Why I Think Bitcoin is Still Undervalued
Introduction
In an interesting discussion with another user ( @pedrombraz ) I stated that I think Bitcoin at its current price of around 2.5K USD is undervalued.
I thought this would be an interesting topic to discuss.
Before getting on to my personal thoughts on this, I have created a twitter poll to help gauge other people's opinions in addition to this post:
https://twitter.com/Soul_Eater_43/status/882611101938176000
Please click the link and vote - it is only for 24 hours.
Right now it seems most people voting think that BTC is undervalued and should be worth more than $5K USD.
My Thoughts
Here are my main thoughts on why I think the current price is low. Obviously these are subjective and you may disagree with them.
1. Security:
Despite it's problems bitcoin is the most secure blockchain. That makes it harder to attack and more trustworthy since it is almost impossible (or getting to be) to carry out attacks which falsify transactions, double spending etc.2. Real world effort:
A considerable amount of real world money, energy and infrastructure goes into mining it. In a sense that creates a certain base level of value..jpg)
3. Branding:
Bitcoin is arguably the only cryptocurrency "brand" that has recognition in the real world.4. Community:
Bitcoin probably has the largest community backing - you would be hard pressed to find someone who is into cryptocurrencies who doesn't support it.5. Segwit 2X:
It seems likely that Segwit 2X will now pass. This won't solve the scaling issues forever but will help.6. Gateway to the Crypto World:
Bitcoin is the primary gateway to all other cryptocurrency tokens and investments - and it will likely stay that way for some time. If you have no other cryptocurrency and want to buy "Token X" you will in most cases need to buy Bitcoin first.7. Scarcity Without Some of the Disadvantages:
Bitcoin is very scarce compared to most other cryptocurrencies and monetary systems. Yes you can divide it up into tiny units without problems but that does not take account of how people psychologically deal with numbers.Further even at it's slowest, bitcoin is infinitely easier and faster to transport than commodities like gold.
You can also secure it and hide it more easily than physical money or gold - reducing (but not eliminating) the risk of being robbed.
Conclusion
It is very subjective as to whether you believe that the current valuation takes these factors into account or not (even assuming you do agree with them).
Overall I think Bitcoin will be around for the foreseeable future.
From that perspective and with the limited total tokens (21m) simple demand will mean that valuations in the millions of dollars per token are feasible eventually.
That is pure speculation on my part but I believe that it is within the bounds of possibility and given that it is so, it should have an impact on the current price too.
Feel free to share your own thoughts below.
Thank you for reading
BTC is King, and will always be :)
I think so too.
Unless a government or corporate body decide to support a new crypto, which is always possible. I think given enough traffic/marketing (or just straight power through financial backing or connections) anything can be overturned or assets such as oil/gold/etc. could be moved up/down the lists rather easily, given enough effort. What are the chances of such an event taking place? Very slim. But let's say a future corrupt state decides to fund their own coin or support something that helps with their business, and other corrupt nearby states also jump on the train.. boom, BTC is knocked down a place. It'd have to be GIANT momentum, but it's certainly not impossible for it to be moved down (at least for a temporary bit).
Of course nothing is impossible in this regard.
Great article! I find myself also in the group who thinks Bitcoin will be worth more than 5k, I think even that there is a chance it will be worth 10k by the end of this year...
But... seeing that the majority thinks this makes me a bit uneasy about this... hmmm....
I also think that as Bitcoin rises the other second-Tier currencies will rise even faster... (the same holds true if it falls, they will fall faster, but as the market seems to be poised to go up, btc dominance might fall)...
Dominance will definitely fall as the ecosystem expands and more people invest.
I agree with most of your points, but I am concerned about this one:
"5. Segwit 2X:
It seems likely that Segwit 2X will now pass. This won't solve the scaling issues forever but will help."
I just wrote an article on why, which I'll link below (apologies for the self-promotion), but to paraphrase, SegWit2x will not do much to help scaling or fees compared to even a modest block size increase (which Satoshi expressly suggested), it may be difficult or impossible to remove later, and the real intent of it is to "create off-chain transactions" which literally violate the Bitcoin white paper.
https://steemit.com/bitcoin/@lexiconical/seg-wit-is-a-trojan-horse-bitcoin-scaling-debate-explained
Here's some r/btc threads relevant on scaling:
https://www.reddit.com/r/btc/comments/6l7ax9/censored_twice_on_rbitcoin_in_2016_the_existing/
This thread notes skepticism we'll even see the 2x part, which I share to some degree:
https://www.reddit.com/r/btc/comments/6lcmia/so_is_the_2x_part_of_segwit_2x_going_to_happen/
Interesting. Thanks I will check out those links!
@lexiconiica Totally agree abput negative effect of Segwit It could help to split interest in original Bitcoin and gain control over transactions in the future to third party
I am invested in bitcoin because I think it will go up in value but in saying that, I cant agree with all your points
If this is your impression you may need to leave the echo chamber there are a lot of people and a lot of money invested in cryptocurrencies that are not 'believers' in bitcoin.
Also I would highly question the value of a poll of your twitter followers as they are likely invested in bitcoin and therefore want to believe it is worth a lot more as they want to make money.
Your other points are still valid though and I tend to agree with them
Based on what though - your own echo chamber? I never said it was a an unbiased sample.
They are all valid whether you agree or not.
My own echo chamber? Where some people believe in bitcoin and some don't?
You don't seem to understand the concept. We all tend to be surrounded by people who support our opinions to a greater or lesser degree. I find it strange that you would say that my twitter feed is an echo chamber but be shocked if I suggest the same to you.
You stated that it would be hard to find someone that was into cryptocurrencies that didn't support bitcoin. Only way I could see someone believing that is if they were in an echo camber.
The only view I have expressed is that, there are people of many views, but that seems to be enough info for you to conclude that i am in an echo chamber.
Which is based on what though? Your own experiences which may be skewed and biased in a similar way.
In the same way as you can only see someone believing it being in an echo chamber the opposite could also be true.
In fact I can't think of a single person I have encountered in the cryptocurrency world that is anti-bitcoin - the idea of it is somewhat hypocritical.
That suggests to me that it is a tiny niche - I can't prove it, but I doubt you can prove the opposite either.
It also did not escape my attention that you altered your original comment - I'm not sure why you would bother.
Anyway it seems trying to explain this idea to you (which you actually brought up) is a fruitless pursuit so this is my final attempt.
I would rather not spend time explaining the meaning of what you said back to you.
Life is too short for that.
I i edited 2 typos . Didn't change any meaning.
While proving your point would be difficult to prove mine you could just go on r/ethtrader r/ripple r/dash, here on steemit or a lot of other places that none bitcoin cryptos are discussed. You will find while a lot support bitcoin too a large number in each community do not. I am amazed you can't see that.
Your statement of 'it would be hard to find someone that doesn't support x' is especially strange as i think you could replace x with anything and it could be disproven in 5 mins with a few Google searches.
You're still doing this?
Lol Google searches disprove nothing.
You make a particular argument but can't take it when it is turned back around on you. Your assertions have no more validity than mine and the most hilarious thing is you can't even seem to understand that obvious logic.
What is even more sad is that you can't let it go and trying to argue a pointless argument.
Now I feel embarrassed for you.
Also I'm not helping by continually arguing! I tend to get stuck on little details too. Let's just agree that we have different points of view on this:)
:)
Fuck. You're recruiting my adrenaline glands right there.
bitcoi needs some time to ride the waves. Its currently looking at mass adoption so there will be no going back for btc.
Dono how the soft and hard fork arw going to affect the coin in the future though.
Cheers for the article and much love from me friend :)
Thank you!
I agree, bitcoin is really the so called "branding" of cryptocurrency, we can see most of the alcoins prices will be affected by bitcoin's. However, I reckon LTC is also way undervalued, I believe the price will go way more than double of the current price in the near future. Well, the price of ltc goes really dramtic these two days.
BitCoin is first crypto that comes in mind.
If you tell people who are not into cryptocurrencies about dash or steem curencies they think it is some scam, but bitcoin is brand everyone knows even people who are not in cryptocurencies.
It can easy go above 10 000 USD
I agree as well, to adapt and accept a different form of payment is difficult - the ability to just accept 1 cryptocurrency will be a huge leap - and admittedly I doubt many of the baby-boomer generation will make the leap. Bitcoin has the potential to get to 10K. To see that, we will need to see government acceptance, etc.
I think most governments are starting to realise they are better getting on board rather than getting left out.
I agree I think of LTC as being Bitcoin's little brother.
Don't forget the negatives.... I notice you didn't mention FEEs. They are slowly increasing by design and eventually it'll cost more to transfer through bitcoin than fiat. And top miners will work to keep it this way.
That's why I put more stake in other coins that have zero fees. I'm sure bitcoin will rise from where it is today, but I don't think it has the infrastructure match other coins.
The negatives will be sorted out long term. Fees can be adjusted.
UPVOTED AND RESTEEMED
Thanks!