Post
Topic
Board Economics
Re: Better Bitcoin Value Estimator/Calculator
by
odolvlobo
on 02/10/2014, 00:46:42 UTC
My best attempt to explain it is this:
If their only existed 100 1 gram gold nuggets, and 1000, 1 gram silver nuggets; than a trade of 1 gold nugget should equal 10 silver right?

Unfortunately, no. Price depends on supply and demand. The demand curves for gold and silver are not the same, so simply scaling the supply curve by a factor of 10 will give you different results, even assuming the supply curves are also the same.

Just look at the actual numbers for gold and silver. Silver is 17 times more abundant than gold, yet gold is worth about 50 times silver.