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Bitcoin Bubble Makes Dot-Com Look Rational

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Re: Bitcoin Bubble Makes Dot-Com Look Rational

#71

Post by 0bsidian »

AznHisoka wrote: post #67
0bsidian wrote: post #18

The idea that you can value bitcoin via P/E, utilizing mining fees as the "E" is incorrect. It's akin to valuing gold through P/E, by utilising the cost of extraction as the "E". This is obviously wrong because holding gold doesn't entitle the bearer to a portion of those mining costs, same with Bitcoin. The reality is that gold cannot be objectively valued because it doesn't have an objective value (beyond its indus…

How about the "E" in non dividend stocks? How does owning 1% of Amazon entitle me to 1% of their earnings?

It's a good question.

The consensus is that P/E is not a good valuation metric for high growth companies.

I would rather use comparable multiples, DCF or sum of the parts for this type of exercise.

The principle being that you will benefit from stock appreciation rather than dividend payout.

e.g.:

https://www.investors.com/how-to-invest/investors-corner/ign...

https://seekingalpha.com/article/4035706-p-e-ratio-good-metr...

Re: Bitcoin Bubble Makes Dot-Com Look Rational

#72

Post by scotty79 »

matte_black wrote: post #55

My only resentment toward Bitcoin is that if I had gotten in early enough there could have been some easy money to be made, but only because I believe in the Greater Fools theory, not because I actually believe in Bitcoin as a currency.

I never believed bitcoin as a currency same way I don't believe gold or art as a currency.

But bitcoin for me is something like art or gold (scarce, durable) easily, securely transferable to anyone on the planet within less than a day without the need for any third party.

That's bound to be worth something.

Re: Bitcoin Bubble Makes Dot-Com Look Rational

#73

Post by kss238 »

Nursie wrote: post #59
0bsidian wrote: post #18

The idea that you can value bitcoin via P/E, utilizing mining fees as the "E" is incorrect. It's akin to valuing gold through P/E, by utilising the cost of extraction as the "E". This is obviously wrong because holding gold doesn't entitle the bearer to a portion of those mining costs, same with Bitcoin. The reality is that gold cannot be objectively valued because it doesn't have an objective value (beyond its indus…

You remember that there were other social networks before facebook dominated everything, right? Network effect now is no guarantor of the future.

That doesn't mean Facebook is overvalued though. Just because it's value could disappear doesn't mean it has no value.

Re: Bitcoin Bubble Makes Dot-Com Look Rational

#74

Post by charlesdm »

leereeves wrote: post #70
scotty79 wrote: post #63

Earlier quoted context omitted.

Like people holding gold in the period when gold does not appreciate are left holding worthless chunks of metal?

Gold doesn't require a worldwide network of specialized computers to continue operating so it will continue to be useful.

The internet needs a worldwide network of specialised computers to continue operating. I bet it won't be very useful anymore once we turn those off.

Re: Bitcoin Bubble Makes Dot-Com Look Rational

#75

Post by alex_young »

lemondrops wrote: post #52
tobyhinloopen wrote: post #13

Earlier quoted context omitted.

How do I know what? That it will crash and burn? Because it is a useless resource. It is only worth something because other people say it is worth something, and unlike paper money it is not backed by anything significant. It is a bubble of hot air, ready to pop at any time. It might continue rising for years or decades. But it is not usable as a real currency, so it will always remain a useless waste of resources. T…

>> It is only worth something because other people say it is worth something That is actually the very definition of most currencies currently in use [1]. Money is actually just a promise that someone will provide you goods or services in exchange for it sometime in the future, it has no intrinsic worth. Also, paper money isn't tied to anything [2] either, let alone the "digital" money we have in the banks. [1] https…

Money is traditionally backed by something though right? Isn't a currency a bunch of tokens with an army? Where's the Bitcoin army when I need them to enforce my contacts?

Re: Bitcoin Bubble Makes Dot-Com Look Rational

#76

Post by perseiden »

benbou09 wrote: post #34
tobyhinloopen wrote: post #13

Earlier quoted context omitted.

How do I know what? That it will crash and burn? Because it is a useless resource. It is only worth something because other people say it is worth something, and unlike paper money it is not backed by anything significant. It is a bubble of hot air, ready to pop at any time. It might continue rising for years or decades. But it is not usable as a real currency, so it will always remain a useless waste of resources. T…

What do you mean by 'anything significant'? Paper money is not backed by anything material. Rather, it is backed by institutions (central banks, governments, banks) and individuals using them. To me, that's pretty much the same as cryptocurrencies.

I think that was the point he was trying to make. Without major support of such institutions / individuals, bitcoin won't catch on as a "real" currency.

Re: Bitcoin Bubble Makes Dot-Com Look Rational

#77

Post by Cheapershot »

0bsidian wrote: post #18

The idea that you can value bitcoin via P/E, utilizing mining fees as the "E" is incorrect. It's akin to valuing gold through P/E, by utilising the cost of extraction as the "E". This is obviously wrong because holding gold doesn't entitle the bearer to a portion of those mining costs, same with Bitcoin. The reality is that gold cannot be objectively valued because it doesn't have an objective value (beyond its indus…

What is the P/E ratio of the dollar? That’s how stupid this article is

Re: Bitcoin Bubble Makes Dot-Com Look Rational

#78

Post by leereeves »

charlesdm wrote: post #74
leereeves wrote: post #70

Earlier quoted context omitted.

Gold doesn't require a worldwide network of specialized computers to continue operating so it will continue to be useful.

The internet needs a worldwide network of specialised computers to continue operating. I bet it won't be very useful anymore once we turn those off.

People use the Internet for a lot more than speculation.

What do people use BTC for other than speculation?

Re: Bitcoin Bubble Makes Dot-Com Look Rational

#79

Post by leereeves »

charlesdm wrote: post #39
leereeves wrote: post #35

Earlier quoted context omitted.

Maybe it's digital gold. Maybe when the price stops rising no one feels any desire to buy it anymore and people are left holding worthless numbers.

Yes, maybe it will become digital gold. If it were true digital gold, it would have a similar valuation closer to gold, i.e. $8tn (a 60 fold increase of its current value).

A whole lot of the world's gold is held by governments. For BTC to reach similar valuations, it would need governments to buy it. Why would they?

Re: Bitcoin Bubble Makes Dot-Com Look Rational

#80

Post by sanmon3186 »

f_allwein wrote: post #9

Old saying: "What's common in every bubble is the belief that this time, it will be different." -> if you invest in cryptocurrencies, make sure not to invest more than you can comfortably lose (probably a few percent of your overall funds).

Bubble or not, one obvious difference with cryptocurrencies is, it is not limited to a geography or a country. I hesitate to use the term “insurance” but the risk is spread across the globe. That plus the freedom to get into it (and leave) anytime makes it unique in a way.
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