9 ms·

Most interesting for me: They estimate the fair long-term value to be around 1.300 USD - indicating no more great rises will come.

by netrus 13y ago

1qaz2wsx3edc 13y ago
Well, I have a feeling it will go higher. I've only been paying attention recently, but as I understand it, 30-40% of generated coins have been inactive since 2009-2010. If the market cap is 15bn, then we can assume 11538461.538 coins exist, but if say 8076923.076 coins (70%) then the value of a coin is 1857.14USD or the market cap is closer to 10b. Which is it?
- rebelidealist 13y ago
  If most of merchants on the internet are willing to accept bitcoins, then a bitcoin can be worth 100x more than $1,300. It is a value of a finite resource like the value of a diamond.
  - ekianjo 13y ago
    Yeah, if Steam or even, let's dream a second, Amazon ever accepts Bitcoins, this will make the utility of Bitcoin explode, and its value should go up as a direct result.
    - aianus 13y ago
      You can spend all the bitcoins you want on Amazon right now and with 3% cashback to boot by going through gyft.com Maybe the media exposure would be great if Amazon accepted it directly but it wouldn't really change the utility of Bitcoin.
      - ekianjo 13y ago
        That's like saying "You can Convert your Gold Bar in Dollars and shop on Amazon so that doesn't change the utility of Gold" . This is wrong. If tomorrow my convenience store accepts Gold coins, of course it increases its utility because it removes time, effort, and additional steps (i.e. barriers) to use it.
        zodiac 13y ago
        Yeah the utility would increase, but I think his point was that it wouldn't "explode". I think it's more accurate to say that Amazon accepting BTC would place a minimum value on BTC, assuming Amazon didn't peg the price of items in BTC to the price some other currency, for example if they offered to sell the Nexus 7 for 0.5 BTC, then 1 BTC would be worth at least USD600.
        ekianjo 13y ago
        The reason why I said it would explode is because right now Bitcoin has virtually no utility on the market, apart from niche usage (HB, Namecheap...). As for the value of BTC, nothing would prevent Amazon to have a fixed price in USD and a floating/real-time adjusted price in BTC (that's what merchants using BTC do anyway currently).
        aianus 13y ago
        The time, effort, and additional steps in this case are: a) negligible (you have to scan a QR code and then copy/paste the gift card code instead of typing in your CC) b) they pay you for it!
    - sgk284 13y ago
      If Amazon ever accepts bitcoin, you're effectively allowing Amazon to track all of your non-Amazon bitcoin spending too (via the public ledger) since they'll know your address and/or name. You'd have to go through a third party to obfuscate the bitcoin's source wallet, which I suspect most people won't do (if mass adoption of bitcoin occurs). The moment a physical address / name are associated with a wallet, any spending from that wallet can be tracked back to you forever. If a substantial number of people are using bitcoin on Amazon, then effectively Amazon will be able to track what and where all of those people are spending their money. Multiply this across all retailers, paycheck services, government institutions (e.g. the IRS), etc... and bitcoin effectively allows many corporations and governments to track any of your spending and (perhaps more importantly) wealth associated with bitcoin. This, I suspect, will ultimately limit bitcoin's adoption.
      - ekianjo 13y ago
        Who says you are limited to having a single wallet anyway ? As far as I know nothing prevents you from having 10 of them. It's not different from having separate credit cards, which is something people already do nowadays. As for the tracking of your spending, it's already happening when you have a credit card. I don't know if Amazon know about your spending outside of their marketplace, but Mastercard, Visa and others certainly do, and I'm not sure whether they keep that data entirely private or not - Nothing would stop the government to ask them directly for your data, for example.
        sgk284 13y ago
        For sure, you could have multiple wallets. My point is, the second you spend from one wallet, that wallet may be forever "tainted". Admittedly, governments can already request credit card data, under court supervision (ideally... unfortunately, it seems with an exception for the NSA), but with bitcoin you are voluntarily placing this information on public record. If you ever want to buy something with bitcoin, the retailer can immediately look up how much money you're worth (or at least that particular wallet) when you give them your wallet address. They can also immediately check if you've spent any money (and how much) with their competitors' known public wallets. There will likely be aggregation services that will associate multiple wallets that are connected with a common address (just like modern day data collection agencies) and sell this data to retailers. Advertisers will know exactly (or at least a lower bound) of how much you're worth and where you like to spend your money. If bitcoin gets traction, it will effectively ruin any financial privacy we have remaining. It's one thing for a government to have access to this, it's a whole other world of problems when everyone from my neighbor to my cable company has access to it.
    - nly 13y ago
      I don't see it. There's an added step (exchange) for anyone wishing to transact in Bitcoin compared to just putting their debit/credit card details in to such already respectable sites... and, if anything, you want more reversibility when dealing with sites you don't trust so much, not less. For this reason I don't see Bitcoin exploding based on its utility as a payment platform, at least on-line. Fiat NFC mobile payments can be made just as convenient on the high street as well. IMHO Bitcoins success with the everyman really hinges on being a super convenient but secure alternative for casual payments.
  - netrus 13y ago
    It's not acceptance. If Amazon offers Bitcoin payment next to Paypal tomorrow, not much will change. The question is: When will prices of goods become stable in Bitcoin? Imagine a web agency that decided earlier this year it will pay its designers 5k USD + 10 Bitcoins a month (as a nice perk). That agency would be bankrupt by now :)
    - ekianjo 13y ago
      You don't need to have prices of goods stable in Bitcoin - they can be adjusted in real time vs a fixed value in dollars. You are not paid in Bitcoins anyway. Bitcoin is just a way of exchanging your dollars/something else to them and make payments online without fees. With bitcoin you can, in theory, get rid of an expensive credit card, for example.
      - knowaveragejoe 13y ago
        But isn't what really matters whether Amazon turns around and uses those bitcoins as bitcoins or converts them to USD? What benefit would the average consumer get from turning their USD into bitcoin to spend on amazon?
        ekianjo 13y ago
        As mentioned in another reply, this means you can get rid of a mastercard or visa while shopping goes on as usual.
        knowaveragejoe 13y ago
        And what does that do for the average person? Marginally cheaper prices? Does that offset the steep learning curve and the fact that you're effectively on your own if something goes wrong? Other players(or perhaps even Amazon themselves) can step in to fill that gap, but then you're back at where we are today. Noone has yet made a convincing argument for why bitcoin-as-a-currency will take off in any meaningful way beyond niche markets serving niche customers without the addendum that re-centralization will have to occur. But more importantly, what matters is whether the manufacturers and distributors accept and use bitcoin amongst themselves all the way along the resource chain. If Amazon immediately turns around and converts the btc revenue to usd in order to pay for inventory, then what point is there in using btc in the first place? Right now it's a niche group of people using bitcoin to actually buy things(at their own expense at that), and without a doubt the retailer is immediately converting that revenue to usd.
  - olouv 13y ago
    Since diamonds can easily be industrially synthesized, it's not a finite resource nor a good example for bitcoin, the usual analogy is digital gold.
    - thaumasiotes 13y ago
      Diamonds can be synthesized by well-understood processes, but "easily" might be pushing things a little; synthetic diamonds aren't (just) expensive because of the artificially high price for natural ones.
  - simonh 13y ago
    Comparing the market for btc to the market for diamonds is not flattering for btc. The diamond market is thoroughly rigged. Try selling your second hand diamonds and see what you get for them.
  - nl 13y ago
    I like this approach of setting a ceiling on the potential value: The world GDP is somewhere around 50 Trillion Dollars ($50 x 10^12). Bitcoin is designed so that there will never be more than 21 Million in existence. Let’s say that there is a possibility that Bitcoin could one day constitute 1% of world transactions. (I could envision the percentage being much higher, or 0%, but 1% is a good place to start). If this were the case, then ($50T x 1%) / 21M BTC = $23,809.52 / BTC (Again, this isn’t a scientific treatment of the valuation of a currency, but a back-of-the-envelope approach.) So we could see how the price of a single Bitcoin could increase from its current value of ~ $550.00 to $23,809.52. What is the likelihood of Bitcoin succeeding in being the currency used in 1% of world transactions? Let’s say it’s 10%. (Again, exact value not important.) You get a risk-adjusted value of $2,3809.52. https://medium.com/i-m-h-o/468e11b9f95 https://medium.com/i-m-h-o/468e11b9f95

Most interesting for me: They estimate the fair long-term value to be around 1.300 USD - indicating no more great rises will come.

by netrus 13y ago

Most interesting for me: They estimate the fair long-term value to be around 1.300 USD - indicating no more great rises will come.

1qaz2wsx3edc 13y ago

Well, I have a feeling it will go higher. I've only been paying attention recently, but as I understand it, 30-40% of generated coins have been inactive since 2009-2010. If the market cap is 15bn, then we can assume 11538461.538 coins exist, but if say 8076923.076 coins (70%) then the value of a coin is 1857.14USD or the market cap is closer to 10b. Which is it?

rebelidealist 13y ago
If most of merchants on the internet are willing to accept bitcoins, then a bitcoin can be worth 100x more than $1,300. It is a value of a finite resource like the value of a diamond.
- ekianjo 13y ago
  Yeah, if Steam or even, let's dream a second, Amazon ever accepts Bitcoins, this will make the utility of Bitcoin explode, and its value should go up as a direct result.
  - aianus 13y ago
    You can spend all the bitcoins you want on Amazon right now and with 3% cashback to boot by going through gyft.com Maybe the media exposure would be great if Amazon accepted it directly but it wouldn't really change the utility of Bitcoin.
    - ekianjo 13y ago
      That's like saying "You can Convert your Gold Bar in Dollars and shop on Amazon so that doesn't change the utility of Gold" . This is wrong. If tomorrow my convenience store accepts Gold coins, of course it increases its utility because it removes time, effort, and additional steps (i.e. barriers) to use it.
      - zodiac 13y ago
        Yeah the utility would increase, but I think his point was that it wouldn't "explode". I think it's more accurate to say that Amazon accepting BTC would place a minimum value on BTC, assuming Amazon didn't peg the price of items in BTC to the price some other currency, for example if they offered to sell the Nexus 7 for 0.5 BTC, then 1 BTC would be worth at least USD600.
        ekianjo 13y ago
        The reason why I said it would explode is because right now Bitcoin has virtually no utility on the market, apart from niche usage (HB, Namecheap...). As for the value of BTC, nothing would prevent Amazon to have a fixed price in USD and a floating/real-time adjusted price in BTC (that's what merchants using BTC do anyway currently).
      - aianus 13y ago
        The time, effort, and additional steps in this case are: a) negligible (you have to scan a QR code and then copy/paste the gift card code instead of typing in your CC) b) they pay you for it!
  - sgk284 13y ago
    If Amazon ever accepts bitcoin, you're effectively allowing Amazon to track all of your non-Amazon bitcoin spending too (via the public ledger) since they'll know your address and/or name. You'd have to go through a third party to obfuscate the bitcoin's source wallet, which I suspect most people won't do (if mass adoption of bitcoin occurs). The moment a physical address / name are associated with a wallet, any spending from that wallet can be tracked back to you forever. If a substantial number of people are using bitcoin on Amazon, then effectively Amazon will be able to track what and where all of those people are spending their money. Multiply this across all retailers, paycheck services, government institutions (e.g. the IRS), etc... and bitcoin effectively allows many corporations and governments to track any of your spending and (perhaps more importantly) wealth associated with bitcoin. This, I suspect, will ultimately limit bitcoin's adoption.
    - ekianjo 13y ago
      Who says you are limited to having a single wallet anyway ? As far as I know nothing prevents you from having 10 of them. It's not different from having separate credit cards, which is something people already do nowadays. As for the tracking of your spending, it's already happening when you have a credit card. I don't know if Amazon know about your spending outside of their marketplace, but Mastercard, Visa and others certainly do, and I'm not sure whether they keep that data entirely private or not - Nothing would stop the government to ask them directly for your data, for example.
      - sgk284 13y ago
        For sure, you could have multiple wallets. My point is, the second you spend from one wallet, that wallet may be forever "tainted". Admittedly, governments can already request credit card data, under court supervision (ideally... unfortunately, it seems with an exception for the NSA), but with bitcoin you are voluntarily placing this information on public record. If you ever want to buy something with bitcoin, the retailer can immediately look up how much money you're worth (or at least that particular wallet) when you give them your wallet address. They can also immediately check if you've spent any money (and how much) with their competitors' known public wallets. There will likely be aggregation services that will associate multiple wallets that are connected with a common address (just like modern day data collection agencies) and sell this data to retailers. Advertisers will know exactly (or at least a lower bound) of how much you're worth and where you like to spend your money. If bitcoin gets traction, it will effectively ruin any financial privacy we have remaining. It's one thing for a government to have access to this, it's a whole other world of problems when everyone from my neighbor to my cable company has access to it.
  - nly 13y ago
    I don't see it. There's an added step (exchange) for anyone wishing to transact in Bitcoin compared to just putting their debit/credit card details in to such already respectable sites... and, if anything, you want more reversibility when dealing with sites you don't trust so much, not less. For this reason I don't see Bitcoin exploding based on its utility as a payment platform, at least on-line. Fiat NFC mobile payments can be made just as convenient on the high street as well. IMHO Bitcoins success with the everyman really hinges on being a super convenient but secure alternative for casual payments.
- netrus 13y ago
  It's not acceptance. If Amazon offers Bitcoin payment next to Paypal tomorrow, not much will change. The question is: When will prices of goods become stable in Bitcoin? Imagine a web agency that decided earlier this year it will pay its designers 5k USD + 10 Bitcoins a month (as a nice perk). That agency would be bankrupt by now :)
  - ekianjo 13y ago
    You don't need to have prices of goods stable in Bitcoin - they can be adjusted in real time vs a fixed value in dollars. You are not paid in Bitcoins anyway. Bitcoin is just a way of exchanging your dollars/something else to them and make payments online without fees. With bitcoin you can, in theory, get rid of an expensive credit card, for example.
    - knowaveragejoe 13y ago
      But isn't what really matters whether Amazon turns around and uses those bitcoins as bitcoins or converts them to USD? What benefit would the average consumer get from turning their USD into bitcoin to spend on amazon?
      - ekianjo 13y ago
        As mentioned in another reply, this means you can get rid of a mastercard or visa while shopping goes on as usual.
        knowaveragejoe 13y ago
        And what does that do for the average person? Marginally cheaper prices? Does that offset the steep learning curve and the fact that you're effectively on your own if something goes wrong? Other players(or perhaps even Amazon themselves) can step in to fill that gap, but then you're back at where we are today. Noone has yet made a convincing argument for why bitcoin-as-a-currency will take off in any meaningful way beyond niche markets serving niche customers without the addendum that re-centralization will have to occur. But more importantly, what matters is whether the manufacturers and distributors accept and use bitcoin amongst themselves all the way along the resource chain. If Amazon immediately turns around and converts the btc revenue to usd in order to pay for inventory, then what point is there in using btc in the first place? Right now it's a niche group of people using bitcoin to actually buy things(at their own expense at that), and without a doubt the retailer is immediately converting that revenue to usd.
- olouv 13y ago
  Since diamonds can easily be industrially synthesized, it's not a finite resource nor a good example for bitcoin, the usual analogy is digital gold.
  - thaumasiotes 13y ago
    Diamonds can be synthesized by well-understood processes, but "easily" might be pushing things a little; synthetic diamonds aren't (just) expensive because of the artificially high price for natural ones.
- simonh 13y ago
  Comparing the market for btc to the market for diamonds is not flattering for btc. The diamond market is thoroughly rigged. Try selling your second hand diamonds and see what you get for them.
- nl 13y ago
  I like this approach of setting a ceiling on the potential value: The world GDP is somewhere around 50 Trillion Dollars ($50 x 10^12). Bitcoin is designed so that there will never be more than 21 Million in existence. Let’s say that there is a possibility that Bitcoin could one day constitute 1% of world transactions. (I could envision the percentage being much higher, or 0%, but 1% is a good place to start). If this were the case, then ($50T x 1%) / 21M BTC = $23,809.52 / BTC (Again, this isn’t a scientific treatment of the valuation of a currency, but a back-of-the-envelope approach.) So we could see how the price of a single Bitcoin could increase from its current value of ~ $550.00 to $23,809.52. What is the likelihood of Bitcoin succeeding in being the currency used in 1% of world transactions? Let’s say it’s 10%. (Again, exact value not important.) You get a risk-adjusted value of $2,3809.52. https://medium.com/i-m-h-o/468e11b9f95 https://medium.com/i-m-h-o/468e11b9f95