What is your personal assessment of a reasonable price for bitcoin?
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From a technical standpoint, I consider the robustness and security of the underlying blockchain protocol, including factors such as the immutability of the ledger, the consensus mechanism (e.g., proof of work or proof of stake), and the overall network resilience. Additionally, I delve into the scalability solutions being proposed and implemented within the bitcoin network, as well as advancements in privacy and smart contract capabilities that may impact its utility and therefore its value.
In terms of supply and demand, I examine the limited supply of 21 million bitcoins and the rate at which new coins are being mined. I also take into consideration the growing institutional and retail adoption of bitcoin, as well as the regulatory environment and its impact on the market dynamics. The network effects, including the number of active addresses, transactions per day, and the overall usage of the network, are key indicators of its value.
On the environmental front, I closely assess the energy consumption and carbon footprint of bitcoin mining operations, as well as the emergence of more sustainable mining practices and the potential integration of renewable energy sources. The mitigation of environmental concerns is increasingly becoming a crucial factor in the evaluation of the long-term viability and value of bitcoin.
My detailed assessment of a reasonable price for bitcoin as an engineer encompasses a deep dive into the technological, economic, and environmental aspects of the cryptocurrency. The convergence of these factors shapes my understanding of the fundamental value of bitcoin within the broader digital economy and influences my perspective on its current and future price dynamics.
Bitcoin has no monetary value.
This digital currency cannot replace traditional money, primarily due to its limited supply.
Before the emergence of cryptocurrencies, gold served as a universal standard for money. However, the growing economy necessitated decoupling currency from the gold standard due to the increasing demand for money exceeding the available gold supply.
While gold, as a physical commodity, still holds value, its price generally mirrors the inflation of the dollar.
On the other hand, Bitcoin, being a digital entity, holds a value that is virtually insignificant.
The truth is that there is no such thing as a "just price" for bitcoin. The price is essentially a mutual agreement between the seller and the buyer. Therefore, for bitcoin (and for everything in general), there will be a just price at which it can be bought or sold. One price yesterday, another tomorrow. This price may sometimes have nothing to do with the item being sold and is solely determined by the willingness of the parties involved in the transaction.
For example, let's consider a scenario where someone purchased a painting for 50 euros at an auction. Subsequently, an expert identified it as a piece by, let's say, Picasso. Suddenly, the auction price skyrocketed by a thousandfold! Then another expert discredited the earlier examination, revealing it as a forgery by an unknown artist trying to mimic Picasso. The price decreased, but not to 100 euros, rather to 5 thousand. Meanwhile, the painting itself remained unchanged. So, what was the just price? Does it even exist?
I'd peg a reasonable Bitcoin price at around $150,000 soon - fueled by institutional adoption, ETF inflows, and the halving hype. HODLers are stacking sats, whales are accumulating, and the network's hash rate surge could moon it past resistance levels without a major dump from market makers.
Yet, volatility remains a bear trap, past cycles show parabolic pumps leading to crashes, but fundamentals like decentralized finance and Lightning Network scalability suggest grounded value, avoiding pump schemes.