Bitcoin fair price in 2013 - A more realistic poll

[deathcode]

This is an unbiased poll with 5 options. Two bullish, Two bearish, and the status quo.

[1715464876]

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[1715464876]

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[1715464876]

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[caveden]

Price is always "fair" if coercion is not being used to set it.

So, yeah, the current price is fair, and wherever it goes, it will remain fair.

[deathcode]

Price is always "fair" if coercion is not being used to set it.

So, yeah, the current price is fair, and wherever it goes, it will remain fair.

Is this an opinion or a fact?

[piramida]

this is neither, it's a definition of a fair price.

[turboNOMAD]

Voted "~20 makes more sense"
Not that I think $40 is too high, but simply because quadrupling price in just 2 months cannot be a normal rally, so a correction must follow.

[BitPirate]

I think just over ~$50 by now would be a fair price, so I voted $47.

I don't see there being any big movement now until Monday, where we still might hit $50.

If the current price were unfairly manipulated, it would have crashed for good with the bad news earlier this week -- people looking to get out would have done, for good. It didn't. It's a fair price.

[deathcode]

this is neither, it's a definition of a fair price.

In accounting and economics, fair value is a rational and unbiased estimate of the potential market price of a good, service, or asset

It seems like the definition of fair price/value uses the word potential. I don't see how your definition is comparable to this definition of fair price. potential means the future. How far in the future is not established but can be. the price is always fair in present time, however since this pools is posted in the speculation section, then we must see it as the future value of bitcoin and not its current.

[desired_username]

There's no such thing as fair price regarding to Bitcoin, so I cannot understand people giving any value.

Think of it from an other perspective:

The price of bitcoin just indicates how big the BTC economy is.

It is insignificantly small at the moment.

[granolageek]

Price is always "fair" if coercion is not being used to set it.

So, yeah, the current price is fair, and wherever it goes, it will remain fair.

That's theology, not experience.

The one Keynes quote that even the Austrians use is "The market can remain irrational longer than you can remain solvent."

[afbitcoins]

My view is that the bitcoin market is one of the only markets in the world where a fair price is achieved by honest price discovery between buyers and sellers. The market is on a bull run which extends back before the bubble in 2011 and I see no reason for that to end. It is increasing on a log basis. It won't be long before people happily pay more than $100 for a bitcoin.

I'm hoping for a breakout past the $50 mark and think there is a great chance we'll achieve it. We're not in a bubble yet.

[granolageek]

I'm hoping for a breakout past the $50 mark and think there is a great chance we'll achieve it. We're not in a bubble yet.

The run from $32 to $49 was pretty bubbleicuous. A few weeks in the forties to stabilize things will build some confidence.

[Wekkel]

... simply because quadrupling price in just 2 months cannot be a normal rally, so a correction must follow.

Trader error no ##: just because the price went up so drastically, it must come down.

[deathcode]

... simply because quadrupling price in just 2 months cannot be a normal rally, so a correction must follow.

Trader error no ##: just because the price went up so drastically, it must come down.

Actually is an educated statement. I see that EVERY day in the stock market!
Stocks jumping %10-15 after a quarterly report and them coming down the next day almost back to what they were before or settling 2-3% over the original price.
I see cases where in the vicinity of a conference call to announce quarter results, the stock goes up, and even though the companies beat expectation, the stock suddenly comes down anyway.
His statement is not far from reality, however, bitcoin is its own niche and it has some disctintive qualities that make him unique.

[cdb000]

I don't have the faintest idea what is a "fair" price for a Bitcoin.

I mine Bitcoins using GPUs, long ago paid for. It costs me about £11 in power to mine a Bitcoin. Would (say) £15 be a "fair" price? Maybe, but I'm happier with a price above £30.

If you offer me £32 for my Bitcoins and I accept your offer, than maybe that is a fair price.

If you offer me £32 for my Bitcoins and I decide instead to hold them, does that mean that £32 is not a fair price?

Does anybody actually have an objective definition of the word fair anyway? Many people use the word "fair" to mean "what I think it should be".

[notbrain]

... simply because quadrupling price in just 2 months cannot be a normal rally, so a correction must follow.

Trader error no ##: just because the price went up so drastically, it must come down.

Actually is an educated statement. I see that EVERY day in the stock market!
Stocks jumping %10-15 after a quarterly report and them coming down the next day almost back to what they were before or settling 2-3% over the original price.
I see cases where in the vicinity of a conference call to announce quarter results, the stock goes up, and even though the companies beat expectation, the stock suddenly comes down anyway.
His statement is not far from reality, however, bitcoin is its own niche and it has some disctintive qualities that make him unique.

"Past performance is no guarantee of future results."

This is not the fiat-based market you are looking for...    http://www.youtube.com/watch?v=2I33k8vV3Sk

Bitcoin is an infant, $100 by end of year is reasonable as long as gov coercion stays away. Think in terms of market cap and how many companies are worth more than all BTC in circulation. $100 per btc would give a little over $1B in mkt cap...still sitting at the kiddie table in global capital markets.

Human behavior is way more complex than the current market models and net risk models dictate.

[randrace]

The one Keynes quote that even the Austrians use is "The market can remain irrational longer than you can remain solvent."

Oh, hell yeah! I'm posting here on my way to the John Maynard Keynes Quotes Thread!

Long run is a misleading guide to current affairs. In the long run we are all dead.

[Wekkel]

Also used by Austrians is the famous quote from Keynes' book 'the economic consequences of the peace'

Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens ... Lenin was certainly right. There is no subtler, no surer means of over-turning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

I still shake my head when I read this quote and am subsequently reminded of this dark force raging in our societies.

[Zangelbert Bingledack]

Fair price is a myth.

[rpietila]

By using net present value analysis, I came up with the result that a bitcoin now is actually worth $2000 on average. There is significant variation in the possible outcomes, though. Considering that many people will want to get rich even when the odds are against them, I see that bitcoin is a good value proposition to become rich. After all, the average payout is 40 times the the investment now (it was even discounted at 8%).

For a person with my tolerance for risk, this translates to a portfolio allocation of about 40%, and I am busy trying to achieve it.

In the links below, in my signature, you can support my quest by purchasing silver for cheap or for cheaper (hint: post #50).

[Wekkel]

By using net present value analysis, I came up with the result that a bitcoin now is actually worth $2000 on average.

Very interesting.

Would you be so kind to share a bit more of the reasoning/calculation behind this outcome? Furthermore, I assume that you see $2,000 as the projected end value (and not the current value,as the text suggests)?

[Largo]

http://www.google.com/trends/explore?hl=en-US#q=%22buy%20bitcoins%22&date=8%2F2010%2033m&cmpt=q

i would say 47 looks right

[rpietila]

It was a scenario analysis for bitcoin's value in 5 years. I don't remember the exact figures (it's buried somewhere in the speculation forum as it is - gasp - already 48 hours old).

Something like, 4 scenarios

A) Mass adoption gets the price to $20000
B) Steady, albeit slowing rise of price to $1500
C) Bitcoin is wounded and price is stuck anywhere between $10 and $100
D) Bitcoin folds altogether and goes to zero.

Then I assigned probabilities to these scenarios, calculated the expected value and discounted it to find the net present value. $2000 was the present value.

This kind of analysis is very important, since bitcoin does have the fat tail of very large payouts in not-so-small probabilities. If there was not the possibility of $20000 price, the NPV of course would not be anywhere close to $2000. I am finding it funny to state that $200 in 5 years is an example of a scenario where bitcoin has failed.

[Wekkel]

Thanks for sharing. I did some calculations on my own, based on a suggested market cap. https://bitcointalk.org/index.php?topic=146022.msg1630314#msg1630314
Of course, exponential growth is a very tricky assumption - especially when massaging the annual growth rate to meet your own expectations - although I consider an average factor of 1.6 not to necessarily be extraordinary.

[Frequency]

If what happend in Cyprus today ( gov. Shut down the entire bankingsystem, they choose the weekend to do so to steel there peoples money)  then Btc will succeed and will get more and more attention...

There's no such thing as fair price regarding to Bitcoin, so I cannot understand people giving any value.

Think of it from an other perspective:

The price of bitcoin just indicates how big the BTC economy is.

It is insignificantly small at the moment.

This is a good way to see/say it

[rpietila]

Thanks for sharing. I did some calculations on my own, based on a suggested market cap. https://bitcointalk.org/index.php?topic=146022.msg1630314#msg1630314
Of course, exponential growth is a very tricky assumption - especially when massaging the annual growth rate to meet your own expectations - although I consider an average factor of 1.6 not to necessarily be extraordinary.

Nice analysis +1. For some time I thought you were a bear. Maybe you were just buying, like I also did last week.

[Wekkel]

Nice analysis +1. For some time I thought you were a bear. Maybe you were just buying, like I also did last week.

I'm suspicious of the large run up lately, but technical indicators just do not seem to matter with Bitcoin. It's a whole new game.....

From my perspective, I am not gambling or speculating but protecting my savings for the benefit of me and my family. The Robber Baron's are on the loose, and I don't want an involuntary part of that.

_{Note: LTC seems like a nice speculative prospect. In theory 1/4th of a BTC, so it still has a 20x potential if enterprise is build around it. I like it's fast confirmations and the spread of risks over multiple currencies. We'll see in the next few years...}

[Odalv]

It was a scenario analysis for bitcoin's value in 5 years. I don't remember the exact figures (it's buried somewhere in the speculation forum as it is - gasp - already 48 hours old).

Something like, 4 scenarios

A) Mass adoption gets the price to $20000
B) Steady, albeit slowing rise of price to $1500
C) Bitcoin is wounded and price is stuck anywhere between $10 and $100
D) Bitcoin folds altogether and goes to zero.

Then I assigned probabilities to these scenarios, calculated the expected value and discounted it to find the net present value. $2000 was the present value.

This kind of analysis is very important, since bitcoin does have the fat tail of very large payouts in not-so-small probabilities. If there was not the possibility of $20000 price, the NPV of course would not be anywhere close to $2000. I am finding it funny to state that $200 in 5 years is an example of a scenario where bitcoin has failed.

What if Sathoshi Group controls (35-78)% of currency. Are you still confident ? (and they will never sell a single Bitcoin next 10 years because they have a lot of $B in USD)

[rpietila]

For all I know, the likely upper limit for Satoshi group's holdings is about BTC2,500,000.00000000. That is a huge number of satoshi, I agree. But it is only about 10% of the total btc issued.

Call me pervert if you like, but I actually like the idea of a wealthy and responsible entity behind something. The power behind the current world order are wealthy, yes, but I don't like the way the manage the world. Satoshigroup has so far been doing better, as evidenced by the +100,000% rise (1000:1) of USD/BTC exchange rate since the opening of Mt.Gox.

For everyone buying gold, I am sure you realize that 60% of world's gold in the hands of the bankers. Not so with silver. So guess which one is more trustable and valued? Gold, indeed.

The so called Satoshi group has been behind stalling this rally for the common good. Otherwise, who would have sold? I was seriously considering it would go directly to $100-$300, followed by a huge crash. The current course of action is so much better if BTC is ever to gain some mainstream credibility.

It was a scenario analysis for bitcoin's value in 5 years. I don't remember the exact figures (it's buried somewhere in the speculation forum as it is - gasp - already 48 hours old).

Something like, 4 scenarios

A) Mass adoption gets the price to $20000
B) Steady, albeit slowing rise of price to $1500
C) Bitcoin is wounded and price is stuck anywhere between $10 and $100
D) Bitcoin folds altogether and goes to zero.

Then I assigned probabilities to these scenarios, calculated the expected value and discounted it to find the net present value. $2000 was the present value.

This kind of analysis is very important, since bitcoin does have the fat tail of very large payouts in not-so-small probabilities. If there was not the possibility of $20000 price, the NPV of course would not be anywhere close to $2000. I am finding it funny to state that $200 in 5 years is an example of a scenario where bitcoin has failed.

What if Sathoshi Group controls (35-78)% of currency. Are you still confident ? (and they will never sell a single Bitcoin next 10 years because they have a lot of $B in USD)

[mp420]

We are at the fair price at the moment, since that's what the price is. It's a tautology. The market decides the fair price for a given moment.

Also, at this price I don't want to either buy or sell bitcoins, so I think it's neither grossly undervalued nor grossly overvalued.

[piramida]

Ok one last necrodig. The funniest one. The poll has all the options - except its highest guess missed the actual high by x13 times

[zimmah]

Ok one last necrodig. The funniest one. The poll has all the options - except its highest guess missed the actual high by x13 times

the funniest thing is you can still vote on it

[Malin Keshar]

will save this topic for reference for those who thinks bitcoin is dying only because a few 100s $ fall in value