4 ms·

> What value? $13K of value, and counting.

by cgmg 9y ago

prawn 9y ago
Now US$14k. ;)
sliverstorm 9y ago
Well, that's what it is today. But if BTC has no fundamental value, you might argue the price fluctuations are the price-discovery function of markets screaming "there is no correct price because there is no actual value", or something like that. All other fiat currencies have some fundamental value. In the past they were backed by gold. Most common today, you have to pay your taxes using them, which means for example everybody who owes US taxes needs USD.
- cgmg 9y ago
  > You might argue the price fluctuations are the price-discovery function of markets screaming "there is no correct price because there is no actual value" That makes no sense. If the market were really 'screaming there is no actual value', the price would be around $0, not $14K.
  - sliverstorm 9y ago
    It makes sense to me in a divide-by-zero sort of way. I'm not saying the market confidently believes bitcoin has no value. But such wild fluctuations might suggest that even after five years, the price discovery function still has no idea what bitcoin is worth. Now what does that mean? We can only speculate, of course. But to me I wonder if 1) there is no identified fundamental value today and 2) no one knows what the fundamental value will turn out to be
Havoc 9y ago
All of which is speculative & counting on a future where BTC usage will be more prevalent. And how exactly will it become more prevalent when it can't be used for transactions.
- nickonline 9y ago
  > All of which is speculative Just like Gold, coloured beads, or stocks > can't be used for transactions. Gold is a pain to use for transactions, and so are shares, but they still store value and people continue to speculate on their future worth?
  - Havoc 9y ago
    Gold is tangible and definitely has real world applications. Shares are backed a legal system tying them back to the real world corporation and it's assets. BTC in the absence of transactions has not tie-back to anything.
dclowd9901 9y ago
Here's a question: if a single bitcoin can be infinitely divided, does the price of a single bitcoin actually mean anything? If I spend $13 on .001 of a Bitcoin, I've, in essence, bought a $13k BTC, have I not, but without any real skin in that figure...
- Balero 9y ago
  No you've bought .001 as you state yourself. The component parts of a bitcoin can be allocated. (I think the minimal is 1 "satoshi") It's a bit like buying one pen out of a very large pack of pens. You don't own the pack if you only buy one.
  - thaumasiotes 9y ago
    I think dclowd9901 was getting at a different question, which I'll present by analogy: I incorporate with 1,000,000,000 shares of stock. I sell 20 shares of stock to my good friend for $50. Is my company now worth 2.5 billion dollars? The answer to this worry is that the value of the good (bitcoins or stock shares, or anything else) is reliable in proportion to the total trading volume, not in proportion to the amount one person typically buys in a single transaction, or even the amount that one eccentric rich guy bought that one time when he was drunk.
    - dclowd9901 9y ago
      Thank you; you explained this much much better than I did. But your answer, I don't think is sufficient. Just because total trading volume supports the figure doesn't mean that it's valid. If I've invested a small amount of money into the currency (as I suspect most of its buyers have), I've essentially bought into an insane price for little or no "skin". In other words, the price could be high simply because there's no risk to it being that high for most of its investors.
      - thaumasiotes 9y ago
        By "total trading volume" I meant to total across buyers and sellers, not to total across history. Going back to the analogy, suppose I incorporate with 1,000,000,000 shares of stock and sell 20 shares to my friend for $50. He forgets about them, because after all the whole thing was just a joke. My company has a market capitalization of $2.5 billion, of which I own $2,499,999,950. That paper wealth is worthless, because the daily (or whatever) trading volume of stock in the company is $0, suggesting that if I tried to realize my immense wealth, I wouldn't be able to. Suppose instead that I sold 500,000 shares to my friends for $50 (total - 10,000 shares to the dollar), and that they sold the shares on to the public, and that now 10,000 shares trade per day at $2.50 per share. My company has the same market capitalization of $2.5 billion. I own $2,498,750,000 of that (plus $50 of cash!) -- not as much as I had in the first example, but still pretty good. Just as in the first example, the daily trading volume suggests that this wealth is mostly illusory -- the tiny $25k / day market will be quickly overwhelmed if I try to sell $1 million worth of stock, and the trading price will plummet. However, unlike in the first example, my wealth is not entirely illusory. If I try to pick up an extra $5,000, I'll probably have to sell more than 2,000 shares of stock, but the trading volume can support that amount. As long as there is active trading at a price, that price is real. There is no such concept as trading enough of a bitcoin for the price of "a bitcoin" to be "real"; what matters is whether you're trading enough of the market to move the price single-handedly. If the amount that you want to trade is much less than trading volume, you can more or less rely on the market price. If you want to trade an amount which is noticeable relative to trading volume, you're going to change the market price. Put another way, if bitcoin trade volume is 100,000 bitcoins per day, you can sell one bitcoin at the market price even if nobody ever buys or sells more than .00001 bitcoin in a single transaction.
oculusthrift 9y ago
enron had a lot of 'value' too.

> What value? $13K of value, and counting.

by cgmg 9y ago

> What value? $13K of value, and counting.

prawn 9y ago

Now US$14k. ;)

sliverstorm 9y ago

Well, that's what it is today. But if BTC has no fundamental value, you might argue the price fluctuations are the price-discovery function of markets screaming "there is no correct price because there is no actual value", or something like that. All other fiat currencies have some fundamental value. In the past they were backed by gold. Most common today, you have to pay your taxes using them, which means for example everybody who owes US taxes needs USD.

cgmg 9y ago
> You might argue the price fluctuations are the price-discovery function of markets screaming "there is no correct price because there is no actual value" That makes no sense. If the market were really 'screaming there is no actual value', the price would be around $0, not $14K.
- sliverstorm 9y ago
  It makes sense to me in a divide-by-zero sort of way. I'm not saying the market confidently believes bitcoin has no value. But such wild fluctuations might suggest that even after five years, the price discovery function still has no idea what bitcoin is worth. Now what does that mean? We can only speculate, of course. But to me I wonder if 1) there is no identified fundamental value today and 2) no one knows what the fundamental value will turn out to be

Havoc 9y ago

All of which is speculative & counting on a future where BTC usage will be more prevalent. And how exactly will it become more prevalent when it can't be used for transactions.

nickonline 9y ago
> All of which is speculative Just like Gold, coloured beads, or stocks > can't be used for transactions. Gold is a pain to use for transactions, and so are shares, but they still store value and people continue to speculate on their future worth?
- Havoc 9y ago
  Gold is tangible and definitely has real world applications. Shares are backed a legal system tying them back to the real world corporation and it's assets. BTC in the absence of transactions has not tie-back to anything.

dclowd9901 9y ago

Here's a question: if a single bitcoin can be infinitely divided, does the price of a single bitcoin actually mean anything? If I spend $13 on .001 of a Bitcoin, I've, in essence, bought a $13k BTC, have I not, but without any real skin in that figure...

Balero 9y ago
No you've bought .001 as you state yourself. The component parts of a bitcoin can be allocated. (I think the minimal is 1 "satoshi") It's a bit like buying one pen out of a very large pack of pens. You don't own the pack if you only buy one.
- thaumasiotes 9y ago
  I think dclowd9901 was getting at a different question, which I'll present by analogy: I incorporate with 1,000,000,000 shares of stock. I sell 20 shares of stock to my good friend for $50. Is my company now worth 2.5 billion dollars? The answer to this worry is that the value of the good (bitcoins or stock shares, or anything else) is reliable in proportion to the total trading volume, not in proportion to the amount one person typically buys in a single transaction, or even the amount that one eccentric rich guy bought that one time when he was drunk.
  - dclowd9901 9y ago
    Thank you; you explained this much much better than I did. But your answer, I don't think is sufficient. Just because total trading volume supports the figure doesn't mean that it's valid. If I've invested a small amount of money into the currency (as I suspect most of its buyers have), I've essentially bought into an insane price for little or no "skin". In other words, the price could be high simply because there's no risk to it being that high for most of its investors.
    - thaumasiotes 9y ago
      By "total trading volume" I meant to total across buyers and sellers, not to total across history. Going back to the analogy, suppose I incorporate with 1,000,000,000 shares of stock and sell 20 shares to my friend for $50. He forgets about them, because after all the whole thing was just a joke. My company has a market capitalization of $2.5 billion, of which I own $2,499,999,950. That paper wealth is worthless, because the daily (or whatever) trading volume of stock in the company is $0, suggesting that if I tried to realize my immense wealth, I wouldn't be able to. Suppose instead that I sold 500,000 shares to my friends for $50 (total - 10,000 shares to the dollar), and that they sold the shares on to the public, and that now 10,000 shares trade per day at $2.50 per share. My company has the same market capitalization of $2.5 billion. I own $2,498,750,000 of that (plus $50 of cash!) -- not as much as I had in the first example, but still pretty good. Just as in the first example, the daily trading volume suggests that this wealth is mostly illusory -- the tiny $25k / day market will be quickly overwhelmed if I try to sell $1 million worth of stock, and the trading price will plummet. However, unlike in the first example, my wealth is not entirely illusory. If I try to pick up an extra $5,000, I'll probably have to sell more than 2,000 shares of stock, but the trading volume can support that amount. As long as there is active trading at a price, that price is real. There is no such concept as trading enough of a bitcoin for the price of "a bitcoin" to be "real"; what matters is whether you're trading enough of the market to move the price single-handedly. If the amount that you want to trade is much less than trading volume, you can more or less rely on the market price. If you want to trade an amount which is noticeable relative to trading volume, you're going to change the market price. Put another way, if bitcoin trade volume is 100,000 bitcoins per day, you can sell one bitcoin at the market price even if nobody ever buys or sells more than .00001 bitcoin in a single transaction.

oculusthrift 9y ago

enron had a lot of 'value' too.