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BitCoin’s Real Value Correlated to Price Action

Published a couple of weeks ago in Info Tech , Politics - 0 Comments
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Clarity in the distinctions separating the long-term value-drivers of BitCoin’s valuation model relies on the nuances between what this technology is in society, and what it can do. The same is true for the multitude of “alt-coins”. In my estimation, the hyperbolic patterns seen in weekly, or even daily trading charts are the effect of automated trading programs working across several coins concurrently… but I’ll leave that for another time.

As for the valuation models, and correlating them to patterns seen in other asset classes, the key differentiators that put cryptocurrency in an entirely new asset/commodity class is primarily based on two key aspects of this technology. The first being the fact that it functions as a currency, and the second, it is the only type of currency that is truly borderless.

BitCoin Distinctions

The fact that BitCoin functions as a mechanism by which goods and services can be exchanged; and thereby fuels activity in an economic environment, doesn’t allow for a direct correlation to the dot-com bubble in the 90’s, the housing bubble in the 00’s, the stock bubble in the 1920’s, and especially not a tulip bubble. The dot-com bubble is the closest correlation, but eve it was based on actors inside and economic environment needing to acquire fuel. Note the distinction.

Additionally, because it’s a border-less currency, the first ever of its kind on this planet, the direct correlation to currency models existing circa 2017, cannot be made. Market penetration takes on a whole new context when assigning this border-less quality. Again, note the distinction.

These two distinctions are critical when coming to an understanding of what technologies such as BitCoin are doing to our paradigm as a society. It is especially imperative to keep these in mind if considering the acquisition of cryptocurrency as an “investment” — else you might lose your shirt, car, and house otherwise!

Be Wise!

Quantitative Context

Until this tech gets through several phases of disruption in the economies of the world, the only real basis that can be used to assign quantitative value of the currency is the number of integrated network(s), users, nodes, and channels that the system architecture has and is adding.

Qualitative Context

Most importantly, this “currency” is a user-based network architecture. This distinct qualitative difference between other forms of currency and BitCoin is the primary differentiator when correlating it to other currencies that are not cryptographically secured by network protocols. Its apples-to-oranges. Aligning the correlation of rise in price to the number of users, nodes, channels, etc, that are integrated into the network is a way to begin getting a sense of the actual driving force behind the increase in value.

Outside that, valuation of any sort is really is only speculation. Even if its done through technical analysis of charts. — the bots rule that world of inflating and deflating value metrics. And they will continue to do so. Its part of the rules of the game.

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