A General Formula for Calculating the Fundamental Price of Bitshares.
Have you ever wondered what the “real” i.e. fundamental value of bitshares is? I think about this a lot.
Value is one part subjective and one part objective. Fundamental value derives from utility. The utility for bitshares stems from how it can be used by individuals. If Bob has a diverse portfolio of investments and understands how to leverage smart contracts and smartcoins then bitshares presents great value. If Alice is living in rural America and does not own a computer then her valuation of bitshares is effectively zero. This is the subjective component of value.
Objective value on the other hand refers to a market price. The market price is determined by the last quoted exchange in a public marketplace. If my subjective value of bitshares is higher than the lowest posted order to sell then rational behavior would dictate that I buy those bitshares. The market price is objective in the sense that it refers to the price that any market participant can get for bts
A general formula for calculating the fundamental price of bitshares.
Price Bts = (Aggregate Demand for all Smartcoins x 1.75) + (L)
Where L = a liquidity/optionality premium. In essence it is valuable to own a token that can not only be transacted with quickly but can be leveraged into exposure to other assets through the native smart contract functionality of the bts platform.
The multiplier 1.75 represents the lower bound of demand for bitshares via smartcoins. It comes from the minimum collateral ratio required of smartcoin positions. In practice this multiplier will be higher, yet given the measurement problems associated with a variable collateral ratio it is helpful to keep 1.75 fixed as the critical number because it represents the technical lower bound of demand for bts as the smartcoin economy grows.
It is clear from this rudimentary model that the key determinant for the nominal price of bts is the demand for smartcoins. The application of smartcoins that can scale and be of interest to many different people (or few people with deep pockets) will be the most promising support for the price of bts. This is my humble contribution to the bts community - support smartcoins wherever possible.
Call to action/engagement: what do you think of this model? Are there components you disagree with or believe I missed?
Nice brother... Price Bts = (Aggregate Demand for all Smartcoins x 1.75) + (L)
All models can be improved and tweaked my friend. All thoughtful input welcome. There is always an "X" factor.
Excellent info and got some great comments. BTS for the win. I can not express in words how happy I am I discovered bts in the early days. I am not from the people who made money with bts since most of the times i was on the wrong side of the trade and i had some bad lucks as well but irrespective of my loses this system is beyond money and I will always be a supporter! May BTS with the use of HERO and smartcoins change the world to a better place where people actually hold honest and true money and do not have the illusion of holding their hard worked moneys on centralized thiefs.
When it comes right down to it, it's nice to know that the Fluctuations in Value can always be measured by U.S. Coinage and hopefully U.S. Trade Dollars in the Future...
It's all down to the fundamentals man. What's a great big shiny brick of Gold worth when the Sun goes super-nova? but no, we are in the here and now and economics is fascinating mixture/science of 'what things are worth'. Really nice post ...
What do you consider is the best way to measure value...???
That's a good question. My answer would be value is measured by whatever people are prepared to pay, and that can vary greatly depending on need. Supply and Demand = Economics 101 :)
Value is an abstraction. Abstractions have measurement problems. Markets approximate value but only to the degree there are buyers and sellers motivated to exchange.
Value is an abstraction. That's another perfectly rational way of expressing it ...
Then, what is the best way to Measure the Value of an Abstraction...???
value is an abstraction, I think and it also measured whatever people are prepared to pay.
I've sold most of my BTS and bought into some much more promising projects that have direction. Bitshares itself, although highly active, doesn't seem to have a roadmap or plan going forward; so I don't see any potential for appreciation in the token.
Bitshares lets you trade crypto fast and cheap without worrying about the exchange getting 'hacked' or shut down by gubberment and losing all your money. It is awesome and people should only use centralized exchanges to move in and out of fiat. Do your trading on the Bitshare's DEX and you don't have to worry about some lowlife stealing your coins!
There are many newer Decentralized Exchanges than Bitshares. But Bitshares is a more versatile platform, in my opinion, or at least because it is the progenitor of all graphene based chains it may implement some of newer graphene iterations.
Thank you for your continued support of SteemSilverGold
I thik maybe you are a big friend of SteemSilverGold. I also like his post. He is a great writter for Economies. I like him.
Wait until you stumble upon my posts...
Price bts = (Aggregate Demand for all Smartcoins x 1.75)+L. It's so nice. I want also add that i'm very happy that you are following me. I told this in a comment maybe u didnot see. Really it is big thing for me. Thanks a lot.
Thank you for your continue support of Steemit and other
I really do like BTS. Nevertheless, I do see some potential issue that could keep it from being widly successful. Note widly here. I do think we are going to see higher highs. It's just that I don't think BTS could reach something like $200-300 USD. $50 USD would be just fine. This would put it at roughly $180 000 000 000 USD market cap, which I think is achievable given enough time.
Why?
Simple because I think that in order to get to the highest league, you need to have: top marketing, a great team and revolutionary tech. BTS only has the tech.