Absolutely right, Impaler.
Bitcoiners have no economics training. It's like the blind leading the blind. This is too funny.
Many companies spend billions of dollars on R&D and the products fail and never make back the investment. What a fantasy world, if your wealth increases with increase in spending.
Bitcoiners are so blinded by greed that they refuse to see that Bitcoin is a pyramid scheme.
All they look at are the rising prices at the exchanges.
The exchanges are not regulated, no government oversight.
I can open my own exchange have group of friends buy and sell to each other, bid up the price, and wait for the suckers to buy into Bitcoin with real world currency. You are sheeps, helpless against the wolves.
unfortunately, you have no idea what bitcoin is if you think it's a pyramid scheme, this is a common misconception that shows your lack of knowledge. Take a look at the the wiki, learn what bitcoin is, learn what its potential implications are for macroeconomics, I assure you that you have no idea what you're talking about if you think "bitcoin is for suckers". You should also note that the "big fish", the early adopters have not sold even though they had the chance to, its because they don't have the mental capacity of a goldfish and understand what bitcoin means to the world.
https://en.bitcoin.it/wiki/Myths - there's even a specific article talking about "isn't bitcoin a pyramid scheme?"
http://seekingalpha.com/article/1836602-is-bitcoin-for-real-macroeconomic-considerations-for-an-alternative-currencyAll this information is out there, please take a minute and read about it.
PS: this is coming from someone who owns <0.1 btc and at one point owned 650 however needed to sell for tuition
Their is one huge glaring problem with your whole theoretical framework
COSTS != VALUE
The cost to create BTC's has no link what so ever to their market price. This is a classic 'regression theorem' error by BTC zealots, just because something valuable is destroyed to make a product dose not make the product worth the cost of the inputs. People make foolish production decisions every day which produce products worth less then the input costs, the free market weeds these people out eventually so in the LONG RUN the products are worth at least the inputs (and hopefully some profit margin if your a good business person). But it is by no means an absolute that can be applied here.
By adding up all expenditures involved in mining BTC all you have determined is how much minimum value we would have to apply to BTC as a service in order to consider the production to have been a sound investment. The actual value we DO assign could be vastly higher or vastly lower then that production cost, it is a fully independent variable. Your number IS useful (I can't speak to accuracy) don't get me wrong, your just calling it by the wrong name and drawing erroneous conclusions from it.
Also you may find this site to be a treasure trove of data, this guy has been doing analysis of the network for some time and has tracked the ASIC transition and produced estimates of electrical consumption.
http://organofcorti.blogspot.com/I agree with you, it's not ready yet. Right now (besides my school-work that I'm doing) I'm designing two compound coefficients that I need to add to the labour value to get the "True Value" (not speculative) These values are the "Risk Factor" of bitcoin, which includes everything that makes the investment not 100% safe and acceptable, and the second one is the "Utility Factor" of bitcoin, or it's ability to be more useful than other systems as a payment processor, as a inflation-less currency, etc. THAT information is mostly independent of most bitcoin variables and will have to be determined empirically based off data points like "number of bitcoin emergency patches, cumulatively per year" this value could definitely contribute to a "security factor" which would be addable to the "Risk Factor" however the specific empirical multiplicative factors I'm not entirely sure on yet, will work on it later.
