I responded to your post comprehensively - here. You have no problem in making comparisons between bitcoin and nonsensical things but when challenged to defend such comparisons against the characteristics of a good store of value, you won't engage. That doesn't do much for your claims.I repeat, in case you missed it.
We are going around in circles
The fundamental question is how do you justify the value of Bitcoin?
None of you is able to do that. None of you is able to explain why it's worth $16,000 and not $5,000. None of you can explain why it was worth $20,000 three years ago. Why it dropped to $3,000 and why it's now back at $16,000
You can only trot out irrelevancies like
- "That is what the market says it's worth"
- "I'll answer when you tell me how you value gold"
- "It's a whole new world"
- "The fiat currencies are in trouble"
You can only trot out irrelevancies like
- "That is what the market says it's worth"
- "I'll answer when you tell me how you value gold"
- "It's a whole new world"
- "The fiat currencies are in trouble"
Soft you, a word or two before you go.
I have done the thread some service, and they know ’t.
No more of that
Personally, I don't how to value Bitcoin. I am aware, however, of the academic research into different valuation bases.
Hi WolfeTone,
Are we agreeing or disagreeing - it's (not its) been a long day!?
This is an extract from an excellent OP in a Key Post "Why Bitcoin has Value". I have put a sentence in bold. We see in this how Satoshi craves for some intrinsic value to "bootstrap" bitcoin. He posits that his bitcoin with such intrinsic value would be such a wonderful thing that even if it doesn't exist people will take up something (that they convince themselves meets the test). This is rather like the argument that the idea of a paradise in our after life is so appealing that religions arise to assert that this is the case.fpalb said:Then we arrive at Satoshi's proposal:
As a thought experiment, imagine there was a base metal as scarce as gold but with the following properties: - boring grey in colour - not a good conductor of electricity - not particularly strong, but not ductile or easily malleable either - not useful for any practical or ornamental purpose and one special, magical property: - can be transported over a communications channel If it somehow acquired any value at all for whatever reason, then anyone wanting to transfer wealth over a long distance could buy some, transmit it, and have the recipient sell it. Maybe it could get an initial value circularly as you've suggested, by people foreseeing its potential usefulness for exchange. (I would definitely want some) Maybe collectors, any random reason could spark it. I think the traditional qualifications for money were written with the assumption that there are so many competing objects in the world that are scarce, an object with the automatic bootstrap of intrinsic value will surely win out over those without intrinsic value. But if there were nothing in the world with intrinsic value that could be used as money, only scarce but no intrinsic value, I think people would still take up something. (I'm using the word scarce here to only mean limited potential supply)
(Bold again supplied by me.) Of course this has to be true and is how Satoshi saw it as well. Fiat has no intrinsic value, but people accept it as a store of value (not an investment) because they have confidence in its role as a medium of exchange. Workers give their labour for a digital entry in their bank account knowing they can pay their mortgage with it etc. The commitment of central banks to stabilise the price level is a very important factor in this. Bitcoin enthusiasts boast proudly that there is no such institution for stabilising its price. A digital entry with no intrinsic value can only possibly have a store of value if it has made the grade as a medium of exchange. Bitcoin is a long long way off that and if it ever showed signs of making that grade it would be suppressed by regulators (in my interests)*.John Kelleher of Investopedia said:One of the biggest issues is Bitcoin's status as a store of value. Bitcoin's utility as a store of value is dependent on its utility as a medium of exchange. We base this in turn on the assumption that for something to be used as a store of value it needs to have some intrinsic value, and if Bitcoin does not achieve success as a medium of exchange, it will have no practical utility and thus no intrinsic value and won't be appealing as a store of value.
Bitcoin is $15,500 today because that is what the market (of innumerable variables) determines it to be.
So he(she/they) - alongside other cypherpunks - engaged in long ongoing discussions about how to build the most resilient decentralised cryptocurrency - and you home in on one single aspect of that to support your narrative? I see where you're going with that. At the end of the day, beyond all considerations, Satoshi released bitcoin. The digital currency has many qualities - that crypto-critics here won't acknowledge. In the consideration of intrinsic value, trustlessness and supreme scarcity are key. To consider the bitcoin proposition and the intrinsic value question without considering these characteristics is wayward.We see in this how Satoshi craves for some intrinsic value to "bootstrap" bitcoin. He posits that his bitcoin with such intrinsic value would be such a wonderful thing that even if it doesn't exist people will take up something (that they convince themselves meets the test).
I've listened to / read plenty of discussions related to the originator of bitcoins thoughts and you're the first to assume you know precisely what his thinking was (on the back of cherrypicking a couple of sentences that meets your narrative...the same as you did with Keleher).Of course this has to be true and is how Satoshi saw it as well.
And that 'acceptance' as a store of value gets questioned continually and increasingly. Ask the people of Venezuela what their thoughts are on its properties as a store of value. Ask them what confidence they hold in it as a store of value today. Repeat the exercise with the Lebanese, the Iranians, the Argentines, the Turkish, .....how long have you got? There's a reason why the average lifespan of a fiat/sovereign currency is 27 years.Fiat has no intrinsic value, but people accept it as a store of value (not an investment) because they have confidence in its role as a medium of exchange.
And people around the world are at the mercy of whether they will be competent in doing so. In cases where they do their best, they rely on past data to try and decide how to balance things. Whether they undercook or overcook those measures is fraught with difficulty.The commitment of central banks to stabilise the price level is a very important factor in this.
They do because the bitcoin network provides for a complete monetary policy within its own right. All stakeholders know from the outset how that works - it's predefined. It's in this way that stakeholders can have complete confidence in it. There's no second guessing interest rate changes or money printing, etc.Bitcoin enthusiasts boast proudly that there is no such institution for stabilising its price.
Gold is not a medium of exchange yet it's a store of value. Your theory has been debunked.A digital entry with no intrinsic value can only possibly have a store of value if it has made the grade as a medium of exchange.
Again, everything for you seems to be black and white. There's no reason why sovereign currency, decentralised digital currency and corporate digital currency can't co-exist. Competition is healthy - and its good for ordinary people.Bitcoin is a long long way off that and if it ever showed signs of making that grade it would be suppressed by regulators (in my interests).
Some of the brightest minds are working within the crypto space - having left other industries because they see what's coming down the tracks.My guess is that much of the bitcoin speculation does not think this deeply about what bitcoin essentially is.
You once spoke of the evolution of monetary systems. The irony is that its staring you in the face. You'll be the very last to accept it.Some believe that the Fiat system is hopelessly corrupt and very vulnerable in the current crisis - it certainly is a bit disturbing.
We've been over this - but I guess we need to go over it once more. You mean fax machine guy? Turkeys dont vote for Christmas. Like you, they'll accept it when they have no alternative. In the same way the banking set is coming round. We had Jamie Dimon of JPMorgan saying bitcoin is a fraud in 2017 - now one of his analysts is saying that bitcoin could give gold a run for its money and could 10x. We had the CEO of S.E. Asia's largest bank saying that bitcoin is a ponzi scheme in 2017. Now they're going to offer it to all of their customers.Finally mainstream economic thought is dismissive of bitcoin.
Fiat has no intrinsic value, but people accept it as a store of value (not an investment) because they have confidence in it role as a medium of exchange. Workers give their labour for a digital entry in their bank account knowing they can pay their mortgage with it etc.
The commitment of central banks to stabilise the price level is a very important factor in this. Bitcoin enthusiasts boast proudly that there is no such institution for stabilising its price.
Some believe that the Fiat system is hopelessly corrupt and very vulnerable in the current crisis - it certainly is a bit disturbing. But how anyone sees an antidote to Fiat vulnerability in digital entries signifying nothing is completely beyond me.
That's the bitcoin narrative, a hedge against collapse of fiat. The hedge is not based on a diversification of intrinsic value as neither have any intrinsic value. Probably as good a hedge as a bet on next year's derby winner.Of course, this is not in dispute. All that is occuring, from my perspective anyway, is hedging against the prospect of a loss of confidence in fiat. Not a total loss, but devaluations, confiscations, inflation etc are par the course of a fiat monetary system throughout history.
Doesn't sound like a damnation of the fiat of major western economies.Again, my interpretation, the value of having no 'commitment of central banks' to stabilise the price level, is to do with the realisation that central banks are hopelessly incompetent of providing price stability for any prolonged period of time.
The euro is a wonderful example of this. For sure, we can all point to relative price stability and an abundance of goods and services in our supermarkets and elsewhere in the goods and services we buy and sell on a daily basis. And all of this provides for a stable and functioning society and economy, and that in itself is worth its weight in gold.
Fair points but is only a hedge against that in that it is completely unpredictable. It is really a repeat of the hedge point, but doesn't convince me that bitcoin has a future as a major medium of exchange, which would underpin its price - the John Kelleher point; do you agree with John?. Its price is purely speculative and since that can go anywhere it does constitute a hedge.But the backdrop to all of this the clear and obvious price instability wreaking havoc in asset prices from, property, stocks, bonds, energy etc... with the underlying glue holding the whole house of cards together - debt, increasing all the time.
Hedge point again, a bet on the 2021 derby winner is just as good.The current trajectory of the fiat monetary system is headed into decline. How it all pans out is anybodys guess but at some point there will be some form of correction. Who will benefit, who will lose?
So holding some personal wealth in decentralised network may not be the smartest move, alternatively it may be a very good move.
You have done that adequately without me echoing it.It would be interesting, just for a change, to perhaps elaborate on what you find disturbing about the Fiat system in the current crisis.
Yes that is my view but I am certainly uneasy by the unprecedented CB interventions but unlike you I will never see bitcoin as a hedge against that as its price is based purely on speculation with no underlying support as a valid medium of exchange.would have thought you would be of the opposite view, the monetary system showing a magnificent ability to keep society and the economy at large relatively stable and free of panic - notwithstanding the real struggles of many people and businesses, toilet rolls are still plentiful.
The hedge is not based on a diversification of intrinsic value as neither have any intrinsic value.
is only a hedge against that in that it is completely unpredictable.
the John Kelleher point; do you agree with John?
We had Jamie Dimon of JPMorgan saying bitcoin is a fraud in 2017 - now one of his analysts is saying that bitcoin could give gold a run for its money and could 10x.
“Having a physical bearer asset only has so much utility in today’s world.”
Indeed it does, Rose. I guess it comes down to an evaluation of what represents value and utility.Well having only so much utility presumably trumps having no utility?!
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