Why Bitcon has value, an austrian school prespective

[Sprout]

...crypto and especially BTC covers a huge global inefficiency and that is not going to stop. I wonder why nobody asks why the synthetic BTC dollar as well as stable coin yield is double digits.

And they still waffle about some economy 101 that has nothing to do what's actually going on.

Perhaps you could elaborate on this global inefficiency of which you speak?

 

[jys78]

No because for someone to sell BTC at $20K, another party needs to buy. The counterparty could have bought the material goods instead, all else being equal. Value wasn't extracted from BTC but siphoned from someone else.

Real goods/services can only be created through production, anything else is (re)distribution without an aggregate effect on society's wealth.

Fair enough. I'm perfectly happy to siphon value by this mechanism

 

[piezoe]

Just because someone does something other than the intended purpose and does not do what is beneficial does not defeat the idea and concept. There are tons of stupid people out there who abuse medication, it does not defeat the original intent of most medication, which is to address a certain ailment. Just because someone speculates does not change how companies are valued. And re fiat currency, the only reason anyone works for fiat is because there is trust in its stability and buying power. Even if you could pay taxes with bitcoin or buy stuff, if the trust is not there in its stability and backing of a powerful body behind it then momentary buying power does not equal future buying power. Big difference.

We are not totally disagreeing, we are just pointing out aspects that the other my have over looked. However as long as a company's equity price, i.e., the cost of a unit share of ownership, has anything to do with how a company's value is determined, speculation will have much to do with valuation. This is Soros's great insight, i.e., speculation effects fundamentals. Speculation very much changes the valuation of a company!

 

[johnarb]

I don't know, that would be none of my business, or yours either.



That's because Bitcoin is a currency, and it is used to either buy or sell or donate money, the same way Fiat money is used. So the 1B to 5B you speak of has to do with people buying or selling or donating money. You know, same way fiat money is used.

MrMuppet is giving valuable info, but doubt anyone's listening or able to participate in that market. I can't or don't (directly, speaking, indirectly, yes)

Rehypothecation, Sec Lending, prime brokerage...

No way to provide context without shilling my biggest altcoin bag that has outperformed my btc holding.

Celsius network symbol $cel is the number 1 player in this crypto business. I got in around 20cents, I'm up over 1150% in a 7 month period, still hodling. ~$30K invested valued at over $350K. Their competitor in the CeFi is the famous BlockFi and lots of DeFi competitors in the deposit/lending biz through smart contract everything (i.e. flash loans on single block execution)

[Alex invented VoIP, trivia, lol]

 

[DiceAreCast]

Hmm, not sure Soros is a great authority on equity valuation and trading. He made some big bucks in currency markets and after his fund pulled everything into long term investments. Speculation according to more authoritative figures like Ray Dalio drives short term equity fluctuations but long term value is very highly correlated with discounted future cash flows. Speculators have close to zero impact on long term valuations. I guess we can both agree that the speculative component or should I say fluctuation in valuation on long term value lies in the estimation of such future cash flow and how sustainable such is. Obviously future cash flows of startups or companies with high growth rates are harder to forecast than mature companies. Cisco stock price was largely driven by speculation in the early 2000s but since has been mostly adhering to discounted future earnings and cash flow estimates. Same with property priced in Japan in the 1990s vs afterwards. Speculators have very limited impact on valuations other than in the short term.

We are not totally disagreeing, we are just pointing out aspects that the other my have over looked. However as long as a company's equity price, i.e., the cost of a unit share of ownership, has anything to do with how a company's value is determined, speculation will have much to do with valuation. This is Soros's great insight, i.e., speculation effects fundamentals. Speculation very much changes the valuation of a company!

 

[johnarb]

Perhaps you could elaborate on this global inefficiency of which you speak?

Inefficiencies at times of high demand creates high yields.

Sorry to belabor the point made in my previous post, but bitcoin is a hard money digital asset with enormous value and as such can be used as collateral in the deb/credit markets. Might have said that incorrectly and hope MrMuppet would correct me.

Alex (Celsius) has mentioned in YT they haven't even seen a limit to scaling their institutional crypto lending business when asked if they're having a hard time given the fact that AUM (currently at $3.3B) on their platform has grown significantly in a very short time.

Below, BlockFi discussing that financial market opportunities. People comparing bitcoin to tulips have no idea what they're talking about and will continue to be ignorant in this space.

1 btc as collateral can get you $9K wired to your bank account 1-2 business days, no credit check, it's that valuable

 

[misterkel]

I'm gonna laugh so hard when the riemann hypothesis is proven and all tokens become worthless

didn't I hear something similar at BTC $325?

 

[stochastix]

didn't I hear something similar at BTC $325?

no you didn't, the statement is about prime number distributions and applies at any price, its not economically related

 

[misterkel]

no you didn't, the statement is about prime number distributions and applies at any price, its not economically related

"Bitcoins inherent value is zero and will go to zero." That was said and is SIMILAR, though not EXACTLY the same as Bitcoin something about prime numbers and ha ha goes to zero. I guess it's completely different because it's a NEW reason, not one of the 50 OLD reasons. Got me there, captain. I feel awful foolish.

It's not economically related, but the price goes to zero, eh?
Okay, whatever you say Professor Bitcorn.

Please explain the connection between your Riemann hypothesis and anything to do with Bitcoin. I actually am interested, though pardon my skepticism of yet another Bitcoin Obituary.

 

[misterkel]

No, and that is the vital difference. Stocks are valued because of discounted future cash flows. Now the estimation of future cash flow is not pure science. But it's a vital difference between a crypto currency whose value is entirely based on hope and trust and a business with stable cash flows that can be extrapolated into the future. With a degree of uncertainty of course but those risk premia are also priced in.

I am not making a value judgment I simply point out the Stark differences. Other categories of assets that are mostly based on pure supply and demand are properties and those on trust is fiat currency. Different asset classes, different valuation approaches, is my point.

This isn't really a disagreement with Pekelo's point. He said both TSLA and BTC have value because people think they have value. All you've explained is that the belief 'TSLA has value' is arrived at by some means X whereas the thought 'BTC has value' cannot be arrived at by the same means.