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Gold has base value derived from its industrial, ornamental uses. But its trading value is much larger. Similarly Bitcoin has a base value in the cost of minin
by fonosip 13y ago
Gold has base value derived from its industrial, ornamental uses. But its trading value is much larger.
Similarly Bitcoin has a base value in the cost of mining 1 BTC. Right now it is around $800 or so.
Because of the competition in mining, asic chips development, and More's law. The cost of mining 1 BTC is going up exponentially.
- trothamel 13y agoWhile I think it's true that BTC won't fall below the cost of mining 1 BTC, that's not really saying anything. If BTC falls below the cost of mining people will stop mining and the network will adjust to the reduced difficulty, making the cost of mining drop. A problem is that if too few people mine, the network becomes easy to compromise. That's a problem that bitcoin has, and other currencies (and things like gold and silver) do not.
- eru 13y agoBitcoin prices will eventually fall below the cost of mining. Guaranteed. (Because eventually there will be no new bitcoins left to mine. So mining new bitcoins becomes infinitely expensive.)
- wlievens 13y agoCost does not equal value. One could rather say the cost of mining bitcoins is analogous to... the cost of mining gold, not the industrial value it represents.
- anonymoushn 13y agoI can't flip my miner into reverse and produce electricity while destroying BTC. The ability to convert $800 to 1 BTC by mining does nothing to keep the value of 1 BTC above $10.