[kiba]

What can we learn from this? You can see a “fair value” of around $20/BTC due to be hit in a few weeks, with perhaps a full mean reversion to $10/BTC.

We now have a testable prediction. Let see if bitcoin actually falls to to 20 and 10 dollars per bitcoin within 4 weeks.

[Nursie]

I'd almost be surprised if it doesn't hit that within a few weeks.

Not necessarily as a stable value, but in the last few days it's bounced around madly between about 50 and 100 dollars. I think at this point it's fair to say that nobody has any idea of the real 'value' of a bitcoin, and mad speculation is still the order of the day.

[stephencanon]

> I think at this point it's fair to say that nobody has any idea of the real 'value' of a bitcoin.

Nonsense. They have no use, not even as a status symbol or as a practical unit of exchange. The “real value of a bitcoin” is zero, and the fact that this isn’t obvious to everyone is, frankly, astonishing.

[melvinmt]

We have to be careful when we question the "real value" of specific assets as we may tumble in an essentialist philosophical debate where we have to question the "real value" of every single asset in the universe. There is no inherent difference between gold and bitcoins, they're both scarce assets, one in slightly higher demand than the other. The value of assets is mostly[1] determined by both supply and demand, and as long as the demand is higher than the (more or less) fixed supply of bitcoins, the value will always be > $0.

[1] Please enlighten me if you know more ways of determining the value of assets.

[leoedin]

But bitcoins do have a use. There's at least a few million dollars a month of value moving through Silk Road.

However, it's not in the interest of users of BTC to use a wildly unstable currency. My prediction is that bitcoin will be replaced at some point by another crypto currency which fixes some of its major flaws - particularly its deflationary nature.

[shawabawa3]

> particularly its deflationary nature.

As far as I can tell, there's no real reason it has to stay deflationary.

At some point there could be a consensus that inflation would be good for bitcoin and they could patch the client to start increasing the new bitcoins per block.

tbh I don't know why it isn't inflationary, if it was you could remove/reduce transaction fees as miners would always have an incentive

[danielweber]

At some point there could be a consensus

In theory there could.

In practice, the vast majority of the bitcoin users are speculators, and will fight tooth-and-nail against changing away from being deflationary.

[rlpb]

Bitcoin users don't call the shots; they have no say whatsoever. Bitcoin miners control the network. What matters for them is their return on mining in BTC, and the exchange rate to their local currency to pay their capital expenses and electricity bills.

If the miners think that they'll get more value out of the system by creating new coins forever, they'll make the change. They have to be careful not to destroy confidence in the system; this will be part of their value assessment.

[gnaritas]

> particularly its deflationary nature

Which IMHO is what will kill it; it's just a terrible feature for a currency.

[jpadkins]

why?

[gnaritas]

Currencies are meant for spending, money that's worth more tomorrow than today doesn't get spent, it gets hoarded by investors, it has a built in deflationary spiral. Bitcoin is a terrible currency. The ability for a fiat currency to be inflated is not a bug, it's a necessary feature. The supply of wealth to be traded in the world is not fixed, nor can the supply of the tool we use to exchange it be.

That bitcoins are divisible completely misses the point that prices go up faster than they go down, i.e. they are sticky, and deflation is painful and feeds back into itself leading to a recession. Divisibility is not the correct solution, inflation is the correction solution, i.e. add more money rather than expect all prices to go down to adjust to the supply of a fixed currency.

[drewblaisdell]

Bitcoin has no use? And after saying this, you find yourself qualified to comment on the "real value of a bitcoin"?

Sometimes it is more valuable to accept what you do not know instead of pretending. Bitcoin may drop to $0 or bounce back to $250. I do not know, but I know why it made it this far and that is something that I would suggest you attempt to grasp before making any broad, unsubstantiated statements.

[Nursie]

I didn't want to say that because people get annoyed. I also didn't want to quote this from the article -

"I have better things to do with my time than play with weird monopoly money"

And say "I like the cut of this guy's jib", for similar reasons, but I guess now I have...

[DennisP]

Given that they are used to buy things in the real world, I'd say their total value is the value of the goods exchanged, divided by the bitcoin velocity of money. Varying expectations of future value screw with the price though.

[mikeash]

There's no such thing as the "real value" of anything, only what people will pay. And that is pretty obviously not zero.

[lmgftp]

Willingness to pay is someone's valuation. That's not the real value. That's not the inherent value. The inherent value of BTC is nill, except as a speculative commodity.

I won't further comment on BTC since both sides are staunchly rooted in their positions.

[vrotaru]

> That's not the inherent value.

Show me your inherent-value-meter, or shut up. Simple, eh?

[rrrrtttt]

People here are saying over and over again that there is no such thing as "real value". That's bullshit. Economists have great ways to measure real value. For example, for financial assets real value is net present value of future cash flows. For currencies, real value is parity purchasing power. (Bitcoin is not a currency in this sense.) Things have real value.

[legutierr]

What's the real value of anything?

[Nursie]

Five.