73 Reds

Curious that the opening paragraph in Peterson's "Metcalf's Law for Bitcoin" states that Bitcoin has no intrinsic value. On the other thread proponents lambasted BTC skeptics for making the same suggestion.

@Jfan much appreciated. Lots of reading ahead.

Thank you @TwoCitiesCapital. Look forward to learning more.

Who suggested that valuation need be in the form of DCF? Your answer if I recall correctly was a comparison to gold. Gold has been a TERRIBLE (emphasis added) investment over time.

Do you have links to these theories? I would be interested in reading them (though am always skeptical of what Dr. Google brings up). Thanks.

@ShaperDingaan I asked a straight forward question of proponents on another thread (Trump Trades): How do you value BTC? In other words, how do you know the price you are paying is sensible? No one could provide a cohesive answer. They all tried hard to justify the future of BTC but responses ranged from "trust", "belief", comparisons to gold, and the efficient market theory (supply and demand). Personally, I'm neither for or against BTC, though I have trouble ascertaining how or why I would ever need it, and even so how any value - other than relative to other currencies can be derived. What say you?

No; I can own collectibles for any number of reasons and not care at all about the price or market value. Just saying. (Sorry, I wasn't going to post on this subject again).

My last post on this thread: <<Eventually there will be a way to value it>> This shows me that there is no way to value BTC now. So there is no way to tell whether the price you pay is reasonable, or not. Therefore BTC today is simply a bet, a gamble or speculation. If so, I get it, good luck, but I'm out.

And how has gold performed as an investment over time? (No need to answer that!)

OK, but it is possible to "get it" with collectibles, sports and entertainment franchises, etc... and still not comprehend BTC.

Bottom line, is it unreasonable to question how owners of BTC value their investment? What metrics or standards do they use? Imagine if folks here were to recommend stocks solely on the basis of supply and demand and the last price? Would that fly?

I am genuinely trying to understand the thought process behind valuing BTC. There are no standards of valuation known to me that make any sense and "supply and demand" simply endorses the efficient market theory which essentially says that Buffett was simply lucky.

The speaker classifies computer power as a commodity. Not sure how or why. He then concludes without any substantiation whatsoever that the world's computer power today is worth at least 1 trillion dollars. No one is a buyer of the world's computer power. The fact that an intangible force creates benefit doesn't mean that the intangible force can be valued, bought or sold for any measurable price. And computer power benefits all of us in almost every facet of life; we're not quantifying and marketing each such facet as an investable asset.

Why do you assume I am wrong? Serious question.

"World's most powerful computer network": Please define.

Location. And all residential properties have rental value unless renting is otherwise restricted.

1. Valuation of certain assets are indeed that easy. 2. Categorically, any price paid has to make sense. The asset is not what is important, what matters is how it can reasonably be valued. Supply and demand is simply a cop-out answer that only applies to the last marginal transaction. 3. I don't distinguish between growth investing and value investing. There are elements of each in the way I would value any investment. 4. How do rate of adoption and catalysts for use translate into an ascertainable price today? Again, the issue is not the asset itself but how it can be valued and priced when there is nothing of real substance backing it and it is based primarily on a belief that is not so dissimilar to a passing fancy. To me, the poster child for the Greater Fool's Theory.

Its not just supply and demand. Income property is valued based on an expected return on investment. Not sure why this concept is so difficult to understand. If BTC is a currency, the only way to value it is relative to other currencies. What if BTC traded at $1,000,000 tomorrow? Would you buy? Would you sell? How will you ever know when, or why it is appropriately priced?

While we're at it why don't we, as BRK shareholders propose that BRK use all its spare cash and buy BTC? Its a sure thing, right?

Well, there are widely accepted valuation metrics for real estate. And there are comparables. When you bought your house 9 years ago it was worth a lot less for many identifiable reasons. Why was BTC worth ???% more yesterday than it was the day before?

OK, let me know when a legitimate price has been discovered, and why. Not trying to be rude but next time you buy a car, house or anything significant, don't you want to know the price you pay is appropriate?

The issue for me is that none of your info provides any reasonable, quantifiable way to value BTC.

So again trying to understand, BTC is backed by folks in very small, oppressed economies with a belief that it is superior to their own currency. I suppose that is something but I have no idea how that equates to sustaining its current price, or any price for that matter. If these small economies over time become more prosperous, who then needs BTC, and why? In other words, BTC has the full faith and credit of what?

If I understand correctly the Mars tokens are backed by the productivity of the Mars economy. What backs BTC?

I'm fondly reminded of the late 1990s when internet stocks were all the rage. Can't even count how many internet millionaires I met (that was when one million dollars was real money). All these companies were a sure thing and price didn't matter. Buffett was looked at like the village idiot. Not saying that history necessarily repeats itself but it often rhymes.