Is it possible the “extra value” in Bitcoin is brand equity?
Most brands are worth more than the value of the thing they sell, hence the high profit margins. Is it possible the same kind of phenomenon is happening with bitcoin?
👤 mikewarot Accepted Answer ✓
Bitcoin is a globally distributed trustless blockchain implementation of the sunk cost fallacy.
The more the price rises, the more people think it is worth, until the bubble pops, it drops by half or more, and then the cycle repeats.
👤 randomopining
Bitcoin makes sense as a store of value. Environmentally I don't really agree at all that it's worth it. And also if it were adopted in large, it would reduce the ability of central banks to use monetary tools to influence the business cycle and inflation.
But it's individual vs societal conflict of interests. Which also shows up in climate change.
👤 draygonia
It's due to the low circulating supply and even lower supply available on exchanges. This is why prices fluctuate so much. Less liquidity = greater volatility.