Bitcoins have non-speculative value, don't they?

[PowerGlove]

I'm busy reading "Understanding Bitcoin" by Pedro Franco and have a question for the forum.

In chapter 3 he compares bitcoin to gold and says that one of gold's advantages is that the cost of production (physical mining) forms a support for price levels that can help to prevent acute down-trends.

The mechanism being that if the price falls too low then gold mining would slow down in response and supply would decrease therefore increasing price.

My question is: Isn't there something very similar happening with bitcoin too?

The mechanism being that if the price falls too low¹ then selling would slow down in response and supply² would decrease therefore increasing price.

I have never studied economics, so maybe I'm missing something obvious. I would appreciate anyone's thoughts on this, thank you!


[1] Below the "minting" cost, which is considerable and increases every "halving".

[2] I don't mean "supply" in the "minting" sense, I mean it in the "willingness-to-sell" sense.

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[mk4]

My question is: Isn't there something very similar happening with bitcoin too?

Not going to happen. The less miners, the more bitcoin existing miners get. On the case of bitcoin though, the bitcoin mined per block is capped anyway. So it's not like there are more bitcoin that gets mined when there are more miners. For more info: https://academy.binance.com/en/halving

The mechanism being that if the price falls too low¹ then selling would slow down in response and supply² would decrease therefore increasing price.

[2] I don't mean "supply" in the "minting" sense, I mean it in the "willingness-to-sell" sense.

Maybe, but we can't know for sure. People sell bitcoin for multiple variety of reasons. Certain news rake up more sellers than other news, depending on how dire the news is.

We could also say that as price goes down, long-term investors buy. But then again, it depends. How much capital do buyers have compared to sellers? If there are more bitcoin being sold than being bought, then the price would go down anyway.

[BlackHatCoiner]

My question is: Isn't there something very similar happening with bitcoin too?

No, there isn't. That's why it's so volatile. There's no change in the supply that re-balances the change in demand, so that the equilibrium price remains somewhat more stable. Supply is completely inelastic.

However, I don't see how's that relevant to the title.

For more info: https://academy.binance.com/en/halving

Don't do Binance good. Here's some better source: https://en.bitcoin.it/wiki/Controlled_supply

[tranthidung]

Don't do Binance good. Here's some better source: https://en.bitcoin.it/wiki/Controlled_supply

Bitcoin Wiki should be one of first resources we should look at when we're finding something about Bitcoin.

I know a very helpful article from Jameson Lopp.

• How is the 21 Million Bitcoin Cap Defined and Enforced?
• Interesting fact is many points in that article was discussed on the forum months or years ago. I don't say Jameson stole ideas of forum members as fact is fact but it proves that the forum has many knowledgeable members

[kryptqnick]

I've been numerous speculations on how BTC price can't fall below a certain level because then mining wouldn't be profitable, and the op's question reminds me of that. The thing is, that's life, and yeah, something can become unprofitable, people can lose money, and some will go out of business while others would continue operating despite losing money, hoping it would all be worth it in the end. Mining gold requires resources, and mining Bitcoin requires them as well. But we don't value gold based on how hard it is to mine it, and the same is true for Bitcoin. The difference is that with gold a mining deposit can be suddenly discovered and an influx of gold can increase unexpectedly, while mining of Bitcoin is happening at a strict rate, and we also know the total supply whereas we can't know gold's total supply.

[cabron]

Comparing bitcoin to gold is actually pretty good, they're both valueless and we humans with our myopic self preservation perspective see it as a precious commodity. So to answer your question about bitcoin's intrinsic value, I don't think it doesn't have any, try to make a monkey choose between a banana and bitcoin, you'll probably know the results.

That's a sad analogy. Bitcoin can never replace a banana, the monkey won't need a currency but to someone who spends to live another day he will need the money.

Bitcoin is supposedly to be use to replace the legacy fiat system which is why this  is a revolution against it which to an activist we hope BTC replaces fiat currencies including EUR, USD or YEN.That is why we as buyers and sellers put an intrinsic value to BTC and its determined through the market. 

[franky1]

alot of people (like blackhatcoiner) have a narrow mind view and only see the PRICE as the only metric..
they have been told its not the case but yet it may take them longer to think about it..

there is a underlying value (not seen in the market) this value is NOT the market price.
its a number that sits below the market price

EG golds VALUE is not the ~$1,700 currently.. golds underlying value is about $900 at the moment

in short if everyone could mine gold for $1 using a spoon and a coffee filter in their back yard. the market price would not be $1700. it would be $2-$5. value in this case is not the $2-$5k speculative market rate. the value would be the $1 that no one can mine for below and be willing to sell for below.

but because its hard to get gold through mining with it costing over $900 to mine gold. gold miners wont sell for less than $900. so they sell for profit. and the speculative sentiment about how much profit they can make and/or how much demand there is and/or competition is the stuff of speculations ABOVE the value.

when there is too much speculation above value and the price goes too high(premium) totally outside of logic then thats the bubble area of a market.


bitcoin is the same in this respect. if it were PoS where it only costs pennies to signblocks the value would be pennies and the speculative market above that would be the price, where by the price is speculative and volatile due to many factors of sentiment and profitability dependant on supply and demand.

(many people are going to learn this the hard way when ethereum merges to become PoS and the value drops to a few dollars. the speculative price will correct with it.)

bitcoin is PoW so has a higher cost than PoS so already its better value than PoS. and with no miner on the planet able to mine this year for a few dolars. bitcoins value is no where near a few dollar value.
its actually much much higher(way more than $10k)

finding the most efficient hashrate miner and the best rate electric and dividing up that miners hardware cost over its life cycle down to a per coin cost. also also adding the electric cost per coin by comparing that to the network hashrate and coins it is rewarded you can calculate the best rate value per coin of mining bitcoin. the bottom rate no one else can beat. and thats the value line no one on the planet can beat. meaning no one is selling below.
the stuff above that is the less efficient miners or the ones that want to hold out for higher prices to sell or the many other factors of supply and demand..(speculation)

..
as for the factors of shifting this value amount.. well if the more speculative area stuff, like the more expensive miners switch off. then bigger slices of the reward are giving to the remaining efficient miners so that they can get more coin meaning their cost per coin goes down meaning more profit per coin meaning able to sell for less and still break even.

usually miners with less efficient asics switch off when the market price speculates below their higher price mine cost so it ends up not cheap to mine.. however when switching off they can also then become buyers as its cheaper to buy rather then mine which can speculate the price upwards. thus widening the gap between price and value. in both directions..(alot of game theory to try to analyse the value/price gap due to actions of the network. alot of variables to account for. too many to describe)

this is different for gold though.. when prices of gold on markets go down. gold miners stop.. whereby there just is less gold being made. its not a case of the gold gets passed to the remaining miners. it just means there is less gold. and so that affects the supply and demand. causing a price rise but not causing a value dip

difference being that stopping gold mining causes a supply shortage thus the demand can cause a PRICE increase.
in bitcoin stopping mining means the supply shifts to the remaining miners meaning they get a bonus meaning this causes their costs/value number to decrease meaning they can sell for less. while also possibly having more buyers buying instead of mining. causing the price rise.

.. gold/bitcoin underlying value is not a fixed rate. its not even a fixed ratio of price:value. it is different to the price and the value does change due so circumstances. but the underlying value does not change by same the whimsy/speed/reason or volatility of price. value does change but not as fast as the price.

and in many cases even if the market is heading in a downward motion the value hardly moves and sometimes continues in its upward motion just at a slower rate. (many factors at play too many to describe)
it requires alot of things to truly push down the value of bitcoins underlying value amount. and even now with all of the 2022 price drama.. bitcoins VALUE is still higher then the VALUE of 2020-2021. even though the PRICE is lower then the 2020-2021 PRICE

bitcoins value is not the ATH. its a number that sits underneath near the ATL of a longer term period.. the point no one wants to sell below and hasnt sold below on a long period of time, where its unlikely to sell below any time soon

[Upgrade00]

The mechanism being that if the price falls too low then gold mining would slow down in response and supply would decrease therefore increasing price.

Scarcity is vital to valuation, but it doesn't just function as a system you start and stop in response to the market. Gold mining rigs can work for a number of years and takes lots of money to set up. It's not a system that can be readily opened and closed in response to changes in the market, CMIIW.

The mechanism being that if the price falls too low¹ then selling would slow down in response and supply² would decrease therefore increasing price.

Bitcoin's value usually falls low in response to high sell offs and is usually direct result of it. Where holders panic sell to cut their losses.

Also, market supply, i.e, coins available for purchase on exchanges are quite different from total supply, which is determined by each completed block.

[2] I don't mean "supply" in the "minting" sense, I mean it in the "willingness-to-sell" sense.

If willingness to sell reduces against demand, then that should create a support for the price, and prevent further dumps.

[PowerGlove]

However, I don't see how's that relevant to the title.

The title may be a little goofy because I'm mimicking the language the author is using in chapter 3 without fully understanding his definitions. I'm open to suggestions, if you have any.

It seems franky1 and I think the same way, because my intuition also tells me that there is an "underlying" value based on the cost of electricity and the size of the block reward, and on top of that there is a "speculative" value that bounces around based on trading activity.

Based on some of the other responses, I guess I didn't express myself very well. I'm aware of bitcoin's supply schedule and the difficulty adjustment that keeps blocks being mined roughly every 10 minutes. So I know that the supply of bitcoins has nothing to do with price or with how few/many miners there are.

I suppose a simpler way to ask my question would be this: If (according to the book I'm reading) the fact that there are real monetary costs associated with "producing" gold means that there is a kind of "parachute" that helps to prevent its price from falling too low, then why doesn't the electricity cost of mining blocks have exactly the same effect on bitcoin?

Edit: Just want to thank everyone for their responses. There's a lot of knowledge on this forum and I'm grateful for everyone's input.

[hatshepsut93]

Gold can theoretically fall below its mining cost, and mining would just stop - there's a lot of gold lying around in storage, and only a fraction of total gold is being consumed by industry. The lack of new supply would be driving the price up, but it's still possible that a strong downward force could overwhelm it. For example, humanity could decide that it no longer views gold as a store of value, and gold's value would only be dictated by its use in industry.

For Bitcoin falling far below the cost of producing a block could be devastating, because difficulty adjustment happens once per 2016 blocks, so someone would have to mine at a loss the blocks that are needed to reach difficulty adjustment. This could mean that a block would be mined once per many hours or even days. This would contribute to panic and fees would skyrocket to insane levels.

[PowerGlove]

Gold can theoretically fall below its mining cost, and mining would just stop - there's a lot of gold lying around in storage, and only a fraction of total gold is being consumed by industry. The lack of new supply would be driving the price up, but it's still possible that a strong downward force could overwhelm it. For example, humanity could decide that it no longer views gold as a store of value, and gold's value would only be dictated by its use in industry.

Yup, makes sense. Although in that scenario, it seems inevitable to me that industrial use would eventually run up against scarcity which would drive the price back up.

For Bitcoin falling far below the cost of producing a block could be devastating, because difficulty adjustment happens once per 2016 blocks, so someone would have to mine at a loss the blocks that are needed to reach difficulty adjustment. This could mean that a block would be mined once per many hours or even days. This would contribute to panic and fees would skyrocket to insane levels.

That's an interesting point. I guess there would (hopefully) still be a group of enterprising miners that continue to operate at risk, believing that the price will eventually correct. I could see them totally giving up though if there was a serious enough loss of confidence, like a cryptographic break.

[Husires]

It can be said that it will succeed, but the key to failure or success here is determined by one factor, which is demand. Gold is a global reserve and therefore there is a demand for it. No matter how low prices are, you will find that some people want to buy.

In Bitcoin, this equation may not be achieved at the time of the mortgage, and therefore, as long as we ensure continued growth in demand (healthy growth), we will not witness major corrections as is happening now.

It is not appropriate at the moment to compare gold to Bitcoin.

[poldanmig]

It can be said that it will succeed, but the key to failure or success here is determined by one factor, which is demand. Gold is a global reserve and therefore there is a demand for it. No matter how low prices are, you will find that some people want to buy.

In Bitcoin, this equation may not be achieved at the time of the mortgage, and therefore, as long as we ensure continued growth in demand (healthy growth), we will not witness major corrections as is happening now.

It is not appropriate at the moment to compare gold to Bitcoin.

It's quite irrelevant to compare the two under current conditions, but in my opinion these two assets are effective investments to protect our wealth from inflation that occurs, we can say if these two assets are increasingly becoming favorites after fiscal and monetary policies in several countries occur previously, in this case it might be a guide when there is an increase in the inflation rate in a country, although there are many different perspectives in viewing bitcoin and gold, but in this case we cannot make other people  views, both positive and negative be make our benchmark in investing , but despite all these perspectives, I think gold and bitcoin are investment assets that are worthy of our investment in the future.

[dragonvslinux]

The mechanism being that if the price falls too low¹ then selling would slow down in response and supply² would decrease therefore increasing price.

[1] Below the "minting" cost, which is considerable and increases every "halving".

[2] I don't mean "supply" in the "minting" sense, I mean it in the "willingness-to-sell" sense.

Enough people have already responded to your question, but unfortunately appeared to have ignored or overlooked your meaning of supply as "available supply" as opposed to simply "circulating supply".

To answer your actual question, although many like to assume that miners don't sell when price is very low, it's actually exactly what they are known for doing - as they have costs to cover (equipment, electricity, even loans). While true they are more likely to engage in starving the supply when price is stable or rising, they are businesses at the end of the day that need to sell their BTC in order to turn a profit.

So in reality the "willingness-to-sell" from miners actually comes down to price stability, as well as mining costs, rather than network stability such as growth, reduction or stagnation. For example in 2021 when miners were mining Bitcoin for an average of $13K, while price was at $33K (at considerable lows after a capitulation of hash rate), there was more of an incentive to hold (less willingness-to-sell), as there was more of a margin of profit to speculate with. This meant they could unload their Bitcoin not at $33K, but $40K, $50K, $60K, etc, or even hold for a much longer period.

But in another example, such as current prices, the average mining cost is around current price (and has been for the past few weeks, while declining), so there have been miners switching off, while others have been selling utpo 100% of their Bitcoin, in order to avoid mining at a loss in case price falls further. The dynamics between average mining cost, hash rate and difficulty I've been documenting here over the past month.

[DU18]

The mechanism being that if the price falls too low¹ then selling would slow down in response and supply² would decrease therefore increasing price.

[1] Below the "minting" cost, which is considerable and increases every "halving".

[2] I don't mean "supply" in the "minting" sense, I mean it in the "willingness-to-sell" sense.

Enough people have already responded to your question, but unfortunately appeared to have ignored or overlooked your meaning of supply as "available supply" as opposed to simply "circulating supply".

To answer your actual question, although many like to assume that miners don't sell when price is very low, it's actually exactly what they are known for doing - as they have costs to cover (equipment, electricity, even loans). While true they are more likely to engage in starving the supply when price is stable or rising, they are businesses at the end of the day that need to sell their BTC in order to turn a profit.

So in reality the "willingness-to-sell" from miners actually comes down to price stability, as well as mining costs, rather than network stability such as growth, reduction or stagnation. For example in 2021 when miners were mining Bitcoin for an average of $13K, while price was at $33K (at considerable lows after a capitulation of hash rate), there was more of an incentive to hold (less willingness-to-sell), as there was more of a margin of profit to speculate with. This meant they could unload their Bitcoin not at $33K, but $40K, $50K, $60K, etc, or even hold for a much longer period.

But in another example, such as current prices, the average mining cost is around current price (and has been for the past few weeks, while declining), so there have been miners switching off, while others have been selling utpo 100% of their Bitcoin, in order to avoid mining at a loss in case price falls further. The dynamics between average mining cost, hash rate and difficulty I've been documenting here over the past month.

I agree with what you said, with prices getting lower like now, miners must also think about every expense they spend or the term in the company is a production cost, nowadays according to an article I read, the average miner spends a lot of money to electricity and also the graphics cards they use, besides that the increasing number of miners will of course make the price of the mining equipment itself increase, according to a report from Jon Peddie Research (JPR), bitcoin miners which bought up at least  700,000 graphics cards have to spend more money than $500 million , in the first quarter of 2021 and this clearly indicates that mining is getting more and more popular and the costs involved are also very high, so I don't think it is possible for miners to sell bitcoins cheaply if in the end they get a margin from the costs incurred so far.

[franky1]

For Bitcoin falling far below the cost of producing a block could be devastating, because difficulty adjustment happens once per 2016 blocks, so someone would have to mine at a loss the blocks that are needed to reach difficulty adjustment. This could mean that a block would be mined once per many hours or even days. This would contribute to panic and fees would skyrocket to insane levels.

That's an interesting point. I guess there would (hopefully) still be a group of enterprising miners that continue to operate at risk, believing that the price will eventually correct. I could see them totally giving up though if there was a serious enough loss of confidence, like a cryptographic break.

since 2013 where asic mining and pool mining really kicked off we have seen 9 years of their economics play out

not everyone mines at the same costs. for instance japan with highest world energy prices are not mining so they are not cutting into the rewards competition. allowing the remaining miners to get more slice of the reward.

its also why bitcoin didnt surpass the ATH number. because that number was the threshold where everyone on the planet, including japan could mine and sell for less and profit. so the buyers dried up. and the price didnt go higher..

anyway back to speaking about the value(underneath)
same is said about hobby miners using residential electric rates. there is a point they also drop out because they see its cheaper to stop mining at put their (would have been) electric bill money into simply buying bitcoin while its cheaper then mining.

there is alot of variable above the underlying value amount that finds alot of sentiments and support levels of what different people above value settle as their view of their desired price point.

but the underlying value. is the bottom value of them all.. the amount everyone cant acquire for for less and isnt willing to sell below.

if there was a devastating reduction of price(down to near but still above value). then the economic game theory comes into action. however. in the realms of worse-worse -worse case scenario to cause anyone to have a devastating need to sell at a huge loss to trigger a huge price drop below value.. is just a notion for worse case games of speculation and mostly fantasy stories. as the odds of it happening are low. as majority are not going to sell at a loss. and it would require a fundamental break in code(bug) or a complete closedown of merchants/exchanges to break the normal economics

[BlackHatCoiner]

The title may be a little goofy

I don't think intrinsic value has anything to do with this, unless you recognize "intrinsic" as a synonym of "underlying". "Intrinsic" is also a synonym of "essential", which is described here: https://en.wikipedia.org/wiki/Intrinsic_value_%28ethics%29

It seems franky1 and I think the same way, because my intuition also tells me that there is an "underlying" value based on the cost of electricity and the size of the block reward, and on top of that there is a "speculative" value that bounces around based on trading activity.

I've discussed about this with franky frequently, and I've explained him why gold's and bitcoin's underlying value differ variously, but it's usually pointless to talk with him; instead of coming to a conclusion you're getting offended.

Let me make some definitions: There's an underlying value, which is less than the market value. The underlying value is the cost to mine a specific amount. The market value is the amount of money you need to acquire that amount from the market.

What both me and franky say:
Gold has an underlying value of about $900. It also has a market value of about $1,700. If there's no person who's willing to give $900 for gold, there's no gold supplied, because it doesn't benefit the miners.

What franky says: (and please correct me if I'm wrong)
Bitcoin and gold have a relation regarding this "underlying value", because both bitcoin and gold:

• Have a cost to mine an amount.
• Have a market value that's greater of that amount.

What I say:
Bitcoin and gold have no relation regarding this (or the same) "underlying value", because, opposed to gold, bitcoin's cost changes based on the demand. If suddenly less people want bitcoin, the market value will fall. But, the market value is a factor that determines the difficulty, which in sequence, determines the cost.

In bitcoin, the more the energy, the less the amount of bitcoin that is mined per energy unit.
In gold, the more the energy, the same the amount of gold that is mined per energy unit.

[franky1]

lets first deal with these comments

What franky says: (and please correct me if I'm wrong)
Bitcoin and gold have a relation regarding this "underlying value", because both bitcoin and gold:

• Have a cost to mine an amount.
• Have a market value PRICE that's greater of that amount.

What I say:
Bitcoin and gold have no relation regarding this (or the same) "underlying value", because, opposed to gold, bitcoin's cost changes based on the demand. If suddenly less people want bitcoin, the market value will fall. But, the market value is a factor that determines the difficulty, which in sequence, determines the cost.

In bitcoin, the more the energy, the less the amount of bitcoin that is mined per energy unit.
In gold, the more the energy, the more the amount of gold that is mined per energy unit.

3 words value.. values   price (be clearer of which you speak)
VALUE is an economic number. this number is not fixed. but nor is it the market.. its the number beneath all other numbers (below AKA underlying)

PRICE is the market..

if you avoid saying "market value" and say "market price" you gain one step forward in understanding.
then realise you cant see the VALUE on the market order book.. its beneath the price you see..
hope you take a few steps forward and try to find it. but dont keep calling the price the value as you will go backwards

VALUES is not an economic number. its a sentiment of features, utility, desire, views on scarcity. its the emotional decision stuff. above value that add on more to come to a personal number of peoples personal PRICE points

...
gold and bitcoin have a underlying value.. the lowest anyone can mine for. in both

as for the difference of the costs vs reward of both..
depends on which way you view it.

if a land costs more to mine gold because instead of sand, its hard rock.. but both lands yield the same coin.. then obviously the most costly one just wont get mined at all and all effort is put into the sandy land.
meaning if both land could have yeilded 1000 ounces each(2000 combined).. this year gold production is only 1000 ounces.. its not a case of gold mining still getting 2000 ounces because a competitor gave up the hard rock land
its that there is less ounces entering the market this year because les mining

result is that if there is too much work to mine gold. people just avoid the work. in gold they look at the market rate and then account it its worth mining to get paid for the effort..(gold miners react to the market rate)

in bitcoin. if the price slips/declines expensive miners give up. however by giving up the remaining miners get more reward (less competition means more slice of the block reward to keep and not share) so the same coin can reach the market that was expected but now the efficient miners are the ones giving them more coins then they expected(before competition drop) so they have more coin for their same work meaning more profit to be made

thus their same costs gives them more reward by seeing their competition shut down.
where as if we flip to the other side.. because there are efficient miners that can mine below the PRICE . they dont care about the market price. again if there is too much competition. its not the underlying efficient miners losing out/ or wil drop out first.. so again they dont care..
its infact those at the top costs. who speculate out of mining or take the risk to remain in the competition.
this ends up in pushing the price up to compensate this competiton
EG not mining at a loss. so buying instead of mining due to it being cheaper to buy instead of mine for the high cost miners. which gives more support above the underlying value to push the price up

the efficient miners get more reward and reap more benefits where as the most costly miners speculate and cause the price changes and react and respond to price changes

thats where gold and bitcoin differ.
gold miners react to the whims of the markets causing supply shortage/oversupply depending on price. efficient bitcoin miners use the markets to push the markets due to the games of the competition. where by the supply is the same but only the efficient miners reap the benefits when the price is low



anyway lets concentrate on value(economic number)
its like the difference between one house PRICE and the local/national/international "comps" that underly things..
where if you find the bottom you find the lowest VALUE that no one is selling below. thus can then base the prices speculative hype/pump/bubble area amount above this.
EG if the price is 20x more then the underlying value of houses. then there is alot of speculation hype..

you then have to equate the other factors of values(sentiments of features and benefits) this is not a number, but a speculative sentiment of peoples desires, whims and current trends.
EG does it come with a pool a view. a bathroom per bedroom. enough room to do tango dancing with a model
wher by the sentiment decides a price point above value where by someone thinks its their desired PRICE they would prefer to see. where by they personally might see the market PRICE is near their personal price point. or not.

but lets get back to VALUE
its not fixed. yet it does not move at the same speed as PRICE
its not fixed. yet it does not move at the same correlation as PRICE

underlying(bottom) VALUE is not based on having no value because each person rates it different. but to find the BOTTOM value of those varied values.

EG japans mining cost at $0.38kwh makes them way over the current ATH for mining cost. this is not to say BITCOINS underlying value is ATH
but instead finding the cheapest most efficient mining cost ON THE PLANET, is the BOTTOM value. AKA the underlying value

like i said all the varied factors of different cost points and price points above that is the speculation zone above underlying value

..
take gold. no one. absolutely no on on the entire planet can mine gold using a spoon and a coffee filter in their backyard for a $1 cost.
so gold value is not $1. becasue no one can achieve that.

and yes there are land leases around the world where by if people did mine gold on. their costs might end up being over $2k.
but again this does not mean that golds value is $2k
golds underlying value is about $900 because thats where pretty much only the most efficient gold miners can gold mine for. (knowing there are other speculators mining above this point).

and yes.. for emphasis people individually do have their own cost points their own point at which they decide or desire to mine or buy at. but thats the speculative zone of price finding/volatility above the underlying cost no one can buy below or sell for to break even.

this value can and does change over time. and for emphasis (seems i have to repeat things 20 times before blackhatcoiner, etc bothers ready it witohut his defense hat on)

the VALUE does not move as quick or as volatile as the PRICE

[tadamichi]

there is a underlying value (not seen in the market) this value is NOT the market price.
its a number that sits below the market price

EG golds VALUE is not the ~$1,700 currently.. golds underlying value is about $900 at the moment

I have question out of interest franky. Idc much about definitions outside of academia, but why do you call total production costs, underlying value? I agree that total production costs are important, in fact it’s one of the most important metrics in accounting. Im just interested why you’re choosing this definition. In my mind value means something else, i could produce bs for high costs, but it doesn’t mean it’s value is high. Sure this doesn’t apply to Bitcoin or gold tho, but just saying.

[franky1]

the underlying VALUE is a number

the values (note the 's') is different.. values is the reasons. the desire, the utility values that create the sentiment of peoples wants, needs and desires to then use it.
(its plural for reasons)

there are lots and lots of different sentimental reasons lots of people have.(plural) there are lots of price points people think is their "values"(plural).. but if you find the BOTTOM number of all of that. the number where everyone wont sell below. EG the cheapest on the planet to acquire. but not foolish to sell below.. then that bottom number thats the underlying value

and no its not the market price temporary low of the day/week.
the underlying value is a number below that

all the whimsy of lots of different idea's(plural) above that number is the speculative stuff., of values(plural)

underlying value(singular bottom) is different then values(plural whimsy of variance at the same time)..

..
intrinsic
is about value found in of itself...
meaning its not like 1920's fiat that was valued due to being backed by gold. because fiats then had no intrinsic value it had gold value.

intrinsic is about the stuff unique to bitcoin for bitcoin and about bitcoin not other things

EG
LN is not intrinsic feature of bitcoin because LN bridges and pegs to other networks.. LN can function and create channels without bitcoin.. and yea LN has no economic value in of itself. it borrows value from blockchains.