Install the app
How to install the app on iOS

Follow along with the video below to see how to install our site as a web app on your home screen.

Note: This feature may not be available in some browsers.

BIT COIN (S)

Status
Not open for further replies.
Maybe this has been discussed already, but assuming the blockchain tech is equal across cryptocurrencies, and assuming they can be traded in similar fashion, and provided they are mined at the same rate, wouldn't the price if all cryptocurrencies regress to one market value? If not, what would make one more or less valuable than the next?
 
SerenityNigh said:
Maybe this has been discussed already, but assuming the blockchain tech is equal across cryptocurrencies, and assuming they can be traded in similar fashion, and provided they are mined at the same rate, wouldn't the price if all cryptocurrencies regress to one market value? If not, what would make one more or less valuable than the next?
Click to expand...
I think there is a lot of false assumptions there.

I've no idea what you mean by "blockchain tech is equal across cryptocurrencies".

Assuming they can be traded in a similar fashion? Do you mean in terms of similar levels of market acceptance/adoption?

Is there anything to base the assumption that they're mined at the same rate? I would imagine that would be proprietary to the individual "coin" technology.

I would assume that the main factor in making one coin more valuable than another would be the same factors that make other currencies more valued than others: Stability in value, Market acceptance percentage, Adoption rate, turnover.
 
I have no idea what any of it means. I met a girl at a networking event who does PR exclusively for cryptocurrency firms and she said it was well worth investing in, and that it will eventually turn the tide of public perception in its favour. But then again, she would say that.
 

Prevenger17 said:
I have no idea what any of it means. I met a girl at a networking event who does PR exclusively for cryptocurrency firms and she said it was well worth investing in, and that it will eventually turn the tide of public perception in its favour. But then again, she would say that.
Click to expand...
It is not in anybody's interest if they have a bitcoin investment or are making money off of doing PR for it to say its a load of magic beans is it?
 
Efcjake said:
I think there is a lot of false assumptions there.

I've no idea what you mean by "blockchain tech is equal across cryptocurrencies".

Assuming they can be traded in a similar fashion? Do you mean in terms of similar levels of market acceptance/adoption?

Is there anything to base the assumption that they're mined at the same rate? I would imagine that would be proprietary to the individual "coin" technology.

I would assume that the main factor in making one coin more valuable than another would be the same factors that make other currencies more valued than others: Stability in value, Market acceptance percentage, Adoption rate, turnover.
Click to expand...

I'm just trying to think of what valuations are based upon. With currencies, it's micro (in-nation) and macro (world) economic forces, geopolitical changes, GDP and debt/solvency, and rate of paper money printing (surely there are others, but that's basically it, right?).

With securities, it's intra-company dynamics, in-market dynamics, and other dynamics that shift money to or from other markets.

Of course, fads, greed, and fear do a lot to change prices too, but each of these have basic methods to value to currency or security.

With cryptocurrencies, there must be other dynamics. One of these is surely scarcity (largely rate of mining, but also volume in the market), but what about liquidity (can you trade into or out of these assets easily?), and the underlying technology/valuation (is the blockchain valuable, and are all techs equally valuable?). On top of that is the likelihood that someone will steal your cryptocurrency, but to me that's the same as blockchain value.

So, are there other parameters to determine value? In any case, why should one cryptocurrency be significantly different in value from others? In that case, won't all of these eventually move towards the same price*?

*Or at least the same pricing mechanism.

**And like you say, turnover (or liquidity vs volume of a particular cryptocurrency) does a lot to affect its value in good and bad ways
 
SerenityNigh said:
I'm just trying to think of what valuations are based upon. With currencies, it's micro (in-nation) and macro (world) economic forces, geopolitical changes, GDP and debt/solvency, and rate of paper money printing (surely there are others, but that's basically it, right?).

With securities, it's intra-company dynamics, in-market dynamics, and other dynamics that shift money to or from other markets.

Of course, fads, greed, and fear do a lot to change prices too, but each of these have basic methods to value to currency or security.

With cryptocurrencies, there must be other dynamics. One of these is surely scarcity (largely rate of mining, but also volume in the market), but what about liquidity (can you trade into or out of these assets easily?), and the underlying technology/valuation (is the blockchain valuable, and are all techs equally valuable?). On top of that is the likelihood that someone will steal your cryptocurrency, but to me that's the same as blockchain value.

So, are there other parameters to determine value? In any case, why should one cryptocurrency be significantly different in value from others? In that case, won't all of these eventually move towards the same price*?

*Or at least the same pricing mechanism.

**And like you say, turnover (or liquidity vs volume of a particular cryptocurrency) does a lot to affect its value in good and bad ways
Click to expand...
Well at the moment you can't even analyze it like a regular currency because nobody is really using it or buying it to act as one.

That for me is the whole reason it is currently flawed. The people who actually understood what they were getting into with bitcoin were essentially making a bet that this cryptocurrency technology would become the adopted standard. For those people there was an obvious benefit to buying bitcoins early as they were essentially making a bet that they would be adopted and used as a currency and that the deflationary nature of the system meant that buying early had a huge potential for profiting as the currency naturally deflated while adoption rate increased. So if you were to ask me I'd say the main factors for valuing a cryptocurrency are rate of adoption and level of scarcity. Like countries wanting to keep their reserves in US currency because it is highly liquid and stable producing more demand for the US dollar and increasing its value in relation to that demand.

What happened is that a lot of people saw the headline of potential profits and the speculators came and dove into buying bitcoins headfirst, this is still happening now. The underlying issue here is that while more and more people have entered the market to buy a bitcoin the rate of adoption appears to not be growing as was expected by the people who originally made that bet and investment. What this equates to is a severe disconnect in what people believe a bitcoin is worth based on speculation value tied to anticipated adoption which doesn't appear to be happening as was once expected when the original first movers in the market made a bet that bitcoin would dominate the cryptocurrency market. People buying in at this point do not care about any of that and see it solely as an asset that increases in price but nobody can justify that growth in value beyond the speculation factor.

Essentially, I think the original method for valuing cryptocurrencies was based on how likely it was assumed that the currency would be adopted. More adoption would produce more demand for a currency with limited supply and naturally increase the cost of each coin as the market continuously returns to equilibrium.
 
Efcjake said:
Well at the moment you can't even analyze it like a regular currency because nobody is really using it or buying it to act as one.

That for me is the whole reason it is currently flawed. The people who actually understood what they were getting into with bitcoin were essentially making a bet that this cryptocurrency technology would become the adopted standard. For those people there was an obvious benefit to buying bitcoins early as they were essentially making a bet that they would be adopted and used as a currency and that the deflationary nature of the system meant that buying early had a huge potential for profiting as the currency naturally deflated while adoption rate increased. So if you were to ask me I'd say the main factors for valuing a cryptocurrency are rate of adoption and level of scarcity. Like countries wanting to keep their reserves in US currency because it is highly liquid and stable producing more demand for the US dollar and increasing its value in relation to that demand.

What happened is that a lot of people saw the headline of potential profits and the speculators came and dove into buying bitcoins headfirst, this is still happening now. The underlying issue here is that while more and more people have entered the market to buy a bitcoin the rate of adoption appears to not be growing as was expected by the people who originally made that bet and investment. What this equates to is a severe disconnect in what people believe a bitcoin is worth based on speculation value tied to anticipated adoption which doesn't appear to be happening as was once expected when the original first movers in the market made a bet that bitcoin would dominate the cryptocurrency market. People buying in at this point do not care about any of that and see it solely as an asset that increases in price but nobody can justify that growth in value beyond the speculation factor.

Essentially, I think the original method for valuing cryptocurrencies was based on how likely it was assumed that the currency would be adopted. More adoption would produce more demand for a currency with limited supply and naturally increase the cost of each coin as the market continuously returns to equilibrium.
Click to expand...

obviously the price for some (like BTC) is too high to do many transactions; a good value for these would be a price that can easily conduct normal transactions. that's slightly irrelevant to current pricing, but that will provide a lot of price pressure in the long term. that makes me wonder if the setup of BTC isn't flawed. if they could essentially do a stock split, or devaluation, to control price, they might preserve long term value via transactional utility (of course, against the risk/fear that value could be manipulated in the future for nefarious purposes).
 

SerenityNigh said:
obviously the price for some (like BTC) is too high to do many transactions; a good value for these would be a price that can easily conduct normal transactions. that's slightly irrelevant to current pricing, but that will provide a lot of price pressure in the long term. that makes me wonder if the setup of BTC isn't flawed. if they could essentially do a stock split, or devaluation, to control price, they might preserve long term value via transactional utility (of course, against the risk/fear that value could be manipulated in the future for nefarious purposes).
Click to expand...

apparently users discussed this a few years back, but the idea was (not surprisingly) voted down

as I read ^this^ back, it occurs to me that although it is in itself a cogent sentence, I don't really understand what any of it actually describes or means
 
SerenityNigh said:
obviously the price for some (like BTC) is too high to do many transactions; a good value for these would be a price that can easily conduct normal transactions. that's slightly irrelevant to current pricing, but that will provide a lot of price pressure in the long term. that makes me wonder if the setup of BTC isn't flawed. if they could essentially do a stock split, or devaluation, to control price, they might preserve long term value via transactional utility (of course, against the risk/fear that value could be manipulated in the future for nefarious purposes).
Click to expand...

Speculators have killed it as a currency. They've inflated valuations to levels that prevent it being functional. When the valuation corrects and the bubble bursts it will have a hard time regaining public faith enough to encourage the adoption that would drive natural valuation growth (In fact that is what has happened since the first big bubble first in 2014, nobody has been using it as a currency since it first hit the news as a hot little money making asset).

They will not do a stock split or devaluation as that goes against the entire deflationary design and anti-central bank philosophy.
 
One obvious benefit of currency that BTC lacks is that it can managed/manipulated. To some, this is a strength of BTC. But the weakness is that in a truly free market, changes in valuation are often swift and violent. There is no agency nor mechanism to protect stakeholders.
 

Status
Not open for further replies.

Welcome

Join Grand Old Team to get involved in the Everton discussion. Signing up is quick, easy, and completely free.

Register
Back
Top