How Do People Give Value To Cryptocurrency And How Is The Price Of Cryptocurrency Defined? | Bitconnect
Precious metals gain their value/perceived value due to their utility and limited supply, and price is often tied to supply/demand. Supply/Demand is a simple economic factor that affects the price of many things. In some countries Bitcoin and other cryptocurrencies is classed as an asset, in others as a currency. Bitcoin, for example has a maximum of 21 million whole units, divisible 100 million times. With over 7 billion people on the planet, if even 1 billion were to adopt Bitcoin, 21 million whole units would not spread very far without a significant price tag. The supply is also bought in at a constant rate and is unchangeable due to the coconscious rules. This creates a supply that is limited, and thus people will pay more to get the coins they think have value. Block reward halvings, like the Bitcoin halving of 2016 caused the price to slowly increase as the halving approached, due to the reduced supply of new incoming coins imminent. This can affect the price of many cryptocurrencies, but in the case of Litecoin, did not even make a major dent in the price. The energy put into securing blockchains can be intensive. In the case of proof of work (POW) blockchains which are the most popular form, electricity usage can be intense. In the case of Bitcoin, the blockchain uses as much energy securing it at present as a small country uses. This has a factor on the price, as it takes a certain amount of energy on average to mine one Bitcoin. This goes up with difficulty increases. The more secure the blockchain and the higher the mining difficulty , the higher the perceived value and price and the harder the coins are to get through mining. This can have an impact on price and ties in with the energy usage above, in the case of proof of work blockchains such as Bitcoin a Continue reading >>
Why Bitcoin Has Value - Business Insider
Paul Krugman set off a new firestorm this weekend with a post about Bitcoin that asked a fairly simple question: What gives a bitcoin its worth ? The post drew a ton of angry reaction from the Internet community and tech people for a couple of reasons. One is that this question why is a bitcoin worth anything is a difficult question to answer. The other is that the post is bizarrely titled "Bitcoin Is Evil" even though the post doesn't say that. But on the Internet, people don't read past the headline and so, outrage! But back to the question of trying to establish an "intrinsic value" for Bitcoin. It's not simple. The dollar has intrinsic value because you need dollars to pay taxes in the United States. The government accepts no other currency. So if you're going to engage in any kind of commerce whatsoever, you need to use dollars. This creates real value for the currency. Gold has real value because it's shiny and can be used for jewelry. Other commodities get their value from industrial purposes. But what about Bitcoin? If you ask Bitcoin believers why a bitcoin is worth anything at all, they will tell you about how amazing the technology is, and how it's "programmable" and how cryptography and pseudoanonymity are so great. But none of these are very satisfying answers. Why Litecoin believes its superior. Litecoin.org For one thing, these features mainly explain why Bitcoin as a payment platform is so intriguing. They don't explain price. And as Krugman even notes in his original post, most of the techie Bitcoin bulls usually talk about Bitcoin as a platform (something that's easy to defend), rather than Bitcoin as an asset that will go up or down. Furthermore, if Bitcoin's value were simply a function of all of the technological aspects, then there's no reason tha Continue reading >>
Skeptics Say Bitcoin Has No Value. Heres Why Theyre Wrong
On Tuesday, it was trading at $11,943 , a decline of 12 percent, according to CoinDesk. As bitcoin's popularity surges and its price rises and falls, more and more people are asking the same question: How does bitcoin , something that's essentially invisible and intangible, have value? In economics, something has value if it checks the following two boxes: scarcity and utility. Scarcity just means that something has a finite supply. In the case of bitcoin, the cryptocurrency has a set cap of 21 million bitcoins. Many analysts note that this set cap makes bitcoin more desirable than other assets, even gold. That's because unlike with gold, there's no need to worry about a digital Gold Rush. A treasure trove of bitcoin won't ever be "discovered," causing the crypto's price to crash with an influx in supply. "There are potentially millions of times more gold underground than actually has been extracted," said Tom Lee, head of research at Fundstrat Global Advisors. Lee was chief equity strategist at J.P. Morgan before co-founding Fundstrat in 2014. Ben Yu, a blockchain expert living in San Francisco, says technological advances are also making gold easier to mine. "Today we mine gold at four times the rate that we did just 100 years ago," Yu said. So if bitcoin has scarcity, what about its utility? Many believe the cryptocurrency's utility lies in its potential to be a more efficient commodity than we already have. Proponents of bitcoin like it for a number of reasons. First, bitcoin is decentralized, meaning no government, bank or single person has control over it; it can't be toppled by corruption at the top. It's also trivially divisible, meaning you can buy a small item like a doughnut with it as easily as you can buy a house or even a mansion. And finally, the code it Continue reading >>
Why Bitcoin So Expensive?
Bitcoin is not expensive at all, it is just getting more valuable day by day. If we are talking about price in fiat currency then, 1 Bitcoin is equal to 1,675 Latvian Lats and the same Bitcoin is worth 13,81,57,865 Vietnamese Dong so it doesn't actually mean that it is cheap in Latvia and expensive in Vietnam. Bitcoin was nothing a few years ago but more and more people joined the rally over the years and demanded Bitcoin, Quote from: Edward50 on January 03, 2012, 06:58:19 PM 10) Last but not least, who the hell is stupid enough to pay $5.00 now for a bitcoin? Now Bitcoin is growing with a rapid growth rate and if demand continuous then the price will keep rising as per the law of demand and supply. Quote from: CisColtz on October 30, 2017, 05:04:55 PM Well bitcoin is expensive now and in my opinion we are in a big bubble ready to burst out but I doubt it will go ever lower than 3k$. You can start gather money and when you think it's the perfect price for you to jump in , do it When you look for it dollar price you might say that this is so expensive and thats all that gonna do also that looking dor its dollar price but convert it and only look for the price of bitcoin this is not much expensive mg point is we dont have to look always for its price because we all know that as the time pass by it is gtoa and grow the price is high and high. So the price will be more expensive as long as we can have something to do just to have atleast one we must gonna do it so the wag now we look for bitcoin will never too expensive. If you say bitcoin is very expensive now because now its only 6K dollars then what will you say if its rate cross 10k dollars so its better for you to invest now if you have funds which you are not afraid to loose because like every market the price of the Continue reading >>
Why Are Cryptocurrencies Valuable?
I think the best way to explain this is to start with a hypothetical scenario: Imagine if we created a new version of the USA, where we have a fixed supply of money (lets say $1 Trillion dollars). There will never be any more. We move forward as a country as we ordinarily would: we create products, we build businesses, we build houses, etc. We all work together and create a lot of value in our country. In this hypothetical scenario, what would happen to the value of a dollar? It would have to increase, because we would be using the same quantity of dollars to transact in an increasing quantity of goods and services. The growth in the value of a dollar would be related to the growth of our economy. But as we all know, thats not what happens. Our economy grows, but the value of a dollar consistently declines. Where does it go? All of those economic gains, that would have been reflected in the increased value of our currency, are absorbed by the government - in the form of money printing. Not only does the government absorb all of the economic gains we create, but it even goes a step further and prints enough money to cause our currency to lose 2% of its value per year. It is an extra hidden tax that they call inflation. Governments have been telling us for decades (centuries?) that inflation is important in order to incentivize spending and investment. Is it really? The government certainly has a strong incentive to make us believe this. Even if my dollars are growing in value by 23% per year, I still need to eat, I still need a home, a car, etc. And if the stock market is likely to deliver 710% annual returns, Im still going to invest. Certainly, I wont invest in US Treasury Bonds with 2% interest, but who do those benefit? Oh right - the government, again. Im not convi Continue reading >>
Why Bitcoin Has Value
January 13, 2017, 11:17:25 AM EDT By Bitcoin Magazine We all have what feels like an intrinsic understanding of value, though it is actually learned as we come to know our world. A gold bar has value, an empty soda can, not so much. When we encounter new things its usually fairly easy to assess what kind of value they might hold, but Bitcoin is a different beast. Bitcoin is harder to define and understand, and for many beginning Bitcoiners the question of value is one of the most puzzling. So why does Bitcoin have value? To begin, we really need to understand why anything has value. Fans of post-apocalyptic fiction will often point out that in the end, the only things of real value are those that sustain and defend life. Perhaps theyre right on one level, but with the rise of civilized societies things got a bit more complex, because the things that sustain and defend those societies also gain a certain degree of value. It is in this context that all monies, Bitcoin included, gain their value. Since our societies rely heavily on trade and commerce, anything that facilitates the exchange of goods and services has some degree of value. Imagine, for example, a pre-money marketplace where the barter system is king. Perhaps youre a fisherman coming to market with the days catch and youre looking to go home with some eggs. Unfortunately for you, the chicken farmer has no use for fish at the moment, so you need to arrange a complex series of exchanges to end up with something the egg seller actually wants. Youll probably lose a percentage of your fishs value with each trade, and you also must know the exchange rate of everything with respect to everything else. What a mess. This is where money saves the day. By agreeing on one intermediate commodity, say, silver coins, two is Continue reading >>
Bitcoin Price Surge Leads Steam To Stop Taking It As Payment
Bitcoin (virtual currency) coins placed on Dollar banknotes, next to computer keyboard, are seen in this illustration picture, November 6, 2017 ( REUTERS/Dado Ruvic ) Bitcoin price surge leads Steam to stop taking it as payment The cryptocurrency was intended to replace cash, but now can't be used to buy things on one of the internet's biggest shops Bitcoin is becoming so valuable and volatile that it's not possible to use it to actually sell things, according to one prominent online shop. Steam which is the primary way of selling computer games on the internet says that it will no longer accept the cryptocurrency because of its swift and shocking changes in price. Sharing the full story, not just the headlines What is Bitcoin and why is its price so high? Bitcoin mining website loses tens of millions of dollars after theft But those same surges have been accompanied by huge dips, with days where the price has dropped by as much as 25 per cent. That volatility has led many to invest in the cryptocurrency but shops now say it is becoming difficult to know how valuable it is when exchanging goods for bitcoin. The changes can be so quick that the value of bitcoin can vary hugely even in the time that it takes to complete a transaction. That is accompanied by significant transaction fees that make selling things in bitcoin doubly expensive. The bitcoin network charges shops when they sell things using bitcoin meaning that they can be landed with bills of as much as $20 per transaction when selling. Google celebrates its 21st birthday on September 27. The The search engine was founded in September 1998 by two PhD students, Larry Page and Sergey Brin, in their dormitories at Californias Stanford University. Page and Brin chose the name google as it recalled the mathematic te Continue reading >>
Bitcoin Tops $16,000, And Its $271b Market Value Passes Home Depot's
To find out more about Facebook commenting please read the Conversation Guidelines and FAQs Bitcoin tops $16,000, and its $271B market value passes Home Depot's Adam Shell , USA TODAY Published 10:59 a.m. ET Dec. 7, 2017 | Updated 10:17 a.m. ET Dec. 8, 2017 Bitcoins extraordinary price surge means its market capitalization now exceeds the annual output of whole economies, and the estimated worth of some of the worlds top billionaires. Time A visual representation of the digital cryptocurrency, Bitcoin, alongside U.S. dollars on Dec. 7, 2017 in London, England. CONNECT TWEET 57 LINKEDIN 9 COMMENTEMAILMORE The Bitcoin gold rush acceleratedThursdayas the world's best-known digital currency barreled through $14,000,$15,000 and $16,000 in an extraordinary price run-up that now values the cryptocurrency at$271billion, eclipsingHome Depot's market worth. Bitcoin's surgewhich many Wall Street pros claim is a speculative frenzy and financial bubble has boosted thedigital currency'smarket value so much that it's now worth more than 488of the 500 U.S. companies in the Standard & Poor's 500 stock index. So, only 12 companies in the large-cap stock index have market valuesgreaterthan Bitcoin, S&P Dow Jones Indices data through Dec. 6 show. At its peak Thursday, Bitcoin jumped more than 25%, rallying$3,325and hitting an intraday record of $16,568.92per coin, just eight days after topping $10,000. At 4 p.m. it remained up more than 19% at $15,804. For the year, Bitcoin has surgedmore than 1,550%. From its low of $11,450 on Tuesday to its peak Thursday, Bitcoin rallied 45% in aroughly48-hour span.There are now 16.73 million in circulation, according to coinmarketcap.com. Bitcoin's market value is simply the number of coins out in the market times its price, which is constantly shiftin Continue reading >>
Bitcoin Explained: What Is It, What Is It Worth, Will The Bubble Burst?
Bitcoin explained: Its history, why is it so valuable, and will the bubble burst? With one bitcoin worth $10,000, 2017 has seen this cryptocurrency go stratospheric. But what exactly is it? Bitcoin has been around since 2009, but cryptocurrencies as in, a digital currency that operates outside of a central bank have suddenly shot up in value, leaving many wondering if a solid investment could reap thousands. Recently, Bjork encouraged fans to buy her Utopia album with Bitcoin, Litecoin, Dashcoin or AudioCoin . This looks far from being a digital fad, and many who invested several years ago are on the brink of being millionaires. So heres a quick guide to the currency, why its all the rage, and whether the bitcoin bubble will burst. Bitcoin first went online in 2009 as open-source technology, invented by a mysterious, anonymous individual going by the pseudonym Satoshi Nakamoto. Its a digital currency, used to pay for items online without any additional bank charges, or government control. Companies and people can buy or sell items using bitcoin as payment. In 2017, these companies include Microsoft, Virgin Airlines, WordPress and Subway. Hard, real-life currencies such as the Pound sterling or US dollar are managed by a central bank (in this case the Bank of England and US Federal Reserve), which steadies rates and manages supply and demand. Bitcoin has no overall regulation, but it relies on the activity of miners. This is the complicated part. The currencys quantity can only be increased if it is mined a process which involves computers collecting pending bitcoin transactions and turning them into a complex mathematical equation. The first miner to solve this puzzle then chains together a block of transactions (called a blockchain), and they are then rewarded with ne Continue reading >>
Commentary: Bitcoin's Value Explained | Fortune
Bitcoin is a different kind of beast that can be difficult for people to understand. New things usually are. And while Bitcoin is nearly nine years old, it represents a completely new type of asset. Let’s break down what I perceive to be the three major components of Bitcoin’s value: As investors near the Bitcoin iceberg, the first thing they see is payments—after all, it’s a cryptocurrency, right? Currencies are used for payments and so Bitcoin must be all about payments. It’s true: Bitcoin is certainly used for payments, and this is an important part of its value. However, it’s not widely used for payments and, while it may be increasingly important over time, it isn’t the most important component of Bitcoin’s value today. Why don’t people use Bitcoin for payments more often? Simply put, people don’t like to spend appreciating assets. Given the choice of payment methods, people like to spend in the “currency” that is likely to be worth the least tomorrow. At this point, that’s not Bitcoin. Furthermore, most people don’t buy Bitcoin for payments. That’s simply not why they acquired it. Even if you could, very few investors would pay for their coffee with Apple (AAPL) stock because that’s simply not the reason they bought Apple stock in the first place—same with Bitcoin. Lastly, people don’t generally use Bitcoin for payments because goods aren’t broadly priced in BTC terms. Goods aren’t broadly priced in BTC terms because, if they were, the price would have to update several times each minute just to maintain a consistent revenue for the seller. In short, the major drawback to using Bitcoin for payments is that it is volatile, which is neither a great ingredient for payments (medium of exchange) nor the pricing of goods (unit of Continue reading >>
What Makes Bitcoin Valuable?
The digital currency Bitcoin has a dedicated following, regularly makes headlines and inspires countless investors to consider making digital currency part of their portfolios. Yet it enjoys the backing of no government or third-party entity like a bank, and it can be hard to understand where its perceived value comes from. So, you may be asking, what makes bitcoin valuable? Fundamentally, bitcoins derive their value just as anything else does: because people want them. Like any other currency, bitcoin follows the basic rules of supply and demand. Currencies have always been useful tools to make trade easier, enabling holders to convert goods into a widely tradable commodity through sale, then use the proceeds of that sale to purchase nearly anything they wish. While fiat currencies derive value from the governments that back them, currencies like gold are valuable in and of themselves. Currently, bitcoin isnt like other currencies in that it is not universally accepted. There are limits on what it can be used for. While not backed by a government or valuable by themselves, bitcoins are still used as a store of value, a placeholder for the goods and services that they can be exchanged for, as with traditional currencies. Bitcoin derives its unique value from the fact that despite its lack of official backing or wide acceptance, it has generated an ecosystem in which many people are willing to trade and accept it. In fact, some perceive bitcoin to be more valuable, or more useful, than other currencies in that it is a better option for certain purposes, such as seamless digital transfers and use across borders. Also, because there is a cap set on the total number of bitcoins that will ever exist, the currency cannot be devalued through inflation as others can. Finally, Continue reading >>
Why Is Bitcoin So Valuable?
The price of bitcoin has soared from a mere $759 a year ago to an astounding $11,760 today. Naturally, many are left scratching their heads. Why is bitcoin so valuable? In what follows, I consider two common views before offering my own. Many in the bitcoin community claim that bitcoin is valuable because it is costly to produce. Each bitcoin represents the computing power used to produce it, they say. Computing power is valuable. Therefore, bitcoin is valuable, too. Is that right? There is a grain of truth there. But, ultimately, this explanation doesn't work. Let's start with what is correct: it is costly to produce bitcoin. Bitcoin is a distributed ledger technology. The blockchain, or ledger, at bitcoin's core must be updated when a transaction is made. If you buy a burger with bitcoin, your account has to be debited and the diner's account credited. To accomplish this without relying on a central clearinghouse, all of the computers running the protocol race to complete a complicated computing problem that processes the transactionor, more precisely, a block of transactions. Of course, it is costly to solve this computing problem. To encourage folks to incur those costs, the first computer to solve the problem is rewarded with new bitcoinbitcoin that no one owned previously. Thats mining. You run the program and, with some luck, acquire some new bitcoin. So, where does this explanation go wrong? Basically, it gets the causation backwards. It is true that individuals incur costs to mine bitcoin. But that doesnt make bitcoin valuable. Rather, individuals choose to incur the costs of mining because bitcoin is valuable. Think of it like this: no one digs for gold in my backyard. Why? It is costly to dig for gold and, presumably, they do not believe the gold they could Continue reading >>
Ask Hn: Why Are Bitcoin And Ethereum Suddenly So Expensive? | Hacker News
Ask HN: Why are Bitcoin and Ethereum suddenly so expensive? Bitcoin has a bubble, and all cryptos get dragged along with it. The present bubble started in early April, when it became impossible to get USD out of Bitfinex. Being unable to get money for bitcoins on Bitfinex then caused the bitcoin price to go up from $900 at the start of April to $1900 in mid-May to $2800 on 26 May, by which the bubble was bubbling on its own. The mechanism is: 1. Users have a USD account and a BTC account. They cant sell their bitcoins and withdraw their cash, but they can buy more bitcoins using their USD account which contains trapped dollars which cant be used for anything else. Think of it as a Bitfinex USD token, not as actual US dollars Disneyland fun-money which can only be spent inside the theme park. The price goes up. 2. With the higher price on Bitfinex, traders arbitrage by buying coins on an exchange with a lower price and selling them on Bitfinex. (Note that the USD from the sale is stuck on Bitfinex.) This raises the price on the other exchanges. 3. Expectations raise, the price gets mainstream press and more people get into Bitcoin. The bubble inflates. This works precisely because you cant get your money out (and other exchanges were also having problems with US dollar withdrawals). Users were reluctant to remove their BTC from Bitfinex because the price was highest there (even if unrealisable) and because they loved it as a trading platform. The trapped USD also gets used to buy other cryptocurrencies the price of altcoins tends to rise and fall with the price of bitcoins and this has fueled new Initial Crowdfunding Offerings, as people desperately look for somewhere to put their unspendable dollars. Even better: on Bitfinex, you can use BTC as collateral to margin-tra Continue reading >>
Why Bitcoin Is Worth Exactly $0 (and Blockchain Might Be Very Valuable) - Marketwatch
Its hard to go a day without someone asking me a question about bitcoin. What is it? Why is it so valuable? Should I buy some? How do I buy some? The guy down on the corner in the pawn/gold exchange shop said he could buy me one. (Yes, this is actually happening!) It seems bitcoin BTCUSD, -2.28% and the cryptocurrency craze has truly reached the mainstream, and the implications of that are unknown. What we do know is that its attracting every shady crook and scam artist in the world. And why not? Theres tons of money to be made. I hope the following column sheds light on what bitcoin is and isnt. Next time you see one of those guys on TV, notice how deftly he switches between the term coin and blockchain, creating an illusion that theyre the same thing. Lets start our discussion with the technology that made bitcoin possible. Its called blockchain. In simple terms, blockchain technology is a record of all transactions ever done in bitcoin. Imagine a gigantic piece of paper that lists every transaction ever completed. Then imagine that there are thousands of copies of this paper, and all of them are automatically updated when any two people agree to exchange bitcoins. Every time a transaction takes place, all these copies are checked for consistency to make sure you actually have the bitcoins you claim to have. If everything checks out, the new transaction is added to all the pieces of paper at once. This is the heart of the genius idea that is blockchain, and what makes it possible to have certainty over a bitcoin balance someone owns, without needing any central party (such as a bank) to verify it. If all the pieces of paper agree, then the balance is correct, and trying to doctor or fake all the pieces of paper at once is impossible. The best (and worst) thing about Continue reading >>
How Bitcoins Became Worth $10,000
Sign up or login to join the discussions! A few years ago, people thought Bitcoin was a joke. Now it’s worth billions. On Tuesday evening, the value of one bitcoin shot above $10,000. It has been a remarkable run for a currency that was only worth about $12 five years ago. The run has been particularly remarkable because it's still not clear what Bitcoin is useful for. During its early years, the cryptocurrency garnered a lot of optimistic talk about how it would disrupt conventional payment networks like MasterCard or Western Union. But almost nine years after Bitcoin was created, there's little sign of it becoming a mainstream technology. Few people own any bitcoins at all. Even fewer use it as a daily payment technology. Yet that hasn't prevented the cryptocurrency's value from zooming upward. One factor driving Bitcoin's growth has been the emergence of a broader cryptocurrency ecosystem. Bitcoin serves as the reserve currency for the cryptocurrency economy in much the same way that the dollar serves as the main anchor currency for international trade. In this piece, we'll explain the key innovation that set Bitcoin apart from all previous electronic payment schemes. We'll look at how Bitcoin won over regulators and venture capitalists to become a significant part of the global financial system. And we'll examine the cryptocurrency boom of the last year that has helped drive Bitcoin's value into the stratosphere. While we can tell the story of Bitcoin's rise and point to some of the factors that have pushed its value upward, we can't really explain why the currency's value goes up or down during a particular day, week, or month. In particular, bitcoins have more than doubled in value since the start of October, which is hard to explain with anything other than sp Continue reading >>