Hacker News Reader

Comment by elif | Hacker News Reader

yeah there are speculation bubbles, which correct and if you are trying to profit off of the waves you can get bit... sure this one needs a correction... but so does my 401k. It's hard to call this tulip mania anymore... the overall price has been going almost uniformly up on bitcoin for over 4 years now.

The price of USD has gone down steadily since its inception.

I don't think you can say it's "near worthless" to keep your value in an appreciating medium rather than a depreciating one..

My bitcoins are probably not worth the $2400 they traded at today... but they are definitely worth more than the $400 of USD they used to be (now worth $376 USD2013).

View on HN

The difference is that there are fairly objective measures of value that you can apply to equities. We are probably a little overpriced right now based on P/E ratios. But unless something world shattering happens, we can be pretty confident the S&P wont be at 50% of what it is today. If for no other reason than because you actually have an ownership stake in the companies.

But is there any coherent explanation for why bitcoin should be priced at 2500 dollars rather than 2.5 dollars? or 2.5 cents?

The US dollar is a bad example because it's not supposed to be used as long term store of value at all. The inflation is purposeful and much more importantly fairly predictable. A bank can lend me 1,000,000 dollars to buy a house because they can be fairly confident that inflation is going to be ~2%.

>we can be pretty confident the S&P wont be at 50% of what it is today.

except that time the S&P dropped 57% (2007 to 2009 from 1,565.15 to 676.53)

>But is there any coherent explanation for why bitcoin should be priced at 2500 dollars rather than 2.5 dollars? or 2.5 cents?

Are you similarly skeptical about the price of gold? There is a universal need for a store of value which is not only insulated from global financial markets, but also a hedge against them. Due to mathematically certain scarcity and decentralized resistance to manipulation, crypto fulfils that need better than gold. Assuming that gold is priced primarily to fulfill this same market need, and that no gold is ever mined again, a bitcoin should be valued at $377,000.

There is no mathematically certain scarcity because you can always clone ethereum code and launch new cryptocurrency.

But this new currency wouldn't have the same support e.g. by exchange plattforms and not the same popularity.

401k - I agree US equities look overpriced (because of other reasons, mainly interest rates).

>I don't think you can say it's "near worthless" to keep your value in an appreciating medium rather than a depreciating one..

I'm not sure it's useful to group all cryptocurrencies together as a single medium. You should look at them individually and make your own projections. The current valuation the market is giving to 98% of coins, IMHO isn't based on anything except uneducated speculation - there is no utility function or current/potential revenue that reflects the valuation of most coins. If/when there is a correction I don't know - people might just leave their money in for a long time.

Reply on news.ycombinator.com