What someone is willing to pay is not the value of something especially in a bubble....
I'd happen to agree by the way that Bitcoin probably is a bubble
I'm afraid you're wrong: that's exactly what the value of something is, by definition. Whether it's in a bubble or not is irrelevant (I'd happen to agree by the way that Bitcoin probably is a bubble on the principle of walking like a duck, sounding like a duck..... etc., but again, that's irrelevant).
Otherwise you're in the Lewis Carroll territory of choosing your own meaning of words: interesting concept, but hardly useful as a means of communication.
As I said, there's a big difference between saying "X has no value", which is demonstrably not true, and "I believe X to be overvalued".
This is an important point. There was a recent documentary on BBC 'Stealing Van Gogh' that said criminals use stolen paintings as collateral for drug deals etc. A criminal might not know exactly the value of a stolen Gainsborough relative to a stolen Van Gogh but would know it was worth a lot and would use it as collateral for obtaining drugs for a drug deal. You could see how cryptocurrency would fit into this model. If you can steal or force a cryptocurrency owner to hand them over, you use them as collateral for illegal activities. You don't need to establish an 'intrinsic value'. Anonymity is an additional benefit. The cryptocurrency need not necessarily plummet in value; its value would be established relative to the profitability of the illegal activities.There are two main types of people who transact in Bitcoin as far as I can see. Those engaging in illegal activity and those hoping for appreciation in the value of the coins. I can accept that there is a possibility of a more wide-scale use for Bitcoin in the future, but unless there is a take-up by the general population, in the near future, to actually buy stuff, then I think the intrinsic value will be limited to the value placed by those conducting illegal activity. If/when this happens, the price will plummet and those hoping to make a return on holding the currency itself will lose out and probably leave with what they can.
This is an important point. There was a recent documentary on BBC 'Stealing Van Gogh' that said criminals use stolen paintings as collateral for drug deals etc. A criminal might not know exactly the value of a stolen Gainsborough relative to a stolen Van Gogh but would know it was worth a lot and would use it as collateral for obtaining drugs for a drug deal. You could see how cryptocurrency would fit into this model. If you can steal or force a cryptocurrency owner to hand them over, you use them as collateral for illegal activities. You don't need to establish an 'intrinsic value'. Anonymity is an additional benefit. The cryptocurrency need not necessarily plummet in value; its value would be established relative to the profitability of the illegal activities.
Personally I see value in bitcoin at current prices.
What analysis and calculations can you provide for a specific piece of paper - in this instance the 10 euro note - having a value of a pint of plain and a packet of peanuts?But I can show you my assumptions and my calculations. You can disagree with them and arrive at a different valuation. That is how markets work.
Going strictly by your definition of value when it comes to investing, nobody would ever need to analyse a company or industry because the value is simply the price. Nothing is ever overvalued or undervalued.
So far, no one has been able to show why they are worth even $1 each.
IndeedYou are being robbed!
What analysis and calculations can you provide for a specific piece of paper - in this instance the 10 euro note - having a value of a pint of plain and a packet of peanuts?
So the distinction between the two you are making is track record. There's nothing else that differentiates them and there's no calculation or analysis that needs to be carried out as to why you can buy 2x pints with your 10 euro?Good question.
With 10 euro, I could have bought about 2 pints of plain anytime over the past ten years.
A 2nd hypothetical for you..How would you go about putting a value/price on it? The point is that with any other financial asset you can make plausible assessments of its capacity to earn fiat and that enables at least some valid attempt to put a fiat value on it
This is not a valid metaphor. The Boss has explained how financial assets are valued in terms of money. This is effectively using money as a unit of value. There is a logical process - the asset has a money generating potential and can therefore be given a plausible monetary value. That is distinct from the price level between money and goods and services which I have addressed in an earlier post.A 2nd hypothetical for you..
You've just established the Dukedom of Marmalade as a completely independent statelet. How many marmalade coins or notes do I need to buy those 2 pints?
It could be 1, 10 or 100.
What calculations or analysis are you going to show me to demonstrate how much is needed to buy those pints?
How do you do so when the next FIAT comes out? IE. Set price of new FIAT currency against USD/GBP/EUR? Whats the difference?Duke of Marmalade said:The question that is posed is how on earth do you even begin to strike an exchange rate between bitcoin and fiat?
What analysis and calculations can you provide for a specific piece of paper - in this instance the 10 euro note - having a value of a pint of plain and a packet of peanuts?
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