Hacker News Reader

Comment by hackerguy99 | Hacker News Reader

>One thing I struggle with is what is the 'right' price for a bitcoin. How do you calculate that?

Do you think Bitcoin is money?

Then the right price is simple: The amount of goods you can buy for 1 hour of labour should be equal between USD and BTC. If you can buy an apple pie for $5USD, then you should be able to buy a pie with $5USD in BTC. The problem is no one is actually selling anything in BTC in the real world.

If you think Bitcoin is money, you shouldn't be "making money" off it anymore than buying another currency in USD. The fact that it is increasing exponentially in price is a bug, not a feature.

View on HN

> Do you think Bitcoin is money?

Let's say yes.

> Then the right price is simple: The amount of goods you can buy for 1 hour of labour should be equal between USD and BTC. If you can buy an apple pie for $5USD, then you should be able to buy a pie with $5USD in BTC.

OK. So how exactly do we compute the "right" price for Bitcoin from this? I struggle to do this simple math.

You're selling an apple pie for your own currency piecoin. If I to buy a pie from you I have to buy x piecoins first to match your price whatever it is. My need of a piecoin is defined by the need of our settlement for a pie ('right' price). Usually, pie like yours costs $5 so I have no incentive to pay more for your pie. If your price for a pie is x piecoins then I will buy x piecoins for $5 and 1 piecoin will cost me x/5.

'Wrong' part of a price is about modelling other people need for piecoins which in turn is about modelling need for pies and other people speculation and that's can be incredibly complex. As you can easily see 'wrong' part of a price makes your coin shitty currency.

None of this answers my question for how exactly to do the parent's math for Bitcoin, which the parent claimed was simple. None of this even talks about Bitcoin, which was specifically what I asked about.

> The amount of goods you can buy for 1 hour of labour should be equal between USD and BTC.

Why? The amount of goods I can buy isn't equal between USD and GBP. Or between either and EUR. So why exactly should it be equal for BTC?

I don't know. Maybe is is more a store of value like gold. Especially given the relatively high transaction cost, perhaps this is more likely?

Exactly. The volatile price suggests it's all speculation, hype and hoarding, and not actual trade.

Reply on news.ycombinator.com