Bitcoin is a commodity market ?

[IadixDev]

there is a point where something has to have a use/purpose/function/desire. yes if bitcoin had no function and was just a bunch of locked assets held forever in a trust owned by a company thats only value was the investment. then prices could go to $0. because no one would have to mine something that never has to move, and has no reward for trying to move the unmovable

Yes its a bit the point if everyone just sit on their coin waiting for the value to rise it very likely nothing is going to happen and the price is just going to crash.

[1714974701]

1714974701

[1714974701]

1714974701

[1714974701]

1714974701

[1714974701]

1714974701

[franky1]

there is a point where something has to have a use/purpose/function/desire. yes if bitcoin had no function and was just a bunch of locked assets held forever in a trust owned by a company thats only value was the investment. then prices could go to $0. because no one would have to mine something that never has to move, and has no reward for trying to move the unmovable

Yes its a bit the point if everyone just sit on their coin waiting for the value to rise it very likely nothing is going to happen and the price is just going to crash.

if everyone bought at say $6 in 2012. and just hoarded. all them 11mill coins in circulation at the time. never changing hands.
and the market only moved due to fresh mind coins. at mining cost of $200 in 2013 $2000 in 2017  $20,000 in 2021
then there would be 11million coins that would happily sell for anything from $20k all the way down to $6.20 and still feel they have profited.

however if those having 11mill coins colectively in 2012. sold 2mill in 2013
if then the 9m coin($6v) and 2m coin($200) then sold 4mill in 2015($400)
if then the 7m coin($6v) and 4m coin($400) then sold 6mill in 2017($2000)
if then the 5m coin($6v) and 6m coin($400) then sold 6mill in 2017($2000)

its now a market with instead of 11mill able to sell down to $6.20
there is now in 2017 a 6mill support that refuses to sell for less than $2k
so if the price was $2.1k and no one of the 6m2017 wanted to sell yet. then only the 5m 2012($6v) are on offer
and slowly there are less people willing to sell down to low numbers. and more people bringing up the base value

in short letting coins switch hands where the new owner sets new value, helps set new value

i personally use 2 metrics.
mining cost(lowest and highest costs).. and UTXO value at creation(price value when a transaction value last moved)

[IadixDev]

The problem with most crypto project is they try to fit in a classic financial model with this triangle

Developpers - investors - end users.

With Bitcoin the situation is pretty clear since the beginning , satoshi didnt really get paid for the developpment, there is no known investor, so its supposed to be mostly focused on utility value.

Now most coin try to achieve the three ends of the triangle which is supposed to pay developpers AND investors AND  providing utility value at the same time which look a bit like shrodinger coin.

Satoshi didnt sell an investement model to pay a team of developpers that would yeld some return.

Trying to sell cryptos as an investement can only be a flawed model in the long run imo.

The way i see it, if you see short term you pay developpers with the money, medium term its the investors, long term its the utility value for users.

Most crypto projects see short to medium term. And end up as pseudo ponzi boarding user as pseudo investors to pay back the initial investors back, and the utility value goes down the drain.

In the model of bitcoin its only long term on the utility value.

[pooya87]

The idea of supply and demand ok, but to me it seems more and more to be some kind of sophism more than anything. Look like some form of sollipism like i make the reality how i want it to be. But in reality you will rarely find some instance when this logic apply in real life. There is always a reasonable price to expect for something at a particular time. Then the price can vary following different factors etc but it's the thing i really fail to see with bitcoin. I mean whyt bitcoin worth 100x more now than 5 years ago ?

You are caught up in sophism yourself since you are confusing price with value.
Price can change at any time with irrelevant things. That doesn't change the value though. Value is still decided based on supply and demand, and there will be a reasonable value for everything at any time.

For example a while ago the bitcoin value was above $6k and still due to many reasons (some of the irrelevant) price dropped to $3k.

The whole argument is still irrelevant to the topic you started though. Price varying with different factors isn't a reason to call it a commodity. We have the same thing with fiat. For example during the past 2 weeks our local currency tanked for no reason except FUD and mass panic for about 25%. It is back to where it was today but as you can see price changes like that but the value remains the same. At the same time we define fiat as a currency just like we define bitcoin as a currency simply because of the utility they provide not because of how people treat them (people invest in US dollar these days and make profit from the volatility).

[odolvlobo]

Price can change at any time with irrelevant things. That doesn't change the value though. Value is still decided based on supply and demand, and there will be a reasonable value for everything at any time.

That's an odd thing to write because supply and demand are literally defined in terms of price (and quantity). I guess it would help to  define "price" and "value" and explain the difference between them.

For me, they are basically the same, except that price is a objective aggregate measure of value, which itself is subjective. In other words, something may have a price, but its value to higher to some and lower to others.

[IadixDev]

Bitcoin is not able to generate cash flows for its holder who get profit only after selling it. The bitcoin is neither a commodity, since it cannot be used for the production of something useful.  

It can be used in the chain in an useful buisness as a paiment system ? Like a database or network service ?

Its a digital economy so of course you are not going to build a car with it.

Maybe its like let say an carburetor,  in itself it has no use, but as part of car in use then it does.

Then if you want to hoard carburetors without there are much functionning cars using expecting to make a fortune out of it .. well good luck with that.

[pooya87]

Price can change at any time with irrelevant things. That doesn't change the value though. Value is still decided based on supply and demand, and there will be a reasonable value for everything at any time.

That's an odd thing to write because supply and demand are literally defined in terms of price (and quantity). I guess it would help to  define "price" and "value" and explain the difference between them.

For me, they are basically the same, except that price is a objective aggregate measure of value, which itself is subjective. In other words, something may have a price, but its value to higher to some and lower to others.

Demand is the complicated part of the duo, specially for something that is still in the process of adoption. Demand like value is also hard to measure.
If we define demand as adoption and all that comes with it then it is deciding the value of bitcoin as I said above but if it is defined as the number of buy orders on exchanges then it is deciding the price. I consider the later to be a wrong definition whereas the former is more complete.

This is why price is always arbitrary while value is fundamental. Which means demand (ie. buy orders) can drop on an exchange like it did in 2017 and price can drop down significantly (to 10 cents IIRC) whereas demand (adoption) for bitcoin remains the same ergo value of bitcoin doesn't change regardless of that arbitrary price drop.

[IadixDev]

The idea of supply and demand ok, but to me it seems more and more to be some kind of sophism more than anything. Look like some form of sollipism like i make the reality how i want it to be. But in reality you will rarely find some instance when this logic apply in real life. There is always a reasonable price to expect for something at a particular time. Then the price can vary following different factors etc but it's the thing i really fail to see with bitcoin. I mean whyt bitcoin worth 100x more now than 5 years ago ?

You are caught up in sophism yourself since you are confusing price with value.
Price can change at any time with irrelevant things. That doesn't change the value though. Value is still decided based on supply and demand, and there will be a reasonable value for everything at any time.

For example a while ago the bitcoin value was above $6k and still due to many reasons (some of the irrelevant) price dropped to $3k.

The whole argument is still irrelevant to the topic you started though. Price varying with different factors isn't a reason to call it a commodity. We have the same thing with fiat. For example during the past 2 weeks our local currency tanked for no reason except FUD and mass panic for about 25%. It is back to where it was today but as you can see price changes like that but the value remains the same. At the same time we define fiat as a currency just like we define bitcoin as a currency simply because of the utility they provide not because of how people treat them (people invest in US dollar these days and make profit from the volatility).

Im ok with this distinction but then still if there is some appreciable value and the price differ too much from it, it means someone is making a loss and the buisness is not sustainable in a free market.

Its exemple i took before with asset arbitration with the coffee.

[franky1]

but because mining the cheapest region on the planet is $31k a coin right now and $66k a coin in most expensive region, the value window is within that range.

no one wants to mine and sell at a loss so refuse to sell below $31k
many countries cant mine for $31k as their costs are higher so they would prefer to buy at or above $31k. providing good support to keep prices at or above $31k

no one wants to buy at a premium above $66k as everyone on the planet can mine at or under $66k
so they would prefer to mine-to-sell if prices were near $66k. providing resistance to keep prices below $66k

the 'supply/demand' negotiations sit within this window.
if the price was near/at the top end. beyond good value. then thats deemed 'bubble'

i never treated the $65k ATH and the $69k ATH as sustained value. both were premium hype bubble price that would correct more inline of the window of value

[pareshnakar]

Bitcoin is like currency commodity of bitcoin, bitcoin investment while commodity production and also used for interchange so many peoples used them and using the transaction to altcoin also so bitcoin is commodity market.

[jhonjhon]

Is bitcoin a commodity market. Well, i guess the answer is yes because it can be traded on traditional markets as well as crypto exchanges.

Actually bitcoin can be determined in some many ways It coud be a currency, an asset or commodity either. It is based on what your doing with it.

[pooya87]

but because mining the cheapest region on the planet is $31k a coin right now and $66k a coin in most expensive region, the value window is within that range.

Bitcoin is not a product to have a production cost that sets its value. In fact bitcoin is the exact opposite of any product, its price sets its "production cost" due to how difficulty is designed to work.

BTW how did you come up with $31k as cheapest? By my calculation I'm paying between $0.0007 and $0.005 per KWH which I don't think there is anything cheaper on the planet and I get a lot lower than $31k.

[mindrust]

What satoshi said makes sense. Bitcoin isn't a stock because it has no earnings, no dividend etc.. It certainly don't belong to a company. But is it really a commodity? I mean, if bitcoin is a commodity, then all the other alts are also commodities. Is commodity something you can create in your house? I am not sure about that. It surely has the characteristics of a commodity but... I believe it acts more like a currency.

[witcher_sense]

This is why price is always arbitrary while value is fundamental. Which means demand (ie. buy orders) can drop on an exchange like it did in 2017 and price can drop down significantly (to 10 cents IIRC) whereas demand (adoption) for bitcoin remains the same ergo value of bitcoin doesn't change regardless of that arbitrary price drop.

In other words, you think that bitcoin has some "intrinsic value", that is, a set of unchangeable useful characteristics and properties that make it valuable in itself regardless of the market price and temporary supply and demand fluctuations. These inner qualities of bitcoin are what people adopting bitcoin should be thinking about, but not about a speculative demand for it where a bunch of traders, who primarily care about profit in fiat terms, decide every day at which price it is best to sell or buy bitcoin to maximize their wealth. I agree the qualities bitcoin has, the functions bitcoin performs, the freedom bitcoin may give to people are more important than the market price of it. All other people should think as I do to ensure bitcoin is being adopted for the right reason. However, the problem with "intrinsic value" (if such a thing even exists which I highly doubt) is that it is a highly subjective concept in the first place. The qualities of bitcoin that you consider inalienable and significant may be viewed differently by other people. For example, Michael Saylor doesn't care about the censorship-resistance of bitcoin because no one would censor Michael Saylor's transactions anyway. He also doesn't want bitcoin to be considered a medium of exchange because it implies inconvenience, additional regulatory risks, and uncertainty. This is not to say that I don't like him, I am just trying to make my point. Value is always subjective, it varies from one individual to another and cannot be measured or aggregated at all.

[pooya87]

For example, Michael Saylor doesn't care about the censorship-resistance of bitcoin because no one would censor Michael Saylor's transactions anyway. He also doesn't want bitcoin to be considered a medium of exchange because it implies inconvenience, additional regulatory risks, and uncertainty.

Well it is not just one reason that adds to intrinsic value of bitcoin. People who dump their fiat for bitcoin have seen something in it that attracted them. That may be the decentralized nature (no centralized authority controlling it), or the deflationary nature of bitcoin (with a supply cap) or a lot of other things. Even those who buy bitcoin only for profit are unknowingly doing it for these characteristics since profit is gained due to things like capped supply, etc.

If Saylor doesn't care about censorship-resistance that would be because he doesn't understand what it means, like those who say they don't care about their privacy.

[IadixDev]

Value is always subjective, it varies from one individual to another and cannot be measured or aggregated at all.

Even if the value is at least partially subjective, it doesn't mean there is no good reason for any individual to estimate the price at this or that based on their own subjective valuation and needs.

What satoshi said makes sense. Bitcoin isn't a stock because it has no earnings, no dividend etc.. It certainly don't belong to a company. But is it really a commodity? I mean, if bitcoin is a commodity, then all the other alts are also commodities. Is commodity something you can create in your house? I am not sure about that. It surely has the characteristics of a commodity but... I believe it acts more like a currency.

Other coins might have their own model, you can find like nushare who had another model, or coins with multiple tokens some pegged to fiat or other, some that are used to represent ownsership or seen as a share, or are not made as a currency or commodity.

[panukurap]

Commodity is an object with a use value. In addition, the use value of an object will create an exchange value, which is modified by market expectations. The buying and selling value of Bitcoin is completely determined by market expectations. Then, the value of the dollar is expressed relative to other goods and currencies. While the value of Bitcoin is only determined relative to the value of the dollar. Basically, the rules set by the government aim to protect investment users in order to avoid fraudulent investment products that will harm society. In addition, these regulations will later help the cryptocurrency business grow and be better directed.

[ChiBitCTy]

I think we are just coming back to the whole gold vs bitcoin debate here and the thing I keep coming back to is that bitcoin is a commodity, a currency and other things. It really can’t be defined. In my opinion it’s in an asset class all of its own.  I also believe it’s a hedge asset, as many people are using it as that (maybe not as stable as gold but more upside).

[masulum]

I think we are just coming back to the whole gold vs bitcoin debate here and the thing I keep coming back to is that bitcoin is a commodity, a currency and other things. It really can’t be defined. In my opinion it’s in an asset class all of its own.  I also believe it’s a hedge asset, as many people are using it as that (maybe not as stable as gold but more upside).

I agree with you, Bitcoin is hard to explain if it's a commodity or a currency or whatever. However, if we follow as Satoshi said, Bitcoin is a commodity. when we make BTC a commodity, there will be no threat to FIAT currencies in any countries. Like in my country for example, if BTC is considered a currency, then BTC should not be used in Indonesia. However, since it is a commodity and accepted by the government as a commodity, it is legal to trade BTC. So, in the end, BTC is BTC, where its function will be different according to the point of view of each individual.

[IadixDev]

I just finished reading the whole thread it was very interesting.

The prediction of the OP was still very good so far that the model would make bitcoin fail as a currency because of the high investibility that would encourage people to hoard it and benefit from it as a pseudo pyramid scheme than using it as a currency.

The symptoms he described as people would only buy or sell it with a sweat of anxiety being extremely fearfull of sudden price move in one direction or another loosing sleep over trading chart rather than quietly using it as a currency to be spent to buy things as it was intended has fully realise.

I dont think this was the intention i see more the dynamic as it was the only option to launch it initially is to leave the potential for a huge profit to attract new users and it would probably never have taken off without this, with the halving increasing as bitcoin take popularity and risk of it being abandonned diminish. The fact that the coin he mined didnt move tend to proove this intention.

Knowing that i didnt see any counter argument against the logic of hoarding it as a speculative asset is just going to a dead end in the long run, as the utility as a spending tool goes to zero and the ever going demand based on prospective of making a future profit on the sale cannot be sustainable.

It cannot even really stabilise its funny to see people making this argument when btc was at 10$ saying it will probably stabilise latter as it gain traction but not at all, even at 50k$ and billioneres getting in the game its still the same yoyo of sudden bursts and crashes.

Some people described the mecanics of this very early actually. If there is no incensitive to spend it and only to hoard it waiting for the price to increase it can never be stable and only go through yoyo of bubble and bursts until it finally crash because it cant be told to be a good store of value with such speculative hoarding use without any value added, can never stabilise even a little, cannot be used a currency either and in the end going to be sacrified for all intent and purpose in the name of short term greed.

Maybe im a bit pessimistic but i dont see how the situation could evolve otherwise.

As a viable currency or even a store of value it should behave roughly as a commodity but clearly its not and probably never will.