not. Why? CC are easier because everyone already has them?
Lamborghini (there is currently only one dealer that accepts Bitcoin, so this assumes all of them do)
With prices around $200k one can be had with
BTC740. This would actually make a dent in the order book at one exchange or another, but would not be more than an outlying spike that would be ignored on other exchanges. Lets assume that every person who buys a lambo over the next year will use Bitcoin. With a little over 2000 units sold worldwide per year, that's 167/month x 740BTC = 123,580 BTC required per month to facilitate these purchases. Now THAT is a big dent and some huge demand. That would be one way that the next bubble could start. But lets face it, that isn't going to happen so we'll use some more realistic figures. 2 Lamborghini's that I know of, have ever been bought using BTC. 2/6 (years of Bitcoins' existence) = .33 units per year and multiply that by 740BTC price and you get 244.2 BTC per year spent on Lambo's. Not much
Before any of you chime in with "
I can send money anywhere for nearly free" or "
decentralized" or "no charge backs" or "scarcity" or "
can't be counterfeited" etc... "so my coins are worth $10,000,000/each right now". lol. Those are static fundamentals (Static because they have a value but that value isn't fully realized yet and that value doesn't change once it is realized). Fundamentals that will be priced in organically as the majority realizes the fundamental flaws with the current systems in place. If you think they are worth $10M or even $10k each right now, then I'll happily send you every last coin in my cold wallet (currently about 1200) for $10,000 each. That's cheap right? so wudya say?
The bolded features above are what I think are the most important fundamentals listed from this last section.
But I do have arguments against some of these static fundies.
Decentralized. The public is stupid and lazy. They don't know how to handle money and many don't know how to secure their computer. A decentralized currency means that they have no recourse and no one to blame when their money poofs away. They don't like to be at fault. The general public doesn't like these traits.
Scarcity. Get real... With 2.1 quadrillion units, there are plenty, so it's not that scarce. That's 2,100,000,000,000,000 or more Dollars than in existence. All the QE in the world wouldn't catch up to that.
In conclusion, While Bitcoin is indeed getting fundamentally stronger, the fundamental value is far lower than the speculative price, and the price is far higher than is necessary to sustain this entire list of floating fundamentals. Only when the richest motherfuckers on the planet have to move money to buy a yacht or when Boeing begins accepting Bitcoin to buy 787's will the price really be fundamentally supported at prices that are a lot higher than it is right now. Even 5 Billion people buying a coffee at their local java shop would only use every Bitcoin exactly once. Since that isn't likely to happen any time soon means that it is yet another false hope of fundamental support at this time. What we need is daily use cases (Gorceries, clothing and utilities). Not periodic big ticket purchases. More will come, eventually, but until they do, a $270 Bitcoin is 98% speculative whether you like it or not. Quit rushing into the next bubble because it'll only fall hard again next time because it isn't ready.
