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Bitcoin now in the top 10 of most valuable assets, replaces Berkshire Hathaway

paulpauper 3y ago
stocks trade at multiples and represent fractional ownership of companies. commodities are neither. not an apples to apples comparison. I would sure not be buying now. way too volatile
- smt88 3y ago
  I'd also wager that Bitcoin's market cap is a lot softer once a selloff starts. Apple stock has a high floor because, as you mention, it represents legally-enforced ownership of a profit-generating entity. Its price is boosted by speculation without being 100% speculative. Bitcoin, on the other hand, has no intrinsic value. Even if used widely as a currency, its value has a floor near $0.
  - npoc 3y ago
    There's no such thing as intrinsic value
    - smt88 3y ago
      If you sincerely think that, then you're redefining "intrinsic" in a way that no one else uses it. A banana has intrinsic value because you can eat it. Iron has intrinsic value because you can make things with it. Bitcoin has no intrinsic value because it isn't an ingredient for anything valuable, it doesn't give you a legal right to anything, and you have no guarantee you can use it as currency.
      - npoc 3y ago
        The way I see it used makes no sense. Does paper currency have any intrinsic value?
        smt88 3y ago
        No, it doesn't, unless you think someone would buy it to use as wallpaper or something. That's why Confederate money immediately became worthless after the Civil War ended.
        npoc 3y ago
        Okay, a great setup for an example of what I mean. Before the civil war ended, I could use the banana as food (which means it has intrinsic value), and I could use the paper money to represent work I'd done which is extremely useful, so useful in fact that I could use it to later buy the banana. Passage of time occurred, the war is over and now the money is worthless/rotten and so is the banana.
        smt88 3y ago
        Intrinsic value changes over time and will eventually go to zero for any object. That doesn't mean it was always zero, not unlike the concept of depreciation.
        npoc 3y ago
        Okay. The other main point I was trying to make is that both the banana and the money have utility (one for eating and the other for saving/purchasing) but for some reason only the banana has intrinsic value? It makes no sense to me. Is it that everything that's useful, with the exception of money, has intrinsic value? Also how do you measure/quantify the intrinsic value? Is it derived from supply vs demand like economic value?
        smt88 3y ago
        > the other for saving/purchasing This is not what people mean by intrinsic. You can't spend the dollar just because it's a dollar. It requires a huge amount of social structure and (honestly) faith for it to be spendable. You couldn't "use" a dollar if you were the last human on earth. > Is it that everything that's useful, with the exception of money, has intrinsic value? Fiat money, collectibles (like baseball cards), poker chips at a casino, gift cards, credit cards, checks... regardless of how useful they are right now for someone, they have no intrinsic value. Their value is imbued on them by the context of society. > Also how do you measure/quantify the intrinsic value? Is it derived from supply vs demand like economic value? Mostly you don't. It's more of a binary concept. There are situations where companies have to do it, like if they're looking at bankruptcy and need to liquidate assets. For example, if you have 500 tractors and you have no idea how well any of them run, you can calculate the lowest-possible value for the tractor (which would essentially be its intrinsic value) by looking at: - how much is the metal worth? - what are the costs of finding a buyer? - what will a buyer pay for the metal? (Assuming the tractor doesn't operate at all.)
- adastra22 3y ago
  Also a huge amount of bitcoin (maybe up to 25%?) is immobile and likely lost. Including it in market cap calculations is inaccurate at best.
  - andirk 3y ago
    The immobility of many coins makes the rest of them _more_ valuable, not less. Calculating worth of a stock or person is usually pretty inaccurate because it assumes the 1st and last piece of the asset are sold at the same amount, but if something's worth is based heavily on its scarcity, that causes the value to taper toward zero when sold off entirely.
    - adastra22 3y ago
      That’s not a contradiction of what I said.
genericacct 3y ago
I'd love to see a BTC/EGGprice ratio
- beardog 3y ago
  Related: https://fredblog.stlouisfed.org/2022/06/buying-eggs-with-bitcoins/ https://fredblog.stlouisfed.org/2022/06/buying-eggs-with-bit...
JumpCrisscross 3y ago
The concept of market capitalisation doesn't make sense for an asset without meaning in its aggregate. If you own every Bitcoin, it's worthless. Quite different from owning a whole company or all the traded copper. (The proper term is monetary base.)
- npoc 3y ago
  It's how most of the crypto market fools people. Some guy clones bitcoin in his basement, increases the block size/rate (or something stupid like that to use as a sales pitch), sticks a picture of a moon on it, pre-mines 99.99% and then the next day puts the remaining 0.01% on the market, it's bid up by his friends and bingo, "market cap" of $100B in 24hrs.

stocks trade at multiples and represent fractional ownership of companies. commodities are neither. not an apples to apples comparison. I would sure not be buying now. way too volatile

smt88 3y ago
I'd also wager that Bitcoin's market cap is a lot softer once a selloff starts. Apple stock has a high floor because, as you mention, it represents legally-enforced ownership of a profit-generating entity. Its price is boosted by speculation without being 100% speculative. Bitcoin, on the other hand, has no intrinsic value. Even if used widely as a currency, its value has a floor near $0.
- npoc 3y ago
  There's no such thing as intrinsic value
  - smt88 3y ago
    If you sincerely think that, then you're redefining "intrinsic" in a way that no one else uses it. A banana has intrinsic value because you can eat it. Iron has intrinsic value because you can make things with it. Bitcoin has no intrinsic value because it isn't an ingredient for anything valuable, it doesn't give you a legal right to anything, and you have no guarantee you can use it as currency.
    - npoc 3y ago
      The way I see it used makes no sense. Does paper currency have any intrinsic value?
      - smt88 3y ago
        No, it doesn't, unless you think someone would buy it to use as wallpaper or something. That's why Confederate money immediately became worthless after the Civil War ended.
        npoc 3y ago
        Okay, a great setup for an example of what I mean. Before the civil war ended, I could use the banana as food (which means it has intrinsic value), and I could use the paper money to represent work I'd done which is extremely useful, so useful in fact that I could use it to later buy the banana. Passage of time occurred, the war is over and now the money is worthless/rotten and so is the banana.
        smt88 3y ago
        Intrinsic value changes over time and will eventually go to zero for any object. That doesn't mean it was always zero, not unlike the concept of depreciation.
        npoc 3y ago
        Okay. The other main point I was trying to make is that both the banana and the money have utility (one for eating and the other for saving/purchasing) but for some reason only the banana has intrinsic value? It makes no sense to me. Is it that everything that's useful, with the exception of money, has intrinsic value? Also how do you measure/quantify the intrinsic value? Is it derived from supply vs demand like economic value?
        smt88 3y ago
        > the other for saving/purchasing This is not what people mean by intrinsic. You can't spend the dollar just because it's a dollar. It requires a huge amount of social structure and (honestly) faith for it to be spendable. You couldn't "use" a dollar if you were the last human on earth. > Is it that everything that's useful, with the exception of money, has intrinsic value? Fiat money, collectibles (like baseball cards), poker chips at a casino, gift cards, credit cards, checks... regardless of how useful they are right now for someone, they have no intrinsic value. Their value is imbued on them by the context of society. > Also how do you measure/quantify the intrinsic value? Is it derived from supply vs demand like economic value? Mostly you don't. It's more of a binary concept. There are situations where companies have to do it, like if they're looking at bankruptcy and need to liquidate assets. For example, if you have 500 tractors and you have no idea how well any of them run, you can calculate the lowest-possible value for the tractor (which would essentially be its intrinsic value) by looking at: - how much is the metal worth? - what are the costs of finding a buyer? - what will a buyer pay for the metal? (Assuming the tractor doesn't operate at all.)
adastra22 3y ago
Also a huge amount of bitcoin (maybe up to 25%?) is immobile and likely lost. Including it in market cap calculations is inaccurate at best.
- andirk 3y ago
  The immobility of many coins makes the rest of them _more_ valuable, not less. Calculating worth of a stock or person is usually pretty inaccurate because it assumes the 1st and last piece of the asset are sold at the same amount, but if something's worth is based heavily on its scarcity, that causes the value to taper toward zero when sold off entirely.
  - adastra22 3y ago
    That’s not a contradiction of what I said.

genericacct 3y ago

I'd love to see a BTC/EGGprice ratio

beardog 3y ago
Related: https://fredblog.stlouisfed.org/2022/06/buying-eggs-with-bitcoins/ https://fredblog.stlouisfed.org/2022/06/buying-eggs-with-bit...

JumpCrisscross 3y ago

The concept of market capitalisation doesn't make sense for an asset without meaning in its aggregate. If you own every Bitcoin, it's worthless. Quite different from owning a whole company or all the traded copper. (The proper term is monetary base.)

npoc 3y ago
It's how most of the crypto market fools people. Some guy clones bitcoin in his basement, increases the block size/rate (or something stupid like that to use as a sales pitch), sticks a picture of a moon on it, pre-mines 99.99% and then the next day puts the remaining 0.01% on the market, it's bid up by his friends and bingo, "market cap" of $100B in 24hrs.