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Question: What is the current *actual* worth based solely on usage?
above $10000 - 11 (24.4%)
$1000-$10000 - 10 (22.2%)
$500-$1000 - 7 (15.6%)
$250-$500 - 7 (15.6%)
$100-$250 - 3 (6.7%)
$100-$50 - 4 (8.9%)
below $50 - 3 (6.7%)
Total Voters: 45

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Author Topic: What do you think is the fundamental worth of bitcoin currently?  (Read 1755 times)
An amorous cow-herder
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September 08, 2014, 08:05:24 PM
 #1

I would really like to know how you you consider the actual worth of a bitcoin.
That is, the true current value. Without any speculative surcharge.
I know e.g. stocks usually have a high "speculative surcharge" in potential growth industries, that is, the PE is extremely high.
But what is the current "fair at the moment" value of bitcoin without such a surchage?
Basicly i am trying to calculate the markup of actual value versus market value, or how high the speculative surcharge is.

One calculation basis, that you may accept or reject for reasons you outline below is probably the BoA assesment of bitcoin.
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Ibian
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September 08, 2014, 08:09:09 PM
 #2

might wanna rethink the poll options

Look inside yourself, and you will see that you are the bubble.
An amorous cow-herder
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September 08, 2014, 08:10:23 PM
 #3

might wanna rethink the poll options
In what way?
More options for lower? More options for higher?
Ibian
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September 08, 2014, 08:13:31 PM
 #4

How about a higher ceiling.

Look inside yourself, and you will see that you are the bubble.
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September 08, 2014, 08:16:33 PM
 #5

I believe the "fundamental" value of Bitcoin is technically 0, because there is nothing in principle that would prevent every single market participant from switching to Litecoin, or some other crypto.

Having said that, I still believe Bitcoin is currently undervalued.
An amorous cow-herder
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September 08, 2014, 08:18:56 PM
 #6

How about a higher ceiling.
Well, i think $1000+ should be pretty much sufficient for people who believe BTC is currently undervalued.
Granted, on a log scale 1000 is closer than 100 (from ~500), but that should only gather more people in the 1000+ category.
Also, dont forget i am not asking about potential value but instead current value based on usage.
An amorous cow-herder
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September 08, 2014, 08:21:49 PM
 #7

I believe the "fundamental" value of Bitcoin is technically 0, because there is nothing in principle that would prevent every single market participant from switching to Litecoin, or some other crypto.
This is why i am asking "as is", the "current value". Sure all bitcoin atm operators could switch to ltc or whatever. I am asking about a value corresponding to current actual use.
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September 08, 2014, 08:23:41 PM
 #8

How about a higher ceiling.
Well, i think $1000+ should be pretty much sufficient for people who believe BTC is currently undervalued.
Granted, on a log scale 1000 is closer than 100 (from ~500), but that should only gather more people in the 1000+ category.
Also, dont forget i am not asking about potential value but instead current value based on usage.

It's a useless poll when the op is not being impartial. What "you think" has no bearing on a poll about what "other people think". The poll is useless without a full spectrum of options as represented by the board as a whole.

Look inside yourself, and you will see that you are the bubble.
An amorous cow-herder
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September 08, 2014, 08:27:34 PM
 #9

How about a higher ceiling.
Well, i think $1000+ should be pretty much sufficient for people who believe BTC is currently undervalued.
Granted, on a log scale 1000 is closer than 100 (from ~500), but that should only gather more people in the 1000+ category.
Also, dont forget i am not asking about potential value but instead current value based on usage.

It's a useless poll when the op is not being impartial. What "you think" has no bearing on a poll about what "other people think". The poll is useless without a full spectrum of options as represented by the board as a whole.
Added more options, are you now happy?
Wilhelm
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September 08, 2014, 09:31:17 PM
 #10

I believe the current price is based on the cost of mining by people in low power countries.
The price of 1 BTC would be around $480 to mine and thus approx. $500 to buy.

Since Bitcoin has potential and difficulty is continuously rising faster and faster I voted for a conservative $500-$1000.

The price of Bitcoin has the potential of rising way above this point and I believe it could well go up to 10k before 2017.

Bitcoin is like a box of chocolates. You never know what you're gonna get !!
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September 08, 2014, 10:12:24 PM
 #11

An incredibly complex question, not easy to answer at all, imo.

First, you already said this much, but I want to make it clear: the currently "fair" price is the price paid on the markets. Which includes speculative value. Which is totally fine. That's how markets work.

That said, you're asking about what value would be "fair" removing any projections by investors into the future. Fair enough question.

I claim we can break down non-speculative value into two components: usage for transactions, and usage as store of value. Both are difficult to estimate precisely, but at least the first one can perhaps be somewhat approximated.

We know Silk Road had about a million of revenue per month. There are/were other illegal usage cases, but I guess SR was the biggest one. As far as legal transactions go: There are those who claim the SR/illegal usage was the vast majority of usage, but I don't agree with this. Not anymore. But I also don't think legal usage is vastly higher. Overstock reports about 1 million in revenue after 2 months. Like I said, this is a lot of guesswork, but adding all of the data I heard of together, and even multiplying it by factor 2 or so for good measure, I don't see it higher than maybe 1 billion USD per year at peak. Assuming a high velocity of money of 10, spread over 10 million coins, that implies a transaction usage valuation of 10 USD. Assuming a more reasonable slower velocity of 5, 20 USD per coin. Being very generous and assuming actual floating coins are only half of those mined and not lost, 40 USD per coin.

Still far below current market, huh? So, is the entire difference the speculative value you want to remove from the equation?

No, because there's the "holders". Those that genuinely believe that Bitcoin is a great store of value, and who hold coins accordingly. And at this point, your question kind of falls apart and it becomes clear it can't be answered meaningfully: Those holders (by and large) believe that Bitcoin is a great store of value *now* (which means the non-speculative price of a coin that you ask for must include this store of value contribution).

However, if some oracle would be able to tell, without any remaining doubt, that Bitcoin won't survive the next 10 years (and will be replaced by another crypto, maybe), I am sure a lot of the holders would no longer want to use it as a store of value. In that sense, their usage of Bitcoin as a store of value is after all based on some speculative assumption: that Bitcoin will be around in 10 years from now, and will continue to function as it does now. But since this is somewhat speculative, this contribution should be removed from the value of a non-speculative coin price.

Assuming you'd want to include this contribution however, then we're faced with the problem how to calculate what amount of wealth (in USD) is stored in Bitcoin. That however is heavily dependent on current market price: an early adopter / investor who got his hands on 100k coins never put 100k*500USD= 50 million USD of his savings into Bitcoin, so it's a bit of a stretch to think that those 100k coins represent 50 million store of value usage. On the other hand, if he's not selling, then effectively he *is* keeping that amount of dollar in Bitcoin as a store of value.

My point is: you are asking the impossible. There is however a practical way to answer your question, imo - the non-speculative price is, approximately, the price that emerges after a sufficiently large market capitulation. So, by the current knowledge: 300s to 400s, probably.

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September 09, 2014, 01:35:36 AM
 #12


Still far below current market, huh? So, is the entire difference the speculative value you want to remove from the equation?

No, because there's the "holders". Those that genuinely believe that Bitcoin is a great store of value, and who hold coins accordingly. And at this point, your question kind of falls apart and it becomes clear it can't be answered meaningfully: Those holders (by and large) believe that Bitcoin is a great store of value *now* (which means the non-speculative price of a coin that you ask for must include this store of value contribution).

However, if some oracle would be able to tell, without any remaining doubt, that Bitcoin won't survive the next 10 years (and will be replaced by another crypto, maybe), I am sure a lot of the holders would no longer want to use it as a store of value. In that sense, their usage of Bitcoin as a store of value is after all based on some speculative assumption: that Bitcoin will be around in 10 years from now, and will continue to function as it does now. But since this is somewhat speculative, this contribution should be removed from the value of a non-speculative coin price.


I really like the first half of your post! Well detailed and thoughtful. I can at least partially agree with your conclusion there.
Currently, Bitcoin is a terrible store of value. Why? Because it loses value daily. This removes the store of value argument from the equation, and it then turns into a speculative decision to hold for 10 years (or however long...) at which time would then turn it back into an excellent store of value. But as long as it loses value faster than your Fiat of choice, it is a bad store of value right now over that Fiat.

For those who hold coins from $100, 10, 1... It is still holding well over their initial value, but it is still losing value of their return. Coins from that era number on the minority side of all holdings to date, so it's not the largest group of safely held coins. The coins bought and held all the way down from the December top are performing on par with a short holder in the US stock market indices. Losing value every day.

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September 09, 2014, 01:38:08 AM
 #13

I'd say what ever the all time high was is close to a fair price for Bitcoin.  With all the news that has come out since then it is in no way not worth at least that much.  I'm honestly baffled that the price has gotten so low and I really expect to see a sudden boom, after such a long period of stagnation and decline which many of us seen coming I should add..
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September 09, 2014, 08:19:25 AM
 #14


Still far below current market, huh? So, is the entire difference the speculative value you want to remove from the equation?

No, because there's the "holders". Those that genuinely believe that Bitcoin is a great store of value, and who hold coins accordingly. And at this point, your question kind of falls apart and it becomes clear it can't be answered meaningfully: Those holders (by and large) believe that Bitcoin is a great store of value *now* (which means the non-speculative price of a coin that you ask for must include this store of value contribution).

However, if some oracle would be able to tell, without any remaining doubt, that Bitcoin won't survive the next 10 years (and will be replaced by another crypto, maybe), I am sure a lot of the holders would no longer want to use it as a store of value. In that sense, their usage of Bitcoin as a store of value is after all based on some speculative assumption: that Bitcoin will be around in 10 years from now, and will continue to function as it does now. But since this is somewhat speculative, this contribution should be removed from the value of a non-speculative coin price.


I really like the first half of your post! Well detailed and thoughtful. I can at least partially agree with your conclusion there.
Currently, Bitcoin is a terrible store of value. Why? Because it loses value daily. This removes the store of value argument from the equation, and it then turns into a speculative decision to hold for 10 years (or however long...) at which time would then turn it back into an excellent store of value. But as long as it loses value faster than your Fiat of choice, it is a bad store of value right now over that Fiat.

For those who hold coins from $100, 10, 1... It is still holding well over their initial value, but it is still losing value of their return. Coins from that era number on the minority side of all holdings to date, so it's not the largest group of safely held coins. The coins bought and held all the way down from the December top are performing on par with a short holder in the US stock market indices. Losing value every day.


Fair enough. But keep in mind the distinction I tried to make: objectively, it is probably not a good store of value (currently). But economic preference is subjective to a degree - if a sufficient number of people elects something to be a store of value (despite there being better alternatives), then 'store of value' is a usage case.

That said, the resolve of those who use it as such is obviously tested during the ongoing bear market / correction, so we will see how many are really store of value users, and how many will turn out to be speculative investors that see their investment go underwater for a longer duration than they had ever thought possible, and sell in panic.

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September 09, 2014, 08:36:42 AM
 #15

Worth of bitcoin is not determined by usage, but hoarding (betting on price increase, speculation). If bitcoin was used, people would be buying and SELLING them all the time, so price wouldn't be able to rise much.

Answer to your question, actual worth of bitcoin is less than 1$, meaning speculative surcharge is more than 99% of the current price.

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exocytosis
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September 09, 2014, 09:19:45 AM
 #16

Zero. Bitcoin is essentially worthless. The market is slowly realizing this fact, as we're currently seeing.
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September 09, 2014, 09:28:09 AM
 #17

Zero. Bitcoin is essentially worthless. The market is slowly realizing this fact, as we're currently seeing.

correct
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September 09, 2014, 09:58:53 AM
 #18

Zero. Bitcoin is essentially worthless. The market is slowly realizing this fact, as we're currently seeing.

The USD is the future of money.

Cheesy

Bitcoin is like a box of chocolates. You never know what you're gonna get !!
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September 09, 2014, 10:50:11 AM
 #19

Huh, very difficult to say... Very... But with only about 12 million 'base units' as of now, Bitcoins surely have some value with all the money 'invested' in it. I don't think it will go bust anytime soon!

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September 09, 2014, 11:23:18 AM
 #20

That said, the resolve of those who use it as such is obviously tested during the ongoing bear market / correction, so we will see how many are really store of value users, and how many will turn out to be speculative investors
Why can't we be both?

Look inside yourself, and you will see that you are the bubble.
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