What gives Bitcoin (crypto currency) value, compilation post in reverse chronological order:From 22SEP17
(Bitcoin beginner thread): http://www.bullionstacker.com/viewtopic.php?f=108&t=28780#p549810
Previous bubbles in the stock markets or real estate have obvious benchmarks to compare against both historically, year over year, and against other markets. Stocks have Price/Earnings ratios, dividends, and other metrics where prices are based on future earnings. Real estate has both rent value equivalents, replacement value level (construction), and Price/Annual Income. If you are paying 15 times your annual salary for a house, it is historically WAY overpriced. These metrics tell us if/when a bubble is forming.
Money & currency are different. They are arguable always in a bubble, because their usage is based on confidence in the underlying system and network. There is no price/earnings because there are no earnings. Now some cryptos will have earnings (DBET), but currencies like bitcoin will not. Bitcoin's value is simply derived from the amount which other people are willing to trade other currencies for it. So if there is a party willing to give $3k or $15k for a single bitcoin, then that will establish a market price. One could argue it is irrational to pay "x" price for 1 bitcoin, but that is a theoretical and subjective opinion. If bitcoin is a superior currency in theory and reality (and it is), why not acquire it with depreciating fiat that can be printed to infinity? The smart play is to acquire as much of the best currency as possible as cheaply as possible.From 18SEP17
Bitcoin is not a company with revenues. It is a competing currency to every fiat currency out there. So when you say the $$$ will dry up, I say no, the $$$$ will be printed, inflated, and become a very poor store of value. The dollar may be the strongest of the fiats, but it is still fiat, and we still have a $20 Trillion debt (not counting unfunded liabilities). So as more fiat is inevitably printed, the one currency that isn't being inflated away will stand as the beacon, the true safe haven.
In the future, you will see prices listed in dollars and milli-bits (of bitcoin) in America, euros and milli-bits in Europe, yen and milli-bits in Japan. Then, one day (perhaps years or decades away), the bitcoin price will be the more important price, and the fiat price will fade away.
If this reality happens, imagine owning just 1 bitcoin and how powerful that will be. You can do that today for less than $4k. In 5 years, it will cost much, much more (in dollars).From 15SEP17
Fiat is literally an authoritative decree. Like the USD which has no value except that the government declared it so, and you must pay taxes with it - and so we all play along like it has value as we get poorer each year through inflation (stealth tax). That is fiat. Bitcoin is nearly the exact opposite. There is no person, entity, or government forcing or declaring anyone to use bitcoin for anything. Completely voluntary, with many people and governments fighting it the whole way. Bitcoin has the largest computer network, loads of computer programmers, the protocol itself, the user network, the infrastructure, etc etc. It has utility because people use it and believe that it has utility. That is what matters, and as governments continue to print ad nausea, both crypto and PMs (if they weren't heavily manipulated) will rise in "price" relative to the fiat currencies of the world. But remember 1 bitcoin, will always be worth 1 bitcoin.From 04SEP17: http://www.bullionstacker.com/viewtopic.php?f=108&t=15864&start=1500#p547229
Bitcoin is nearly the exact opposite (of fiat). There is no person, entity, or government forcing or declaring anyone to use bitcoin for anything. Completely voluntary, with many people and governments fighting it the whole way. Nothing backing it up? Besides the largest computer network, the computer programmers, the protocol itself, the user network, the infrastructure, etc etc. If by nothing backing it up, he means no government forcing it down our throats at the threat of jail or a gun - then yes, he is correct.
So, if a government uses a cryptocurrency and claims it is backed by gold, or oil, or chickens, it is completely irrelevant. Why? Because 1) we don't believe them. They have lost the faith of the people, they have no credibility. When was the last time the US gold holdings were audited for real? 1953? And we don't even use the gold for anything - it isn't backing the USD, but still it is shrouded in secrecy. 2) The whole point of a crypto is decentralization - which you can't have if the government is controlling the currency. Yes, they can still use a blockchain, but so what. 3) Who will verify what the chosen commodity to back the crypto exists, and there is enough of it there? Will it be redeemable for that commodity? Answer - no it won't be.
I get how gold bugs may want to merge crypto and gold (or oil) into a new currency system but in order to implement it, a government would have to remove all the best features of the crypto. What these people don't get (or do they?) is that crypto allows us to remove currency control from the power of governments, and into the hands of the users, miners & programmers. That is called technological and societal disruption.From 08AUG17
1) Mish says: Bitcoins are the new beaver pelts of monetary transactions. For thousands of years, when available by free choice, gold has always been the currency of demand. Things like salt, cigarettes, beaver pelts, and recently Bitcoin, come and go. This is true. However, they (bitcoins) are the best form of "beaver pelts" ever invented. All those previous currencies Mish mentions are local currencies where people physically need to exchange goods/value face to face. Not crypto. If something better than crypto comes along, I can transition into that. Until then, crypto is king.From 02JUN17
I find it interesting that people can just use the term crypto bubble and coming crash, or a comparison to the dot com bubble and the next one for crypto is right around the corner and nobody challenges this bubble mentality because the price (in fiat dollars) is going up. Perspective....
Market capitalization of single companies:
Google: $682 billion
Apple: $812 billion
Microsoft: $556 billion
Verizon: $188 billion
Cisco: $161 billion
All of these single companies have market caps larger than the TOTAL market cap of EVERY crypto out there at $89 billion currently. But it is a huge bubble about to crash? Is your hairdresser giving you crypto advice? Is your uber driver giving you a hot crypto tip on the next big decentralized smart contract ICO? Not a bubble. People want it to be a bubble so that they feel justified sitting on the sidelines and can think themselves smart for not getting caught up in that crypto fad. Fad or trend - I think the question has answered itself.From 22MAY17
So the factors involved in valuing these digital currencies comes down to 1) market adoption, 2) network effects, 3) technological edge, 4) ease of use, 5) speed, 6) anonymity 7) fees for use, 8) inflationary vs deflationary, 9) governance, 10) PoW vs PoS and other factors. So bitcoin is the obvious leader as it has huge network effects, the largest market adoption and it was the original crypto [hat tip]. In my view, it has speed problems, governance issues, isn't completely anonymous, and it will be hoarded as it is deflationary. This is why I like PIVX and see it as undervalued if one has a long term time horizon. PIVX has the important stuff, just not the adoption and network effects, yet. That said, I don't know if it or any other crypto currency will ever overtake the king bitcoin, measured in USD. There are many unknowns involved. I think bitcoin $10,000 is inevitable in the next 3-5 years (or sooner).From 03MAR17 - Bucketeer
1 bitcoin is as scarce as 238 ounces of gold (when 21m are created; today 1 bitcoin is as scarce as ~450 ounces of gold)