The value is purely a function of speculative demand. And while previously people anticipated the demand would go up "organically" because of actual real-world usage, you know to pay for stuff and such, that hasn't really materialized in the way we hoped. How many actually use BTC for things like that? At its BEST it has usage to purchase other coins - but that's about it.
It is digital gold, but with seemingly less IRL usage. When I started with BTC 12 years ago, the community was really optimistic on the potential use cases - but mostly the aspect of it replacing expensive wire transfers, potential for being a digital currency you could use in your daily life.
After each hype cycle that belief diminished, and it became more apparent that people only buy it to get richer by the means of speculation.
The days of BTC 1000x'ing are long gone. Even if 1 BTC is to go for $1MM, that's "only" a 21.5x increase, and it would mean that BTC alone has a 21 trillion cap. That's half of the entire S&P500 market cap. And you'd still have a slew of other safe coins that competes against BTC for the same money.
So, my point is: While BTC is still the king of crypto, it lives in a financial market that is mostly driven by speculation and expectations of huge returns. The very same investors can earn a lot more by gambling on "lesser" coins.
There's still money to be made, but that boils down to people buying and selling between the various boom and bust cycles. We're 15 years into this now.
I'm surprised this comment still shows up. The intrinsic value is literally all of the energy spent ensuring the validity of the blockchain via expensive PoW. If you want to point at something with no intrinsic value, look to the fiats.
Also, the more regulation, the easier it will be to hold and use BTC to buy stuff.
Please explain how!
The rest of your long rant is basically useless, because the last 2 words above have strictly no meaning when put together
Likewise, if you invest in a pharma company that produces insulin, and there's a insulin shortage, same principle applies.
Or maybe you want to invest in some heavy machinery company, so naturally the valuation depends on how much their assets are worth. And how much they're making off their services in sales.
In any case, for all the above, there is some base value - some intrinsic value, which is possible to calculate.
Hell, even gold is predictable. If there's physical demand for gold (which there is), you can come up with how much physical gold is needed, at minimum.
But how do you calculate that for, say, bitcoin? I'm having a hard time coming up with anything. I can't point to any application which would require people to strictly use bitcoin, and thus driving up demand. No policies that require people to pay with bitcoin.
I guess one could argue that the hardware needed to mine bitcoin has a value, which could set some minimum for what miners are willing to sell BTC for - but otherwise it seems to be only supply and demand. It is the "demand" part which I find difficult.
Or to put it differently, it is an idea that has little to no predictive power and therefore is of no great value.
There is only one very reliable principle to reason with in that space: supply and demand.
It has been observed to work every time for thousands of years, and therefore very much akin to what physicist like to call a postulate or a law (as in the second law of thermodynamics, yet to be actually proven from other principles, but observed to work every single time in the real world).
Go back to all of the examples you listed above, and dig deep enough, you will see that every single item's vaunted intrinsic value boils down to one thing : there is a demand for these things or the product they put out in the market, therefore they have value.
I repeat : there is no such thing as intrinsic value, there is just supply and demand.
Intrinsic value is a delusion.
And in the case of Bitcoin, there is clearly demand for it. Therefore it has value.
Why there is demand for it is not something you can easily analyze, because you'd have to get inside the brain of every market participant, each of which has followed a different line of reasoning to get to a conclusion about the value of Bitcoin. Some of these will be rational. Some won't. It doesn't matter. Only the aggregate outcome does matter.
You are trying to claim that you don't understand why there is a demand for Bitcoin and you don't because in your world, things have to have "intrinsic value" for there to be demand for it.
a) your premises are clearly incorrect: the current market price for Bitcoin clearly indicates that there is demand for it. Therefore it has value. Therefore the notion of "intrinsic value" is clearly of little practical use.
b) the *reason* why there is demand for it may very well be hard for you to understand based on *your* postulate that things must have "intrinsic value" (no such thing, remember?) for there to be demand for something.
As more people understand its fundamental qualities (or even just see number go up) and save their wealth in it, it's value will become less volatile and it will become more useful as a unit of account and day-to-day medium of exchange. It will be >$10M/BTC before that'll start to happen though.
I don't know about you, but close to 100% of everyone I know that have bought BTC (and other coins, for that matter) the past 5-10 years have done it in hopes of it going to the moon. The bitcoin maxis are at this point a fringe movement, a distant past, really.
If you put all your savings on index funds, there is some predictability and underlying assets to reason for. What is the best predictor for whether crypto goes up or down? How can you possibly predict what triggers its price, if there's little to none real-life usage?
Unless we see widespread adaption of some sort, for actual concrete applications, it is just going to be pure speculation.
But I agree on volatility - ETFs can certainly reduce volatility if there's enough growth.
It doesn't take resolve, only 100s of hours of learning and contemplation.
I'll die on this hill, and there's many more like me.
But I'm wondering - why wouldn't you invest in business? Business are, after all, the drivers of economy.
While cryptocurrencies could theoretically grow to "infinite" (finite supply and all. combined with fiat monetary policies), there must be some realistic limit to the growth, where the price starts to converge. For BTC, that price is somewhere in the single digit millions. Could make a long post of how I came up with that figure, but basically assume that everyone owning any assets in the world manage to liquidate those, and go all in on BTC, nothing else. Combined with investing newly minted fiat into BTC. (Never mind the economical consequences of public companies being worth close to zero $, and people only spending their money on BTC)
So let's say that BTC "only" has a theoretical maximum of, say, 100x increase from the current price. (but more realistically 10x-20x)
If you really wanted to make a killing, wouldn't it be better to also invest in revolutionary companies? NVIDIA has jumped 100x the past 10 years. There will likely be other NVIDIAs out there.
Obviously this wouldn't mean as much if you're a longtime holder, but from the perspective of a fresh investor, that's where one stands right now.
The only reason it's not already $10M/BTC is that noone understands what it is - many people think they do, but they don't. As someone who has studied the subject for 100s of hours, I haven't come across a single valid argument for why it won't absorb all the stored value in the world over time. The hardest part is just being patient while everyone figures it out.
The supply halving every 4 years helps to bring it to their attention :)
Regarding potential value, this article offers food for thought: https://t.co/eLqJCYeCKW
For BTC to absorb all stored value in the world, it would need to be the only currency in the world. That is the only way all assets in the world are bought/sold with BTC.
But that alone is, IMO, a non-starter. It assumes that all countries in the world would more or less give up control of their own currency and economy - if BTC is the only currency worth anything, why would anyone own or get paid in anything other than BTC? Which brings me to the next point...
This is not directed at you, but I think the BTC maxis severely underestimate the power and control that governments hold over these things. They can (and will) force you to pay your faxes, fees, and whatever they want in their currency, and have to power to use force if you chose not to.
If crypto poses a legitimate threat to that power and control, it is much easier to remove the threat than to adapt your system to it.
In fact the opposite of this is happening. We are in a discussion about how the SEC was ordered by the courts to further integrate Bitcoin into the existing financial system. Despite their protests and attempts to impose their own will on the rights of the people.
The only reason there are so many fist currencies is because no country wants to be using a currency that another is printing for free.
With bitcoin, that's not an issue and countries like El Salvador, Argentina would happily use it as the basis for a currency and thrive because of it. Over time, societies that use the best money win.
Personally I think it's one of mankind's most important discoveries. It will improve the world more than most people could imagine. And it's going up forever.
If it remains the same value its USD price will increase at the rate of devaluation of the dollar which is 7% on average (value halves every decade)
If I wanted to make my bitcoin "productive", I could lend it to businesses and then receive interest on top - so bitcoin would go up in price at 7% and then I'd also receive back 5 to 10% more bitcoin per year.
No other asset will ever come close to this, without taking on risk or extra work. Which is why bitcoin will very likely also go up 2000% in value over the next decade.
Wow, you must be rich and retired from Bitcoin right?
You had the opportunity to by at single/double digits and you secured generational wealth? Hoping this is true :)
The reasoning is (I'm not saying I believe this will happen just that it is an interesting thought experiment) that if people quit the shady exchanges and start trading Bitcoin ETF in substantial numbers it could begin to starve the crypto network of transaction fees and the exchanges and other crypto companies of customers.
If Bitcoin ETFs become the main way bitcoin is traded then purchasing bitcoin is just for speculation and not an 'investment in crypto and the future of finance', in that case it's much easier for the bubble to burst.
About 70% of the S&P 500 stocks are held by mutual funds or ETFs rather than individually held.
If you trade stocks and would like to buy bitcoin (as an investment) are you going to do it with an ETF through your broker where the money is protected fairly well by law and insurance, or manually and make sure you don't loose it, or through an unregulated crypto exchange?
Use of Bitcoin as a currency (for buying things) has dropped from 57% in 2019 to 32% in 2023, the rest is speculation and inter exchange transfers
I get your point but without bitcoin being an actual real thing the whole ETF thing won't last either.
"Nobody Goes There Anymore, It’s Too Crowded"
but what about cash you might ask? cash has always been used for everything of course both good and bad but transporting millions of some fiat currency in a briefcase is a lot harder than stealing some wallet with monkey jpegs or tokens worth 45k usd.
the fiat system of currencies has worked and could work but wholehearted replacement of them is akin to just throwing up one's hands and not vying to fix the underlying problem. doing so would do far more good than just making it easier to pay someone but would mean an overall more stable government for the people long term.
Yes, this is just so easy to do in war torn dictatorship! Just get your often undemocratically elected government that has never done anything for you to change everything about itself!
But more likely, people in our generations will still be working until they are 70+, and their 401k will have some allocation to a Bitcoin ETF.
Regularly sunk in joint exercises and simulations:
https://theaviationist.com/2015/03/05/us-aircraft-carrier-su...
https://www.eurasiantimes.com/entire-us-carrier-battle-group...
That can be a positive sum solution for those in cold climates, who are already paying hundreds or thousands a month to stay warm!