7 ms·
> With other asset classes, there's some real-world value backing the minimum price 90% of gold's price is investment/speculation, only 10% has real-world usag
by 21 9y ago
> With other asset classes, there's some real-world value backing the minimum price
90% of gold's price is investment/speculation, only 10% has real-world usage backing.
I'm not sure why you discount intangibles. A lot of Apple/Adidas value is based just on their perceived brand.
Bitcoin has the same thing, an intangible brand value which keeps on rising based on more people getting confortable with it.
- nikanj 9y agoI think we are saying the same thing. Apple/Adidas might have inflated prices today, but they're also creating actual products, selling for actual money, in actual stores. That's the key difference. Bitcoin is as valuable as Beanie Babies. Those too had a perceived brand value, which was supposed to keep on rising forever.
- 21 9y agoThe fact that you or I don't value an asset doesn't mean that that's asset value must therefore be zero. I wouldn't pay 5 million dollars for Michal Jackson's glove, but some people did. That in itself makes it more valuable that let's say it's cost of manufacture. And it's valuation is rational, but in a more complicated kind of rationality than the simple ones presented in economics 101 books. I think you are a person which believes that this is a correct approach: https://en.wikipedia.org/wiki/Homo_economicus https://en.wikipedia.org/wiki/Homo_economicus I don't
- nikanj 9y agoI believe in the god of P/E. If you’re unable to find a greater fool to buy the Michael Jackson glove, how long do you have to hold it before the income covers purchasing costs? For Apple stock, the number might be high, but it is not infite. For Bitcoin, there’s _no_ annual income from holding it. Intangibles can still have substantial real value. For example, the Jackson record copyrights - while completely immaterial - still bring a very nice chunk of revenue every year.
- deleted 9y ago[deleted]
- hndamien 9y agoBitcoin creates the same value as VISA, Paypal and Banbks as a means of transferring money. If transferring money without these middle men is as valuable as a beanie baby, then please explain the similar utility created? It is also a fantastic means for storing wealth and moving it without qeustion, but I'll admit that the volatility makes this use case substantially less useful than the payment network which is the true value, regardless of price (so long as it is non-zero).
- nikanj 9y agoHolders of bitcoin do not get value from these transactions. The transaction fees go to the miners, not to people HODLing bitcoin.
- mrhappyunhappy 9y agoEarly adopters are speculating on future value while eventual adopters May use it for its intended purpose.
- hndamien 9y agoEarly adopters think it is sound money.
- hndamien 9y agoThe transaction fees are the cost of the transaction, not the value created.
- erikpukinskis 9y agoHolders of bitcoin provide stability for people doing short term trades (buying coins to send Grandma in Iran). Traders provide the liquidity. Grandma provides the cash to pay off both.
- shrimpx 9y agoBitcoin is precisely like beanie babies that can be transfered electronically without middle men.
- rickycook 9y agobecause i think his point is that a hedge needs to have “utility value” that’s more than just “the economy says” that being said, if golds utility value is only 10% of what people pay for it today then maybe that particular investment needs re-evaluation :p *edit: changed “tangible” value to “utility” value, as that’s more descriptive
- shkkmo 9y agoMy father was a geologist who spent much of his life doing exploration for gold mining companies. He was always extremely skeptical of gold as a "safe" place to put your money given how much it's pretty extreme price volatility had created massive swings in his industry.
- shrimpx 9y agoOne kind of "tinfoil hat" argument in favor of gold is that it can easily become an exchange medium in case of infrastructure collapse, I.e. banks and the internet don't work anymore. In that case its value can be immensely larger than what you're paying for it now.
- Clubber 9y ago>90% of gold's price is investment/speculation, only 10% has real-world usage backing. I'm not sure I would even give it 10%, but yes, Bitcoin is a lot like gold in that regard. It's not an overly useful metal and it's primary usefulness is to look pretty. Apple/Adidas's stock price is based on their income statement plus speculation. I would guess the speculation could -/+ the dollar value by 20% or so, but the rest is solidly based on the business. I don't personally discount intangibles, but they are tricky because they are harder to predict and can be fleeting. Since Bitcoin is mostly speculative (100%?), there's a lot of things that push it down and it's bottom would be effectively $0.
- shrimpx 9y agoBitcoins can be sent across the internet without middle men. As long as it maps to market value, Bitcoin is digital value transfer without middle men. Do you really believe this is valueless?
- Clubber 9y agoSo can text files. The distributed ledger algorithm has intrinsic value as an algorithm, but not so much the coins. If retailers and banks and other institutions continue to accept them, they do have some value, but that can also be fleeting. Until a major government backs it or something, it's value can go away in a poof.
- erikpukinskis 9y agoSure, sometimes a text file is the best way to send money over the internet, although I have to stretch to think of those scenarios. Bitcoin is the best way to send money in a lot of scenarios. Visa is the best in a lot of scenarios, Venmo is the best in a lot of scenarios, sometimes a check is best, but there are a lot of scenarios where that won’t work. Bitcoins use value comes from the number of those scenarios.