How to calculate the intrinsic value bitcoins

mrees999
By mrees999 on Thu, Dec 12, 2013 - 12:56am

How to calculate the intrinsic value bitcoins.

 

In two open letters written this last week; one to Allen Greenspan and  one to Peter Schiff , these two well respected economic leaders made uneducated statements about the Bitcoin network. The two links below will brilliantly explain the intrinsic value of bitcoins and make the explicate connection that the value of a bitcoin is derived from its utility on the Bitcoin network.

As many doomsayers continue to spout nonsense about bubbles and scams, you can quickly determine how much they know – by asking the difference between a Bitcoin (capitalized) and a bitcoin (lower-case).  If they can’t answer this simple question, why would you trust them in their prediction of the boom and bust of the new currency system? By the time you’ve read this and the links I’ve given, you will know the difference between those who know of what they speak, and those that just like to hear themselves talk and repeatedly babble financial advice on a topic they don’t understand.

In short, what do you value?  Gold?  If you were the only person on earth that owned gold, why would you think it was valuable?  If there were only three or four people that owned dollar bills, and you could only exchange them with three people, how valuable would they be?  It takes a NETWORK of people to trade and realize the value of exchange. It’s a common belief system or mass delusion depending on who you ask.  Some ask “what’s backing bitcoin” – but can’t answer “what’s backing gold”?  It’s all the same thing – a common belief system that it is valuable. It doesn’t necessarily need to be valuable to you, just with enough people that agree - that it becomes self-evident.

 

In your search for the truth in all things, I encourage you to take a look at these letters. The first is from Erik Voorhees.  Peter Schiff agreed to a friendly debate on his radio show, which you can find on youtube – unfortunately Peter was badgering and not allowing for equal and intelligent conversation. Erik followed up with an eloquent open letter to explain with clear answers and clear up confusion for the audience without being badgered.

http://www.reddit.com/r/Bitcoin/comments/1rxmk3/my

 

The second letter was written to Allen Greenspan in reply to the former Fed Chairman’s comments that he couldn’t understand the intrinsic value of Bitcoin. It is written as a simple “layman” with easy to understand concepts and meanings for regular people to get their head around it easily. Even the 89 year old Greenspan has a chance.

https://medium.com/p/56f10f42803b

1 Comment

bowskill's picture
bowskill
Status: Bronze Member (Offline)
Joined: Mar 16 2012
Posts: 78
Banks are responding to bitcoin

That is a great letter by Erik Vorhees. When I listened to the interview with him on Peter Schiff's show I thought he explained himself very well and it was a good interview - even if Schiff was dominating the air time. But it is his show.

Anyway - if the bitcoin payment network had no intrinsic value I don't think that banks would be giving it near as much attention as they are now. And the number of news stories concerning banks and cryptocurrency is growing rapidly. It has set the cat amongst the pigeons.

On the Keiser Report a few weeks ago Barry Silbert predicted that banks will find a way to make money out of cryptocurrency. This JP Morgan story is particularly interesting. They are trying to patent a bitcoin like technology to be managed by them of course.

http://letstalkbitcoin.com/jpmorgan-chase-building-bitcoin-killer/#.Uqs2YPQW0TM

We may be set for a proliferation of all sorts of cryptocurrencies. There is even a sexcoin now! Ultimately there should only be one winner. Hopefully independent, peer to peer, of limited abundance and have all the other characteristics of bitcoin.

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