Bitcoin can care less about its vertical position on the chart. But, as emotional human beings, we cling to price movements for our own benefit. Price fluctuations oscillate like many natural phenomena, and prices should actually be an equilibrium.

Since we've become so used to using stocks, real estate, and other assets as stores of value, we start having to make them rise in price. Indeed, if we start to use stocks as a store of value, then the price of stocks must be kept stable. Imagine an investor owns a large number of stocks. The money is acquired at a price, and they have a vested interest in keeping it above the purchase price, regardless of their beliefs.

True Price Discovery is Terrible

The stock is not allowed to legally discover the price. Many factors make this true. In this article, I focus on the underlying psychological mechanisms that influence people to hang on to their securities which they know they don't believe in, which is a roundabout way of explaining that price discovery is hindered.

In reality, the law does not allow stocks to legally reflect their value. In this article, I will focus on the underlying psychological mechanisms that influence people to continue buying securities they do not believe in. It's a form of price war that shows that price discovery is hindered.

A true store of value is necessary for the economy. Without it, capital would be allocated to pools of unnecessary funds, such as real estate, the stock market, the middle of failing businesses. Selfish investors, in order to protect their nominal value, will be unleashed again on the market, which is undoubtedly harmful to the entire economy. The reason investors protect the prices of these assets is for wealth storage, but Bitcoin renders these forms of wealth storage obsolete and highlights their flaws.

While hedge fund managers and desk traders get excited about price swings, many investors still see them as the devil. In their view, volatility is potential loss. However, from a market perspective, this can change the way people see volatility.

The price of gold has surpassed its own value, and its value in US dollars has also changed dramatically. Anyone in the past would be shocked by today's gold "price".

For a hard currency, the price is not a reflection of its value, but rather a measure of the currency's value relative to sound currencies.

The degree of currency inflation can be reflected by looking at the price of Bitcoin denominated in that currency. Traditionally, we say that an object (such as a car) is worth X dollars. "value", indicating that this is the price evaluation we apply to this object. "Value" refers to the resources (time) we are willing to give up for other goods or services. In economics, it is a measure of returns. But with Bitcoin, the $X amount measures the value of the currency denominator USD, which could be Euros or Yen. Through hard work, we've turned the traditional understanding of value on its head; hard money is not fiat money representing nominal value, but sound money.

As an example, let's buy Bitcoin at $35,000. Instead of assuming a bitcoin (protocol) value of $35,000, we are witnessing a valuation of $35,000 on a single bitcoin.

Separating the Bitcoin Protocol from Bitcoin

When a stock is valued, the "price" of the stock should be considered the valuation of the entire company. Now, the numbers attached to the price can depend on things like the issue of shares and stock splits, but that's just the general concept.

With Bitcoin, we have to separate the valuation of other hard currencies from the valuation of the Bitcoin protocol through the Bitcoin/currency pair. Some bitcoin/currency pairs are at all-time highs – precisely these parts of the world where bitcoin is “worth” more. But the total market capitalization in dollar terms is still considerable. We can simply convert other fiat currencies to USD and find the total wealth stored in Bitcoin. This is the valuation of the Bitcoin protocol.

It sounds pointless, but changing your mind about Bitcoin valuation can make all the difference

Going back to the previous paragraphs, I described how investors have traditionally protected the notional value of their wealth store assets. This is partly because they don't have real hard money to store value in, so they have to create atypical pools of wealth in order to store value over time. But we can see the end of Bitcoin valuation when we lose our understanding of it.

Assets measured in Bitcoin will directly present their prices. This is not a mind game - because everyone trusts Bitcoin to store its value, they can now properly value a store of non-value assets. Without the incentive to maintain the value of stocks, real estate, and other poor options for storing wealth, the world can be revalued to the proper price.

Assets have traditionally been valued based on the benefits they generate, be it cash flow, equity growth, or other benefits discovered through economic analysis. But the value of things in Bitcoin is different. When we start valuing things in Bitcoin, we can find their legal value because Bitcoin is the most valuable currency. There are no laws manipulating supply, buybacks, quantitative easing or protecting value, only straight valuations.

What we unleash here is a medium on which humanity can draw its beneficial ideas. We've never had an unencumbered monetary paradigm that we can interact with without fear of human emotion, greed, or idealism. The importance of such currencies cannot be underestimated - currency valuation is the basis on which we build our worldview and have value within it.

Money is like speech. Just as words can express ideas, money can express values.During certain historical periods, money flourished unaffected.These periods are merely precursors to the Bitcoin era. What we will experience is simply unpredictable. However, the concept of Bitcoin itself, free money, sovereign money, has been unleashed around the world. As it happens, it went hand-in-hand with the Internet, a paradigm shift in connectivity that gave everyone access to instant communication around the world.

The Bitcoin unstoppable nature of the protocol is well-suited to lending Bitcoin an unstoppable rise in price for the currency. Only time will tell.

This is a guest post by Casey. The views expressed are solely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.