Why the high price of BTC has nothing to do with its value.

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Avatar for Telesfor
Written by
3 years ago (Last updated: 2 years ago)
Topics: Bitcoin, BTC, Value, Price

Again and again, users on noise.cash tell me, "Why do you say BTC is worthless? Its price is so high. It's the most valuable coin ever." These users confuse price and value. They are two completely different things. Let me explain it to you.

I have already written here about what constitutes the true value of a coin. Now I'll write to you why the price has nothing to do with it at all.

Maybe they remind some of you of the Bitcoin Cash update on 15 November 2020. At that time, a fork took place in the Bitcoin Cash blockchain and a new coin called BCHA was created. Everyone who owned BCH before the fork could claim the same amount of BCHA. I wrote here how you could (and still can) do it. For 1 BCHA you got about 0.06 BCH at that time. 1 BCHA cost at the time approx. $15. On July 1, 2021 at 12:00 noon UTC, Bitcoin Cash ABC (BCHA) rebranded to eCash (XEC). That in itself is nothing unusual, but at the same time, the new currency was nominated differently 1 BCHA = 1,000,000 XEC.

On 1 July 1 BCHA cost about $35, after the changeover 1 XEC cost $0.000035. It was actually the same coin, just named differently and made much cheaper by the new nomination. Not much has changed for the owners of the coins. Those who owned 1 BCHA now own 1,000,000 XEC. That is all.

The coin has suddenly become much cheaper, but has it become more worthless than before? It is just as valuable (or worthless) as before. Only a few decimal places have been shifted.

Imagine if the creators of BCHA did it the other way around. They would decide that 1 XEC = 0.000001 BCHA. According to the new nomination, 1 XEC would cost a staggering 35,000,000 USD. It would be the most expensive coin ever, much more expensive than BTC. Would this make XEC more valuable? I think you can answer that question yourself.

That is why the high BTC price is nothing but a number. It has nothing to do with the value of the coin.

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Avatar for Telesfor
Written by
3 years ago (Last updated: 2 years ago)
Topics: Bitcoin, BTC, Value, Price

Comments

Your explanation sort of sounds a lot like what happens when a company in the stock market does a stock split. You just own more of the same thing. Is that what you are driving at here?

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User's avatar Porwest
3 years ago

No, my only point is that many are impressed by the high price of BTC. But these are just numbers. I can create a coin and nominate it as I want. I can create a high price for the coin. A much higher price than BTC.

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User's avatar Telesfor
3 years ago

In that way, that is relatable. The stock market is pretty much the same. Someone may look at a stock like Amazon and say, "That's expensive," when in reality what determines whether a stock is cheap or expensive is its PE ratio.

You could put two stocks side by side. 1 is $10 and the other is $1000. Both are in the same peer group. The $10 stock is at 25 times earnings the the $1000 stock is at 15 times earnings. The $1000 stock is cheap and the $10 stock is expensive in that scenario.

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User's avatar Porwest
3 years ago

Exactly.

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User's avatar Telesfor
3 years ago

Wow. That means the value and the price both are not related with a coin.My thought was same about this value and price topics.Thanks for this nice explanation.

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User's avatar Hiyamoni
3 years ago

Hello, my friend,

Your article is very educational and necessary to clarify the difference between price and value in the crypto market. I agree with you that both concepts, although closely related, point to two different situations.

Furthermore, no object by itself has a price or value without the consent of those who use or have it. It is born from the subjective to be used in the world. Although there is an example in which its objective is only speculative.

Thanks for sharing.

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User's avatar Jnavedan
3 years ago

I like BTC because it opened way for Cryptos and digital currencies, nevertheless found BTC difficult because it doesn’t serve the average people as real money that is easy to use by every; both the rich and the poor. Considering all these facts, I concur with you on this article. Bitcoin Cash is the real currency that has really fulfilled the initial purpose by which BTC was created.

Thanks my friend @telesfor for such discussion.

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User's avatar Maxdevalue.BCH
3 years ago

Thank you for your comment Max

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User's avatar Telesfor
3 years ago

What I consider as value is very much different from price. I have limited knowledge of many coins but I think valuing a coin has to do with the potentials of the coin.

This has been the reason why I have always choose BCH as my most valuable coin because of what it is offering aside from the fact that it could make us reach. When we talk of a coin that can put an end to the masses financial slavery, I choose BCH and that's what I call value.

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User's avatar George_Dee
3 years ago

Very well explained Telesfor. I learned a lot from your post. This post is very valuable and at the same time worth a lot too.

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User's avatar Peter-Molnar
3 years ago

Thank you

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User's avatar Telesfor
3 years ago

Perfect analogy. Even if 1XCH is $35M as you said, it will still be regarded as of no value. Then BTC can also be said to be the same, for it offers no value except it being an "asset" as they claim. An asset you can easily use without the fear of the transaction fee attached.

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User's avatar HappyBoy
3 years ago

lol, after my article yesterday the price of XEC doubled.

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User's avatar Telesfor
3 years ago

Thank you for the comment and the tip.

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User's avatar Telesfor
3 years ago

This is such an informative post 🤯

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User's avatar arn.49
3 years ago
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