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Author Topic: Why do people think one Bitcoin will be worth $1000 (or more)  (Read 10752 times)
Radacoin
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March 07, 2013, 08:41:04 AM
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I think many people (newbies) think the value of Bitcoins can only go up is because they know there will never be more than 21 Millions Bitcoins on this planet. Bitcoins are scarce compared to the 7 billion humans on this planet or the trillions and trillions of USD and EURO in the financial markets.

What they forget is that you can, almost indefinitely, divide a Bitcoin. In milli-Bitcoins (mBTC), micro-Bitcoins (µBTC) - or Satoshis (0.00000001 BTC). So there’s plenty of Bitcoins left for everyone on this planet. Or Satoshis (300,000 Satoshi for every human to be exact).

As long as Bitcoins are not used in "real life" (e.g. I can buy stuff from Amazon or pay a pizza with them) they have zero value. OK one could say they have at least the value of the electricity that has been used to create them.

But on the other hand no one measures the value of a 100 Dollar note with the paper and the ink that it's composed of. A 100 Dollar note has it's "value" because it's accepted everywhere and I can get "stuff" for it.

Bitcoins are accepted almost nowhere – hence their "value" is pure from speculation. It can be 50cent today, 50 USD in a month and 10cent in two month. No one should complain if he has lost money. We have all seen this before. In the 17th century in the Netherlands: The Tulip Mania.

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

This was a period in the Dutch Golden Age during which contract prices for bulbs of the recently introduced tulip reached extraordinarily high levels and then suddenly collapsed. The price of tulips skyrocketed because of speculation in tulip futures among people who never saw the bulbs. At the peak of tulip mania, in February 1637, some single tulip bulbs sold for more than 10 times the annual income of a skilled craftsman.
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March 07, 2013, 08:53:43 AM
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What they forget is that you can, almost indefinitely, divide a Bitcoin. In milli-Bitcoins (mBTC), micro-Bitcoins (µBTC) - or Satoshis (0.00000001 BTC). So there’s plenty of Bitcoins left for everyone on this planet. Or Satoshis (300,000 Satoshi for every human to be exact).

These are very good points, however the point about the divisibility is actually the reverse of what you think, when more and more people use and value smaller fractions of the Bitcoin, the Bitcoin as a set of 100,000,000 Satoshi's becomes much more valuable. If we were dealing in µBTC day to day, then the people still holding entire Bitcoins would be very wealthy indeed. (assuming of course a billion people use Bitcoins in a day to day basis)


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March 07, 2013, 08:54:56 AM
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March 07, 2013, 09:05:55 AM
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OK one could say they have at least the value of the electricity that has been used to create them.

Nope. If nobody finds a use for Bitcoin they will have no value, no matter the amount of electricity you spend on them.

What something costs to produce determines if you are going to keep producing it and how much, so it affects the supply, but it has nothing to do with the value it has. You could spend all the electricity and effort you want on a turd, its still a turd.

Bitcoin has value because it is usefull for people, not because electricity was spent on it.
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March 07, 2013, 09:12:49 AM
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I think many people (newbies) think the value of Bitcoins can only go up is because they know there will never be more than 21 Millions Bitcoins on this planet.

You r right. But 95% users of this forum own bitcoins and hope to make a fortune spreading this delusion. They don't have strong arguments to support the delusion so they just troll people like u, giving useless advice to use search button or think outside the box. If u really want to discuss the value of Bitcoin u should find some other forum. Here u'll be just trolled to death.
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March 07, 2013, 09:26:02 AM
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I think many people (newbies) think the value of Bitcoins can only go up is because they know there will never be more than 21 Millions Bitcoins on this planet.

You r right. But 95% users of this forum own bitcoins and hope to make a fortune spreading this delusion. They don't have strong arguments to support the delusion so they just troll people like u, giving useless advice to use search button or think outside the box. If u really want to discuss the value of Bitcoin u should find some other forum. Here u'll be just trolled to death.

Yeah also explain to me why someone pays 30 million dollar on an Rembrandt painting.. There is no  value to it..to me it is just paper and paint isn't it... Btc has value becourse it fulfills needs ...like transfer big amounts off money across the world almost instantly in a private way...the getting rich argument is there only when you first invested willing to take risk of losing your money..

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March 07, 2013, 09:33:42 AM
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I think many people (newbies) think the value of Bitcoins can only go up is because they know there will never be more than 21 Millions Bitcoins on this planet. Bitcoins are scarce compared to the 7 billion humans on this planet or the trillions and trillions of USD and EURO in the financial markets.

What they forget is that you can, almost indefinitely, divide a Bitcoin. In milli-Bitcoins (mBTC), micro-Bitcoins (µBTC) - or Satoshis (0.00000001 BTC). So there’s plenty of Bitcoins left for everyone on this planet. Or Satoshis (300,000 Satoshi for every human to be exact).
By that logic, 300,000 satoshi could potentially represent the life savings of the average person. That being the case, how much would 100,000,000 satoshi (ie, a whole single bitcoin) be worth? Unless you think the average person owns less than $3, it's obviously more than $1000.

As long as Bitcoins are not used in "real life" (e.g. I can buy stuff from Amazon or pay a pizza with them) they have zero value. OK one could say they have at least the value of the electricity that has been used to create them.
One could say that, but one would be wrong. Hiring a bunch of people to dig a hole in the ground and then fill it up again costs money, but it has no value.

But on the other hand no one measures the value of a 100 Dollar note with the paper and the ink that it's composed of. A 100 Dollar note has it's "value" because it's accepted everywhere and I can get "stuff" for it.

Bitcoins are accepted almost nowhere – hence their "value" is pure from speculation. It can be 50cent today, 50 USD in a month and 10cent in two month. No one should complain if he has lost money. We have all seen this before. In the 17th century in the Netherlands: The Tulip Mania.
"Almost nowhere" is not the same as "nowhere". As long as bitcoins are accepted anywhere, they have value there. To use your example, A 100 dollar note is not, in fact, accepted everywhere. Supposing it is a U.S. 100 dollar note, it will not be accepted in Europe. An Australian 100 dollar note will not be accepted in the U.S. But that doesn't mean it has no value: you can go to a bureau de change and exchange it for whatever currency is accepted. In the same way, you can exchange your bitcoins for local currency at any of the numerous bitcoin exchanges. As long as someone, anyone, accepts bitcoins, they have value.

The real question is why should anyone accept bitcoins? Simply, bitcoins enable instant payments anywhere in the world, any time of day, any day of the week, with no restrictions, for far lower fees than any other payment network on the planet. If you're looking for the "instrinsic value" of a bitcoin, there it is.

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March 07, 2013, 09:35:14 AM
 #8

Let me correct this for you:

Btc has value because it fulfills could fulfill needs ...like transfer big amounts off money across the world almost instantly in a private way...

It's just - no ones does it. Hence: Zero value.

Yeah also explain to me why someone pays 30 million dollar on an Rembrandt painting

Exact same thing as for tulips and Bitcoins: Pure speculation, zero value.
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March 07, 2013, 10:25:31 AM
 #9

This is essentially the same type of trolling that is present in the "ponzi scheme" argument, which is something we still run into occasionally. It's essentially an argument that is in the end only based on an assumption that bitcoins have no use. Well, that argument is a pure troll argument and it shouldn't even be addressed, at all. The only reason I'm addressing it is because people insisted on replying to him, and not replying well enough.

Bitcoins are just about as useful as any revolutionary technology, and is being accepted as payment for online services in an exponentially increasing rate. The argument of it not being accepted anywhere, is as trollish as the rest of the argument. It's also trollish that it isn't being used for international transfers, or anonymous transfers, or anything like that. It is certainly being used for all of that already.

Obviously it's a process, not everyone uses it now nor will everyone use it ever. The value of bitcoins is completely subjective. The people who make these arguments usually don't value bitcoins themselves, thus they don't really understand why others do. The fact however is, that a lot of people do value them, many of them a lot more than paper money like USD or EUR.

Bitcoins are of course quite speculative as an asset. There are a ton of expectations resting on the future potential of Bitcoin, but speculation only takes you so far. In fact the first big bubble of Bitcoin was pretty much pure speculation, the economy wasn't there at the time. Now the Bitcoin economy, the foundations, are at least ten times stronger than at the time.

Bitcoin market price has risen beyond the last all time high, proving that it is, at least for some people, the real deal. You can't have a rise beyond the speculative bubble unless there is really something to it. Obviously the people who really understood Bitcoin still supported it even during a speculative crash. If you still don't get it, please either shut up or do some research.

It remains to be seen which niches Bitcoin truly fills and if it's up for a larger world domination, but so far the story is simply glorious. Bitcoin is currently exploding in use in the online world, real use, and I would not be surprised if in a couple of years it's accepted everywhere online. Not so sure about the brick & mortar potential, but it really doesn't matter if it doesn't go there. It can go there with the Bitcoin Debit cards that are very likely coming this year.

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March 07, 2013, 10:30:14 AM
 #10

I think many people (newbies) think the value of Bitcoins can only go up is because they know there will never be more than 21 Millions Bitcoins on this planet.

You r right. But 95% users of this forum own bitcoins and hope to make a fortune spreading this delusion. They don't have strong arguments to support the delusion so they just troll people like u, giving useless advice to use search button or think outside the box. If u really want to discuss the value of Bitcoin u should find some other forum. Here u'll be just trolled to death.

Yeah also explain to me why someone pays 30 million dollar on an Rembrandt painting.. There is no  value to it..to me it is just paper and paint isn't it... Btc has value becourse it fulfills needs ...like transfer big amounts off money across the world almost instantly in a private way...the getting rich argument is there only when you first invested willing to take risk of losing your money..

Not sure about the painting. I agree that Bitcoin has value coz lets to transfer big amounts almost instantly. I disagree that the value goes up coz there will never be more than 21M BTC. It's silly to expect that Bitcoin will replace all the other mediums of exchange. Even now we have problems related to huge number of transactions in the blockchain. Multiply it 1000 times and ask urself if its possible to handle so much data without centralization.
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March 07, 2013, 10:44:47 AM
 #11

Not sure about the painting. I agree that Bitcoin has value coz lets to transfer big amounts almost instantly. I disagree that the value goes up coz there will never be more than 21M BTC. It's silly to expect that Bitcoin will replace all the other mediums of exchange. Even now we have problems related to huge number of transactions in the blockchain. Multiply it 1000 times and ask urself if its possible to handle so much data without centralization.

The value of bitcoin comes from the value of the entire system and protocol (ie. what niches does it end up serving very well, how many people want to use it, etc) and the scarcity of coins in that system. If there was no limit to the number of coins in the system, each individual coin would be worthless. Of course, the million dollar question is how valuable is the whole system? And that is what everyone is trying to figure out, as it will determine the value of each individual coin. But scarcity is a fundamental requirement.
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March 07, 2013, 10:47:46 AM
 #12

Funny you should mention Amazin and pizza...you're wrong in each point by the way. You can buy pizza with Bitcoin and BitPay just figured out how to provide service for sellers with goods in an amazon warehouse.

You should try reading the first page of threads in the main forum (this one). You might learn something that will help assuage your fears.

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March 07, 2013, 11:18:39 AM
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...you're wrong in each point by the way. You can buy pizza with Bitcoin and BitPay just figured out how to provide service for sellers with goods in an amazon warehouse.

I am at Olivia Plaza Hotel, Barcelona, Spain at the moment.
I have 12BTC in a wallet on my smartphone.
I am hungry and want a pizza.

Question for you: What do I do now?
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March 07, 2013, 11:21:34 AM
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Well, that argument is a pure troll argument and it shouldn't even be addressed, at all. The only reason I'm addressing it is because people insisted on replying to him, and not replying well enough.

The essence of my posting was this here:

I think many people (newbies) think the value of Bitcoins can only go up is because they know there will never be more than 21 Millions Bitcoins on this planet. Bitcoins are scarce compared to the 7 billion humans on this planet or the trillions and trillions of USD and EURO in the financial markets.

What they forget is that you can, almost indefinitely, divide a Bitcoin. In milli-Bitcoins (mBTC), micro-Bitcoins (µBTC) - or Satoshis (0.00000001 BTC). So there’s plenty of Bitcoins left for everyone on this planet. Or Satoshis (300,000 Satoshi for every human to be exact). ...

Line of thought: "What? There are only 21 million of them? Quick! I must get one before they are all gone! Price? I don't care!"
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March 07, 2013, 11:24:27 AM
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...you're wrong in each point by the way. You can buy pizza with Bitcoin and BitPay just figured out how to provide service for sellers with goods in an amazon warehouse.

I am at Olivia Plaza Hotel, Barcelona, Spain at the moment.
I have 12BTC in a wallet on my smartphone.
I am hungry and want a pizza.

Question for you: What do I do now?

Send me the 12BTC, and I will make sure a pizza of your choice is delivered. I will throw in a free bottle of wine.

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March 07, 2013, 11:36:27 AM
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...you're wrong in each point by the way. You can buy pizza with Bitcoin and BitPay just figured out how to provide service for sellers with goods in an amazon warehouse.

I am at Olivia Plaza Hotel, Barcelona, Spain at the moment.
I have 12BTC in a wallet on my smartphone.
I am hungry and want a pizza.

Question for you: What do I do now?

You meet with a dude with shaggy hair in a gas station. You have your smartphones with you, initiate a trade, then stand around for 20-30 Minutes awkwardly while waiting for the transaction to confirm. You tuck your Euro into the plastic wallet thoughtfully labeled "outdated currency" in permanent marker. You go back to your hotel and inquire about the nearest pizza plaze. They refer you to the bellhops brothers restaurant on the other end of town. You take a taxi to get there which is eating a hole into your fresh stack of dirty fiat currency. You arrive at the pizza plaze, sit down, order a Pizza Quattro Stagioni and a glass of Chianti. After a satisfying meal you pay with your stack of dirty fiat cash and take a walk around the block for better digestion. You notice it has already gotten late and public transport is no longer available. You hail a taxi but as prices have risen to night fare your stack of dirty fiat currency is no longer sufficient for the ride and the driver leaves you standing in the middle of nowhere while yelling abuse at you. Trying to orient yourself via your smartphone which unfortunately has no reception right here, you notice your stomach telling you that some of  the pizzas ingredients were not as fresh as they should have been....

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March 07, 2013, 11:36:46 AM
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Well, that argument is a pure troll argument and it shouldn't even be addressed, at all. The only reason I'm addressing it is because people insisted on replying to him, and not replying well enough.

The essence of my posting was this here:

I think many people (newbies) think the value of Bitcoins can only go up is because they know there will never be more than 21 Millions Bitcoins on this planet. Bitcoins are scarce compared to the 7 billion humans on this planet or the trillions and trillions of USD and EURO in the financial markets.

What they forget is that you can, almost indefinitely, divide a Bitcoin. In milli-Bitcoins (mBTC), micro-Bitcoins (µBTC) - or Satoshis (0.00000001 BTC). So there’s plenty of Bitcoins left for everyone on this planet. Or Satoshis (300,000 Satoshi for every human to be exact). ...

Line of thought: "What? There are only 21 million of them? Quick! I must get one before they are all gone! Price? I don't care!"

Well you definitely can not "indefinitely" divide them. Vast numbers of Satoshis' are lost forever. By some counts 500K in BTC is tied up somewhere in the Pirate Fiasco. And it's always possible and realistic to think that many more BTC are yet to be lost. Rich people being hit by taxis, etc....

Bitcoin is getting seriously close to being used "in real life". There is a fortune to be made in making it so.

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March 07, 2013, 11:39:54 AM
 #18

Radacoin, if you simply meant that people shouldn't be buying coins simply because there is supposed to be 21 million individual bitcoin units available, you are quite right. I don't think anyone does that though, because it would be completely retarded. The fact that they can be divided is simply a question of usability, it has no effect on the scarcity of the total monetary base.

Bitcoins are of little use if the minimum usable amount is 1 full bitcoin, which would mean that there is not much basis for their value. It's essential that they can be divided so that amounts less than 1 bitcoin can be sent once the value is higher.

So either you are simple, or you're overestimating the simplicity of Bitcoin newbies. It's a rare newbie that doesn't understand that bitcoins can be divided to smaller pieces. It also has a positive effect on the value of bitcoins (that they can be divided sufficiently), so it's a very strange thought indeed.

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March 07, 2013, 11:40:28 AM
 #19

...you're wrong in each point by the way. You can buy pizza with Bitcoin and BitPay just figured out how to provide service for sellers with goods in an amazon warehouse.

I am at Olivia Plaza Hotel, Barcelona, Spain at the moment.
I have 12BTC in a wallet on my smartphone.
I am hungry and want a pizza

Question for you: What do I do now?

Send me the 12BTC, and I will make sure a pizza of your choice is delivered. I will throw in a free bottle of wine.

I will do the above and personally deliver the pizza and remove any rubbish after you have eaten it.

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March 07, 2013, 11:40:37 AM
 #20

...you're wrong in each point by the way. You can buy pizza with Bitcoin and BitPay just figured out how to provide service for sellers with goods in an amazon warehouse.

I am at Olivia Plaza Hotel, Barcelona, Spain at the moment.
I have 12BTC in a wallet on my smartphone.
I am hungry and want a pizza.

Question for you: What do I do now?


In my wallet, at Olivia Plaza, I have a 100$ bill and a American Express credit card. I also have one pound of pure gold. None of them are accepted by the Olivia Plaza Hotel to buy a pizza. I search through my other pocket : I find a diamond ring, a pound of pure silver and a some papers telling me that I own some parts in a company called Google.

According to you, they are worthless and can be throwed away. I can't buy a pizza with them at the Olivia Plaza Hotel…

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