Discussion in 'Business & Economics' started by mathman, Feb 9, 2021.

  1. mathman Valued Senior Member

    What is this craze about? Bitcoins, etc. have no intrinsic value. What drives their prices?
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  3. sculptor Valued Senior Member

    From what I read in this forum:
    Limited quantity.
    I recently read that Tesla bought $1.5 billion of bitcoin over the last few months

    from $10,000 per coin a year ago to about $47,000 today

    wowie zowie
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  5. DaveC426913 Valued Senior Member

    Like all things, they have a value based on what people will pay for them.
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  7. RainbowSingularity Valued Senior Member

    you are asking a 1st year university finance degree question where all the answers are on google for you.
    all 1st year university business degree students would be expected to easily compose a 2000 word essay brief on this question, as an answer.

    intended subject by not mentioning it & instead asking others to gas light themselves into your supposed theory ?
    (gossip language verses intellectual language)

    just a thought on style ...
    maybe you can create a question that better reflects what it is your asking
    rather than gaslighting a counter cultural sub-narrative into debate fashion by asking others to self promote their position of incorrectness to your supposed omitted statement of market dynamic fundamentals
  8. Seattle Valued Senior Member

    Rainbowsingularity lecturing on style...priceless.
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  9. mathman Valued Senior Member

    I agree. His last paragraph feels like gibberish.
  10. Sarkus Hippomonstrosesquippedalo phobe Valued Senior Member

    The following is my take on it, and I have only a simplistic understanding at best (and probably wildly incorrect), so treat accordingly. But it has helped me make some sense of it...

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    Casino chips have no intrinsic value outside of the casino that uses them. But within the casino that uses them they have value. You can play games, buy things etc. And then when you leave the casino you can exchange the chips back for cash.

    The same is true of the cryptocurrencies: they are like the chips and the blockchain is like the casino.
    The idea of Bitcoin is that you can do more and more things with the chips... buy services, goods, houses, cars, pay people's wages in chips. If you have a wide enough eco-system (or casino) then you can effectively replace fiat currency. If someone who works and lives in the casino is paid in chips and can spend the chips to buy everything they need, then they would never need fiat currency until they leave the casino's eco-system.

    Given that there will only ever be 21 million Bitcoin (BTC) in circulation, if it only ever replaces the fiat currency of 10 people then each Bitcoin isn't going to be that valuable. But if 1 million people use BTC to pay for things then the 21 million Bitcoin needs to replace a larger amount of fiat currency... so the value of a single BTC goes up.
    If the utility of BTC is such that 100 million people use it then its value keeps going up... so its value is in relation to its utilisation - or the amount of fiat that it is effectively replacing.

    But bear in mind also that BTC is purely designed as a currency - i.e. its purpose is to replace fiat currency with a decentralised system.

    Other cryptocurrencies, notably Ether (ETH), are somewhat different. The Ethereum blockchain is a more complex beast that allows the operation of smart contracts and... well, let's just say that it has functionality that people use to build decentralised applications. These applications need the token/coin to run. The coin is like the fuel that allows the application to run. Or its like the punch cards that old computers used.
    So for cryptocoins like ETHER, the value is associated with the usefulness of the applications that are produced on the blockchain. The more applications and the more users of the applications, the more in demand the tokens/coins will be.
    So there is some intrinsic value in such coins: if there was an insufficient supply of the punchcards for those computers, the people who had a store of punchcards could sell them at a higher price, etc. The more people that used the computers and needed the punchcards, the higher the value of the circulating supply of cards. (Bitcoin's purpose is to have people exchange the cards in place of fiat currency). And the growth in applications should not be understated - especially in the Decentralised Finance (DeFi) space. So the utilisation seems to be increasing.

    However, what you also get in both cases is predominantly a case of speculation: the hope that people will eventually be willing to pay more for your coin than you originally paid for it. This has undoubtedly fuelled much of the growth. And then there's FOMO (Fear Of Missing Out) that fuelled the previous spike in prices just over a year ago.

    Now, whether this all ultimately fails, who knows. But it has made, and will continue to make, some people very rich indeed. Right up to the point everyone loses it all.

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  11. RainbowSingularity Valued Senior Member

    faking by bullying to pretend you know
    when you dont
    (try hard propaganda to change the subject to style rather than content)
    go you
    little bully

    crypto-idiocy hoists his flag
    when you stop your pointing & laughing you may realize your own pants are around your ankles
    Last edited: Feb 11, 2021
  12. Michael 345 New year. PRESENT is 72 years oldl Valued Senior Member

    When the inventors of Bitcoins etc cash out for cash. A few million in each country they wish to live or visit

    Apart from cashing out the Bitcoins themselves also sell off the system, which if I understand is the only asset in the system

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  13. RainbowSingularity Valued Senior Member

    which government is going to let billions of its currency sink in a bitcoin crash ?
    the market was always looking for the next sub prime mortgage repayment insurance scam & bitcoins are ideal
    they have weathered the storm & now own billions in many different currency's.
    quite aside from the fact that they also now equate to a form of transactional global banking as a mechanism of global financial trade.

    China have been wise to keep a lid on crypto because we can now see that given the pandemic as a steroid
    the potential market losses of burgeoning new crypto crazes would have wiped out a trillion at least
    AND that trillion would probably comprise significant amounts of peoples retirement savings required to long term prop up consumer markets and entire citys.

    irony about china calling elon in for some heavy (breathing/petting)chat
    as he has just invested in bitcoins
    and is in a global market leader position to become chinas #1 electric car manufacturer.
    enviable position & one that cant afford to be pushed over into the gutter on a whim.

    china is doing what the usa refused to do & could not do , when it comes to fossil fuels.
    the Russian American helping the communists teach the capitalists how to save the planet from fossil fuels. with the aid of crypto

    are you a qualified mathematician ?(hold a degree in mathematics?)

    intrinsic value ...
    you mean asset backed value ?
    or commodity/product value ?

    bit coin value comes from 2 basic concepts
    1 the market price speculation buyer market
    what people will gamble to buy them for
    2 what they are traded for as a form of currency(they are used as a form of international digital currency just the same as other global currencys)

    so the value is in 2 things
    1 market speculation which has trillions of dollars looking to make profit from to buy & sell it(trading speculation like a house flipper in the usa)
    2 billions of dollars worth of transactions looking to use a form of currency that might make things cheaper or easier for them to buy & sell things

    globally thats a multi trillion dollar industry
    so bitcoins are here to stay regardless of what happens to the computer on which someone wrote some code.

    your proposition is intellectually illegitimate as a question assuming you are well read on mathematics

    yes maybe you think your being really clever so you can get others to write your own work for you to discuss the concept of zero sum value as a numerical value comparative to crypto data speculation theory

    ho hum
    whos your customer ?(
    i don't mind giving you some free content even if it is for some dickhead company looking to polish their own knobs

    im curious to see if you can debate anything at all when it comes to economics
    the common sense economists i have met & chatted to were all tutors who generally despised the private sectors relentless perversion of common social care in core policy.
    Last edited: Feb 11, 2021
  14. mathman Valued Senior Member

    Casino chips can be exchanged for fiat currency at any time at a fixed rate. Cashing in cryptocurrency depends on the current market. It reminds me of the Holland Tulip craze (1636-1637).
  15. RainbowSingularity Valued Senior Member

    no different to food commodity markets

    look at the bio fuel corn hoarding scam where peoples food security was attacked by commodity speculators buying corn for bio fuels.
    based on fake media by people claiming to be investing in bio fuels where several people scammed government officials
    or those government officials are common criminals.
    breakfast cereals started getting 25% on the shelf price increases.

    peak oil ?

    why have gas prices suddenly gone up by 7% ?
    i watch my local gas price go up & down by between 2 & 5% often
    currently its sitting at 7% above what it was around 8 days ago.

    how much cheaper would food be in the usa if you removed all those scammer middle men making millions off it in between the farmer & the customer ?

    what happened to American invented direct sales ?

    bit of a lie & a scam really

    but that is what you have to expect from capitalists
    they are terribly dishonest equally as dishonest as communists on the whole.

    your talking about cool aid flavours
    as if the flavours are the problem
  16. RainbowSingularity Valued Senior Member


    Governments do not issue casino chips
    but in good faith government officials & their officers may by department policy & for social order recognize casino chips as a form of contractual relationship of credit between partys.

    while a Casino may choose to refuse to cash in a persons casino chips as they have no legal force to do so, the Casino is more than likely to cash them in to avoid the bad publicity.

    if customers & public do not trust a casino to honor the value of the casinos own chips then the casino will be forced into bankruptcy almost immediately.

    however in a heavily class based society like the usa
    places like lass Vegas will have a class system of casino chips operating
    that class system is not an official government rating
    & that currency class of casino chips is also not a form of legal currency exchange

    trading exchanges in those chips without IRS declaration is likely a tax crime

    Casino chips come under "vouchers" i believe.
    & hold no legal value other than publicly assumed value like a credit note.

    which makes them NOT a fiat currency

    lass Vegas probably allows some people to cash in chips from other Casinos
    such an action is likely a breach of inland revenue law

    the usa
    like many asian countrys
    has no shortage of psychopaths who will wipe out entire citys to make money off collapsing systems & companys
    look at that usa mayor who closed a bridge to wipe off millions in money from local businesses just to upset a political opponent
    he didnt go to jail he didnt lose his job
    such terrible corruption
    all those millions in losses & millions spent of hard working tax payers
    denying their children education, food, housing & health care
    & then spending all their taxes on them selves.
    soo terribly corrupt its mind boggling

    but you go with your "fiat currency" rating
    comparative legal terms make little difference in such a legal/moral culture
    Last edited: Feb 11, 2021
  17. Michael 345 New year. PRESENT is 72 years oldl Valued Senior Member

    Which government - or how government organise their financial system to allow or not allow types of transactions of any type within their boarders and outside their borders is a matter for their internal affairs
    it appears Bitcoin has blindsided the global financial markets by producing money (more specifically a universal means (mediom of exchange) which has no PHYSICAL EVIDENCE of existence

    You cannot produce (make / reproduce) any countries currency. But you can, as Bitcoin has shown, swap non material non stuff between members of a club (Bit holders club) around

    If you wish to have PHYSICAL money, because what you wish to acquire does not accept Bitcoin you exchange your Bitcoins (held in the restricted Bitcoin club) for a more expansive PHYSICAL money club

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    Last edited: Feb 12, 2021
  18. RainbowSingularity Valued Senior Member

    Thanks, yes i do realise this.
    it does not detract from the reality on a global & national financial level that bitcoins have become a compulsory market feature.
    people have voted for it democratically globally & nationally by buying bitcoins
    so its a democratically elected global financial system which as its own form of currency(language)

    which country can afford to ban all bitcoin trading & ownership ?
    any ?
    can you list any ?
    even 1
    is there such a list
    can a list be created ?

    the physical reality seems to be that bitcoins are a critically connected global currency/system
    that no modern western government can afford to allow to go bankrupt

    international monetary strategic planning & operation

    BitCoin was left as-is to allow its self to become established or not established by will of the free market
    prior to any government entity validating it as a recognized currency for market inclusion.

    NO Western government or middle eastern oil nation was about to ban or interfere with BitCoin.

    it has been doing exactly as they expected it
    Elon is just mechanizing the next logical step
    its natural progresion
    however sour grapes for the usa because they failed to secure a deal with him to produce the next worlds #1 private motor vehicle which will be Tesla in china(& then probably india)

    so i expect to see various sock puppets coming out attacking bitcoin as a jealous rage of the ignorant tyrant
    Last edited: Feb 13, 2021
  19. Michael 345 New year. PRESENT is 72 years oldl Valued Senior Member

    I really don't follow Bitcoin but in truth large money buyers and sellers have been increasing their PHYSICAL wealth with non existent money for yonks

    Banks can loan out in excess of the amount of physical money in the vault on the basis not every person will all want their money at the same moment

    Curious as to what would happen if Bitcoin trading was given a grace period of a few months and then declared illegal

    Trade out of Bitcoin for "real" money after freezingthe exchange rate

    Outlaw Bitcoin

    I thought it already was illegal to print your own currency

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  20. RainbowSingularity Valued Senior Member

    when 1 falls over, what is your back up plan ?
    Bitcoin has become a back up plan that is self sustaining so it pays its own way.
    globally thats significant as long as it remains to have no political interference

    [[[ but how do the usa narcissist tyrants punish elon & china without bankrupting bitcoins]]]

    cash reserves
    lending rules LVR etc

    thats a bit of a different debate because it mostly exists inside a country rather than as a global exchange process via direct sales etc
  21. Saint Valued Senior Member

    It will hit 100k and then crashed.
  22. Sarkus Hippomonstrosesquippedalo phobe Valued Senior Member

    On what basis do you think this? Or is it just a random guess? What timeframe for reaching 100k?
    And are you willing to put your money where your mouth is: Bitcoin is currently just under USD50k, so you're saying it will double in price before crashing - so why not invest?
  23. RainbowSingularity Valued Senior Member

    i remember when bitcoin was around the same price as gold & i could afford to buy(i have not) 2 bitcoins if i spent all my savings lol

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