On Bitcoin valuation

[687_2]

When I purchase a good or service, I always try to use fiat. Fiat has much less value to me than Bitcoin (XBT), so I prefer to spend it over my XBT holdings. Why is this the case?

The short answer is that all fiat is now competing with XBT, and all available tools must be compared objectively. Which protocol (fiat vs. XBT) is more stable? Which protocol has parameters that can be predicted with almost 100% accuracy? Which is easier to use? Which creates less friction (lower cost) for markets? Which allows more market participants?

To me and many others here the answers are entirely obvious. However, because the way we currently value XBT is completely inaccurate (exchange based valuations that are easily manipulated), many people will discover too late just how valuable XBT is - simply because they didn’t observe the fundamental value of the protocol.

Instead most people just glance at the relative fiat “price” (where quantities demanded and quantities supplied meet) of XBT and decide that it is unstable and therefore unusable - because “price” is how most people (incorrectly) determine a thing’s value.

In the past, societies have transitioned from one technology to another over a period of hundreds or thousands of years. For example, gunpoweder was invented in 9th Century China and it took around 400 years for the technology to reach Europe.

Now, technologies spread much faster. SMS texting was insanely popular in Japan some years ago, and if I remember right it took about 5-6 years (and a relatively modest hardware design change) for it to spread to the US. But prior to that hardware design change texting in the US was considered a complete joke. SMS was literally the subject of late night comedy.

Based on this information, my guess is that in 5-6 years the Bitcoin ecosystem will be so well developed that it becomes the de-facto standard method of transferring and storing value. I think it will take 10-20 years before people start decoupling the value of XBT from fiat, and begin thinking (and pricing) goods and services in terms of XBT.

[1715282689]

1715282689

[1715282689]

1715282689

[1715282689]

1715282689

[Amph]

we should start to use more site which ask only btc as a payment, but even than there is the problem that those site will dump the coins for fiat..., i don't see a solution until bitcoin will reach fiat status as adoption

[NUFCrichard]

When I purchase a good or service, I always try to use fiat. Fiat has much less value to me than Bitcoin (XBT), so I prefer to spend it over my XBT holdings. Why is this the case?

The short answer is that all fiat is now competing with XBT, and all available tools must be compared objectively. Which protocol (fiat vs. XBT) is more stable? Which protocol has parameters that can be predicted with almost 100% accuracy? Which is easier to use? Which creates less friction (lower cost) for markets? Which allows more market participants?

To me and many others here the answers are entirely obvious. However, because the way we currently value XBT is completely inaccurate (exchange based valuations that are easily manipulated), many people will discover too late just how valuable XBT is - simply because they didn’t observe the fundamental value of the protocol.

Instead most people just glance at the relative fiat “price” (where quantities demanded and quantities supplied meet) of XBT and decide that it is unstable and therefore unusable - because “price” is how most people (incorrectly) determine a thing’s value.

In the past, societies have transitioned from one technology to another over a period of hundreds or thousands of years. For example, gunpoweder was invented in 9th Century China and it took around 400 years for the technology to reach Europe.

Now, technologies spread much faster. SMS texting was insanely popular in Japan some years ago, and if I remember right it took about 5-6 years (and a relatively modest hardware design change) for it to spread to the US. But prior to that hardware design change texting in the US was considered a complete joke. SMS was literally the subject of late night comedy.

Based on this information, my guess is that in 5-6 years the Bitcoin ecosystem will be so well developed that it becomes the de-facto standard method of transferring and storing value. I think it will take 10-20 years before people start decoupling the value of XBT from fiat, and begin thinking (and pricing) goods and services in terms of XBT.

I think lots of people agree with you, and it might ultimately be the reason that bitcoin never takes off.  If you were starting a new monetary system would you want it to be held by a few early adapters who would never use it because they treasure it so much?
Also why will anyone accept bitcoin if no one who holds bitcoin will ever spend it? When a company announces that they accept bitcoin, they should be flooded with business from people wanting bitcoin to succeed, whereas that isn't what happens.

I spend my bitcoins whenever I can, I want the currency to succeed. I can always buy more bitcoin after I have spent it.  It is not something to hoard, or it if is, it will be something that is almost worthless but hoarded by a few.

[AtheistAKASaneBrain]

When I purchase a good or service, I always try to use fiat. Fiat has much less value to me than Bitcoin (XBT), so I prefer to spend it over my XBT holdings. Why is this the case?

The short answer is that all fiat is now competing with XBT, and all available tools must be compared objectively. Which protocol (fiat vs. XBT) is more stable? Which protocol has parameters that can be predicted with almost 100% accuracy? Which is easier to use? Which creates less friction (lower cost) for markets? Which allows more market participants?

To me and many others here the answers are entirely obvious. However, because the way we currently value XBT is completely inaccurate (exchange based valuations that are easily manipulated), many people will discover too late just how valuable XBT is - simply because they didn’t observe the fundamental value of the protocol.

Instead most people just glance at the relative fiat “price” (where quantities demanded and quantities supplied meet) of XBT and decide that it is unstable and therefore unusable - because “price” is how most people (incorrectly) determine a thing’s value.

In the past, societies have transitioned from one technology to another over a period of hundreds or thousands of years. For example, gunpoweder was invented in 9th Century China and it took around 400 years for the technology to reach Europe.

Now, technologies spread much faster. SMS texting was insanely popular in Japan some years ago, and if I remember right it took about 5-6 years (and a relatively modest hardware design change) for it to spread to the US. But prior to that hardware design change texting in the US was considered a complete joke. SMS was literally the subject of late night comedy.

Based on this information, my guess is that in 5-6 years the Bitcoin ecosystem will be so well developed that it becomes the de-facto standard method of transferring and storing value. I think it will take 10-20 years before people start decoupling the value of XBT from fiat, and begin thinking (and pricing) goods and services in terms of XBT.

Yeah it's going to take at least 10, Winklevoss brothers predict it in the next decade, and Andreas has said "give Bitcoin 2 years", which will probably be time for consolidation (going back to the ATH).

[flyingplows]

There are too much scams for mass adoption... The solution seems to be regulation, but its double edged sword.. I see no easy way as of now.. There need to be some breakthrough with a killer app/company/integration or we go nowhere...

[Q7]

If we want to completely decoupled value of goods priced in btc instead of dollar, that could only happen if everything were to be priced in btc. And that means not only getting paid in btc but also generally all the daily essential items plus services, can be bought using bitcoins. That means that if you walk into a convenience store, you can pay in btc similarly when you go to the barber shop, the guy will also accept btc. I hope I see that taking place some day.

[sdp]

That's fine.  But laws are often written with fixed monetary values and income tax exception values and minimum wage laws would have to be constantly changing if it were used now.  We would have to see a time when bitcoins had the same value as the average consumable commodity.  As long as there is world population growth, I believe that bitcoin and gold will be deflationary.

As adoption increases and as children grow into adults there is an economic pressure creating demand for what adult goods and services: housing and transportation.  I mean.  Johnny wants to leave his parents house and get a car, maybe fly to where he can find a job.  This has the effect of creating demand for use of currency whatever that may be.  This is the deflationary push which is mostly felt by the dollar.  Then there is the inflationary push brought on by the dollars and bitcoin being created, and people leaving the economy as they die.

sdp

[Kprawn]

The question will be... Is a currency a currency, if it's not used? We cannot just use it as a store of value, it will then kill the currency feature.

The number of daily transactions have been increasing steadily to +100 000 p/d ---> { https://blockchain.info/charts/n-transactions }

There is still a lot of water needed to fill the pond... let's not skip steps to get there... It might damage the pond. 

[Amph]

There are too much scams for mass adoption... The solution seems to be regulation, but its double edged sword.. I see no easy way as of now.. There need to be some breakthrough with a killer app/company/integration or we go nowhere...

people are also still afraid of 51% attack, there is a solution on the way for this(supernode), were the longest blockchain mean nothing

[tadakaluri]

Bitcoin’s value is a perceived regard for its benefits and usefulness. The term value, as used here, is not to be confused with price, which is the monetary cost of a bitcoin. The usefulness and consequent value of Bitcoin is a result of many aspects of its innovation, its network, and its features.

Bitcoins have value because a small, but growing group of people believe that the underlying Bitcoin technology has value. In the future, the Bitcoin technology may be used for a wide array of financial services applications from payments, to contracts, to distributed exchanges. Since Bitcoins are the scarce currency units which are required to power these applications, they are valuable. Unlike fiat currencies whose money supplies may be inflated by central banks, there are a finite number of Bitcoins that will ever be released into circulation, making the currency a superior store of value versus other international reserves. Although Bitcoin is not legal tender backed by a particular government, the currency's value is supported by the individuals and merchants who voluntarily accept Bitcoin for their goods and services.

As long as the transactional demand for Bitcoin continues to grow exponentially in the coming years, the balance between Bitcoin's float and its total monetary base will likely reflect that of other global currencies.

[Lauda]

we should start to use more site which ask only btc as a payment, but even than there is the problem that those site will dump the coins for fiat..., i don't see a solution until bitcoin will reach fiat status as adoption

Well there is an obvious solution in what you just said, but that will possibly even cause more problems and relies on the good will of a individual or company. What they could is accept Bitcoin as a payment, but without Bitpay and such. They'd need hold their coin and work with fiat. But this is where it becomes useless, this doesn't help adoption at all. Nothing really change, maybe we would have a temporary increase in price (if the merchant really got a lot of coins). I think that's it, so it is pretty much useless.

people are also still afraid of 51% attack, there is a solution on the way for this(supernode), were the longest blockchain mean nothing

Bitcoin is vulnerable to 51% indeed, but there is something that people obviously don't understand. It is much much easier to hack a bank, than to pull off a 51% attack.

[CrackedLogic]

we should start to use more site which ask only btc as a payment, but even than there is the problem that those site will dump the coins for fiat..., i don't see a solution until bitcoin will reach fiat status as adoption

Well there is an obvious solution in what you just said, but that will possibly even cause more problems and relies on the good will of a individual or company. What they could is accept Bitcoin as a payment, but without Bitpay and such. They'd need hold their coin and work with fiat. But this is where it becomes useless, this doesn't help adoption at all. Nothing really change, maybe we would have a temporary increase in price (if the merchant really got a lot of coins). I think that's it, so it is pretty much useless.

people are also still afraid of 51% attack, there is a solution on the way for this(supernode), were the longest blockchain mean nothing

Bitcoin is vulnerable to 51% indeed, but there is something that people obviously don't understand. It is much much easier to hack a bank, than to pull off a 51% attack.

Adding to that, if we were to boycott websites/stores that don't accept bitcoin as we don't have much of a following to achieve this. Also as of the extremely unstable price of bitcoin businesses would need to convert the btc immediately in order to combat a loss. I doubt they'll take the risk to be able to hold on to it for a long period of time.

Bitcoin is vulnerable to 51% indeed, but there is something that people obviously don't understand. It is much much easier to hack a bank, than to pull off a 51% attack.

It's a lot cheaper to hack a bank as well if you're just going to be doing that over the internet. However the consequences are less severe if you pull a 51%

[687_2]

I spend my bitcoins whenever I can, I want the currency to succeed.

I can always buy more bitcoin after I have spent it. 

Don't take this the wrong way, but there's a logical break here - if you're always able to buy more XBT that means you're living in the fiat, inflationary economy. Your perspective is 180 degrees from someone who lives in the XBT economy.

[cryptojumper]

if you want to help bitcoin to succeed - you have to use it i suppose.. the thing that matters is not how much you hold but how much you use if nobody uses it and everybody just holds do you think btc will be a success ? i doubt it..

[Hazir]

if you want to help bitcoin to succeed - you have to use it i suppose.. the thing that matters is not how much you hold but how much you use if nobody uses it and everybody just holds do you think btc will be a success ? i doubt it..

I was very optimistic over bitcoin. But after reading some stories of people i.ex. this one: https://bitcointalk.org/index.php?topic=999791.0
I now can see how in theory bitcoin is insanely good invention. But in reality is has many flaws. And for now I think bitcoin will be currency of technical hipsters and people who just want to have some new toy to play (and brag how "progressive" they are) with because they are bored. Mass adoption and 'moon price" Is not gonna happen anytime soon.

[Denker]

if you want to help bitcoin to succeed - you have to use it i suppose.. the thing that matters is not how much you hold but how much you use if nobody uses it and everybody just holds do you think btc will be a success ? i doubt it..

Tell that the whales. They have plenty of Bitcoin to use on a normal day. People who just have 1 or 2 of it I really can understand if they wanna keep it and hope to gain some profit with it in the future.

[CrackedLogic]

if you want to help bitcoin to succeed - you have to use it i suppose.. the thing that matters is not how much you hold but how much you use if nobody uses it and everybody just holds do you think btc will be a success ? i doubt it..

Exactly this  ^.

At our current rate, bitcoin isn't looked upon as a currency. It's more of an investment. Of course you are looking to make a profit, but do you sell your fiat to make a profit like how you would do so here?

Our current value and position will count on those who generally have large amounts of btc in their back pockets.

[dasource]

There are too much scams for mass adoption... The solution seems to be regulation, but its double edged sword.. I see no easy way as of now.. There need to be some breakthrough with a killer app/company/integration or we go nowhere...

people are also still afraid of 51% attack, there is a solution on the way for this(supernode), were the longest blockchain mean nothing

Source on supernode? Thanks

[Amph]

There are too much scams for mass adoption... The solution seems to be regulation, but its double edged sword.. I see no easy way as of now.. There need to be some breakthrough with a killer app/company/integration or we go nowhere...

people are also still afraid of 51% attack, there is a solution on the way for this(supernode), were the longest blockchain mean nothing

Source on supernode? Thanks

wiki report this

https://en.bitcoin.it/wiki/BitsOfProof_%22supernode%22

several thread talking about it can be found here on bitcointalk

[687_2]

if you want to help bitcoin to succeed - you have to use it i suppose.. the thing that matters is not how much you hold but how much you use if nobody uses it and everybody just holds do you think btc will be a success ? i doubt it..

This myth keeps getting circulated here for some reason. XBT's utility has already been demonstrated and validated.

The more XBT you own and refuse to sell, the less there is available for other people to purchase. All things held equal, the relative fiat price will increase as a result. As the relative price rises, more people in general become interested in owning XBT, and more merchants will want to receive XBT in exchange for goods and services. This is all because people (incorrectly) value XBT relative to fiat.