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The maximum value is approximately the cost of a machine for mining it, because if you have that amount of money, you could instead buy the machine and use it t
by dmoney 14y ago
The maximum value is approximately the cost of a machine for mining it, because if you have that amount of money, you could instead buy the machine and use it to mine more than one bitcoin. The minimum value is probably some function of its reliability. If hardware costs continue to fall, and bitcoins become more useful (i.e. people gain confidence in its security and reliability), the value should become more stable.
- DennisP 14y agoOver time, the maximum value can go up a lot more than that. You buy that machine which can profitably mine bitcoin. Lots of other people do the same. The bitcoin network then adjusts the difficulty, so that the same number of coins are created per hour despite the increased computation. Now the cost of the machine you need to mine that bitcoin has gone up. These difficulty adjustments are why people used to mine thousands of bitcoins with CPUs, then had to switch to GPUs, and now are buying custom-built ASICs. Because of the difficulty adjustment, the total cost of the machines and electricity mining coins is a function of the cost of the coins, not the other way around.