Quote from: franky1 on December 09, 2013, 04:29:42 AM

anyone who shouts out bitcoin has no value are simply metal hoarders that are getting hurt because the customer base that they use to sell their metals to at a premium are now buying bitcoin..

thats the more simple answer.

bitcoin has the same value as investment gold.(not to confuse with the intrinsic value of manufacturing gold)
initial price is set by the costs of mining the gold (excavators, sluice machines, labour, transportation, storage, security)

bitcoin is similar. bitcoin miners spend alot of money on equipment, electricity.. and added to that the time.

say a bitcoin miner had free electric, free mining equipment. but no other job. if it took 2 weeks to make a bitcoin. he would still only sell his bitcoin for a price to cover 2 weeks of living costs. EG $300.($150 / week minimal living cost)
now add on price of electric for the miners that dont get free electric. this may equate to $60.
now looking at the difficulty. the cost of equipment to be able to mine a bitcoin in 2 weeks is about the same as a 4 module avalon averaging $2000. and knowing that every difficulty increase over the last 3 months as been near 40% lets say that the miner would be required to buy a new unit every month($800 at 40%). just to break even.

so lets combine it all $800+$60+$300=$1160

this $1160 would become the minimal price a career miner would sell their bitcoin for which would increase in price as difficulty increases or would decrease as difficulty decreases.

prices above the 'cost' would be where value (usefulness and desirability) is added and other factors known as profit or speculation. prices below this are known as panic, loss, stupidity, or more accurately. people that dont know the true value or cost.

you will find early investors that 'got' their coins cheaper more willing to sell for less, but until people start realising that bitcoin does have value and costs, they will continue to panic sell at absurdly low prices, instead of hoarding for few days to let the panic subside.

i can see one possible knit pick reply. which is that gold miners do not set their prices based on labour&cost. they accept whatever their gold purchase contacts offer them.

well this is where bitcoin is different. bitcoin is peer-2-peer there is no middle man who sets the price and demands miners hand over the hoarded at the middle mans prices. miners and hoarders have direct contact with customers. so there is no price fixing.

same story as gold as it is for farmers, if only farmers had the freedom of 'barter' trade that bitcoins offer. they would actually be able to sell milk and meat at its true value. and not at the reduced rate supermarkets force upon them

rant over

While i generally think this is an interesting point of view, there seems to be one huge flaw with this logic.
To mine gold you need a somehow fixed amount of effort.
The effort to mine bitcoin instead is dependent from the amount of people trying to mine bitcoin.
Higher price of bitcoin -> more people mining -> higher difficulty -> higher cost of hardware -> higher price of bitcoin -> repeat
It is more likely it's the other way around: price of bitcoin dictates how much effort and money people put into it.