Why Bitcoin Outshines All Cryptocurrencies: Price as the Ultimate Indicator of Value

As business owners we understand that selling price can be determined in one of two ways. The first method is calculating input costs plus required markup. This is the most basic method. The second, and preferred method, of calculating selling price is to charge as much as you can get away with. This links directly to the theory of subjective value.

Subjective value is the perceived value of an object or service in the mind of the individual, which can change based on context and personal preferences. In other words, we all have different needs for different things at any one time, and based on that, the price we are prepared to pay for something will change with time. How much would you pay for a bottle of water in the desert vs when you are drowning in an ocean?

Our customers understand selling price can be expressed as, ‘’what does it do for me and how badly to I want it’’? This value, too, is subjective. For example, if we look at two different types of cars; a Toyota and a Ferrari, it's quite clear that they both serve the same purpose as a mode of transport and yet they serve quite a different purpose as a status symbol or objet de désir. In fact one would argue that Toyota does a better job as a mode of transport but yet it does not carry the same price tag as the Ferrari. This leads us straight back to the theory of subjective value.

In another example; two seemingly similar items at different price points will immediately make us ask why is the one more expensive than the other. The salesperson selling the expensive item will go into a long list of all the reasons why the expensive item is the premium or better option.

Pricing is determined by a combination of the real cost of production (If the most we can charge for the product is below the cost of production, we go out of business). It could be argued that the entire company and all of it divisions (Operations, Marketing, HR, Production, Procurement, Branding, etc) and a whole suite of executives, divisional heads, mid-tier management, lower management, employees, etc sole purpose is figuring out the selling price for that product or service.

So, let's come back to the idea of price as an indicator of value and how this applies to Bitcoin.

Bitcoin has no head office, no executives, CEO, chairman, or board, no operations department, no marketing department, no middle management, lower management, or employees.
Bitcoin is also seemingly similar to the all the other crypto coins out there.
And yet Bitcoins price dwarfs that of it’s nearest rival. At the time of writing Bitcoin’s market cap is 64% of the entire cryptocurrency market.
Bitcoin, on its own without any formal company support structure or marketing team, in a free market economy, has risen to the top of the pile, by far.
Ironically all the other cryptocurrencies do indeed have a head office, a suite of executives, a technical team, a marketing team, sales team, social media and advertising. All of these things to derive a price and a sales team to find a market for this product, and yet none of these cryptocurrencies even come close to the Bitcoin price.

Why is it that Bitcoin carries such a premium?
Because it’s the individual actions of millions of people around the world determining value in their own subjective framework. The purest free market there is.

You may not understand the technicalities of Bitcoin and what makes it work. None of that is important if you just look at the price. The price will tell you everything that you need to know. Take all the cryptocurrencies and line them up in a row and the price of each one will tell you where the value is to be found. It is as simple as that.

Now it’s time to think about how this could mean for your business.