What Is Bitcoin Really Worth? Don’t Even Ask
nytimes.com
nytimes.com
"for their empirical analysis of asset prices"
Laureate Schiller is the author of the article.
Those are all real areas of research in behavioral economics[1][2][3].
> -- the article could be summed up with "I have no idea what's going on."
There's nothing wrong with saying that you don't know what's behind the rise in Bitcoin's value, but pointing out that it has features of several known irrationality inducing biases, including the ones you quoted above. That's all Shiller is doing here.
I prefer that opinion over the one that claims a priori that Bitcoin's value is backed by economic fundamentals.
[1] https://www.investopedia.com/terms/a/animal-spirits.asp
In 1936, John Maynard Keynes suggested why. He played down the role of quantitative analysis and probability estimates in human thinking of the assessment of ambiguous future events. People in such situations are vulnerable to a play of emotions and at times a “spontaneous urge to action” that he called “animal spirits.” He argued that much of what happens in financial markets has to do with people learning, from price movements, about each other’s animal spirits.
Recognizing a bubble and predicting the pop are two wildly different challenges.
If that would only require 50% of the mining hardware and some 10s or 100s of transactions (e.g. an hour a day or even a week of power). I don't know what it would cost to do that, but if it was only recouping sunk costs, and future income for the miner then it should be relatively easy to calculate even if it changes all of the time.
edit: I don't see how as a store of value it could be worth something that is effectively uncounterfitable and well established like gold ($7T), which would set a $350k maximum. As a transaction medium BTC wouldn't be a good choice anyway even as a first mover.
Because back before it became "that the thing that everyone was trying to profit from", there was at least the sense that it would be somewhat useful as a currency, if not replace cash entirely for most online transactions.
They would rather like to see transaction costs sharply drop to compensate for the equally sharp rise in USD/BTC value. Sadly, that's not how it works, which has led to endless drama on the Internet.
By ROBERT J. SHILLER DEC. 15, 2017
Robert J. Shiller, Sterling Professor of Economics at Yale, is an adviser to the Chicago Mercantile Exchange, part of the CME Group. These are his views, not those of the exchange.
> Bitcoin is vastly more volatile than conventional money and relatively few people trust it as a store of value.
that could and has happened to a real currency; there were lots of countries that preferred, e.g., dollars or euros to the native currency as soon as this native currency started to tank.
> Even if that hurdle [trust] is crossed, how much crypto-currency will people need? Putting it in economic terms, will the demand for Bitcoin have the same velocity as the demand for money?
trust would mean, more sellers would accept crypto-currency as payment. the more sellers accept crypto-currency, the more of it people would need. this is purely a question of trust. bitcoin may not be trusted yet, but that's one of the prerequisites for the discussion given earlier in the article. no reason you shouldn't be able to use bitcoin to buy bread at the local store or as down payment for a house.
> Will there be the same number of hoarders?
i don't really understand this point - but even if it was true, that's not an inherent fault of bitcoin.
> And what about all the other cryptocurrencies that exist today, and those that will arise in the future? Bitcoin might well be replaced by something different and better, and end up being worth nothing at all.
this has happened to lots of traditional currencies.
moreover, traditional currencies are subject to counterfeiting (even though it doesn't matter much in practice).
---
sure, in practice it's different, as (rich, stable) states have an interest in keeping their currency reasonably stable and can act in certain ways as an informed actor to control/steer their currency in a certain direction. this is the only major difference i see (as long as bitcoin isn't derailed by a hostile actor).
but in the end, currencies are worth what actors are willing to pay for it, a principle that applies to both bitcoin and traditional currencies.
The reason I say ethereum instead of all alt coins is because once people figure out that the chain needs to be decentralized to be secure they will stop making their own coins and will do tokenized assets instead. full disclosure: I'm long on Doge ;)