Quote from: Revalin on January 02, 2012, 02:45:07 AM

Price is just a proxy for value. Before there was a price on an exchange, there was still stored value. It was harder to quantify, but it still conceptually existed, and would fluctuate with need. Without even buying or selling actual goods, the demand for novelty was enough to support the very low value per coin at that time.

At $5, you need a lot more than novelty.

Its straightforward to quantify the difficulty, matter of fact its built into the protocol. And not coinicidentally, its mich higher now at $5.

Quote from: Revalin on January 02, 2012, 02:45:07 AM

On the other hand, that's also it's strength: any attempt to compute the value based solely on the MAIN current use of Bitcoins (as a speculation vehicle) is completely detached and self-referential, and can be used to justify any price. Off to the moon we go.

Try computing the value using difficulty as one of the variables. Prices at the moon are only justified if difficulty follows. When it doesn't, there are spikes in the price:difficulty ratio, and it stays grounded at realistic prices.