Thread by @krippenreiter

[1/🧵] With all of the #XRPBuyback debate going on, there is one aspect that frequently gets misrepresented

▶️ People conflating the terms "#price" and "#value"

Because the definitions differ, it is essential to comprehend the distinctions

Let us evaluate it more closely. 👇🧵

[2/19] To have a better understanding of the subject, we must first define several terms that are crucial to #finance and explain the following in further detail:

🔹 "Price"
🔹 "Cost"
🔹 "Value"
🔹 "Store of Value" (#Bitcoin/#BTC)
🔹 "Internet of Value" (#Ripple)

[3/19] We will also go through the following scenarios to see whether what we think we are talking about is correct:

1⃣ The chart in reference to the #USD
2⃣ You are about to sell your #property

[4/19] — Definition 1⃣ — "#PRICE" —

❝ A price is the amount of money given by a buyer to a seller in return for a product or service. As a result, we may say that "#price" is the amount to be paid. ❞

[5/19] — Definition 2⃣ — "#COST" —

❝ The expenditure or amount incurred to manufacture and sell products and services, or to acquire assets, is referred to as "#cost". A cost is charged to an expense when anything is maintained, produced, sold, or consumed. ❞

[6/19] — Definition 3⃣ — "#VALUE" —

❝ The monetary, utility, material, or appraised worth of an asset, good, or service in comparison to its price for a customer is referred to as its "#value". ❞

[7/19] ▶️ Focusing on "#price" and "#value", we can clearly state that "price" is determined from the company's or marketer's perspective through pricing policy, while "value" is determined from the consumer's perspective through #utility

❗️ "Value" has no #monetary measurement

[8/19] 🧐 After all that we've studied, we need to ask, "What is a Store of Value?"

"A store of #value is any #asset that would ordinarily retain purchasing power into the future and [...]
. . .

[9/19] . . .

[...] is the function of the #asset that may be preserved, recovered, and exchanged later and be reliably #valuable when retrieved."

Did #BTC preserve its purchasing power and should it be labeled a store of #value? 🧐

[10/19] This is what @Ripple means when they talk about their vision of the Internet of Value [#IoV]:

⏩ The vision of exchanging #value as quickly as information.

Anything can be #valuable; hence, anything can and will be exchanged. 😉

ripple.com/insights/the-i…

[11/19] Let's take a small #pause, reread all of the definitions, and internalize the meaning before moving on to the examples, which should make everything clearer to everyone.

For the time being, have a look at my adorable #kitten. 🙃

[12/19] The 1⃣st example involves #charts that illustrate a trading pair in relation to an #asset.

🧐 When trading occurs, there is always a #seller and a #buyer for a deal that trades one asset for another (for example, #USDT).
. . .

[13/19] . . .

The following are the primary drivers of #market #price change:

🔹 #Supply and #Demand
🔹 Fundamental aspects (companies expectations)
🔹 Technical considerations (#chart patterns and "behavioral #finance"/#speculation)

[14/19] To grasp the difference between "#pricing" and "#worth", simply question yourself:

❓ Does the #price truly reflect the potential of an #asset when evaluating its worth, for example, based on utility or improvements through time, and thereby assigning value to an #asset?

[15/19] The 2⃣nd example will be about selling a #property, which is slightly different from the previous definitions:

▶️ In this context, "#value" refers to the quantity of worth that both the #seller and #buyer agree on. [...]
. . .

[16/19] . . .

[...] So it's not what the #seller believes it's #worth or how much it should be #priced at, but what both parties agree on.

[17/19] ℹ️ The short version of what we learned today is as follows [TL;DR]:

• #Price [Objective]▶️ Is set by the company's or marketer's PoV

• #Cost [Subjective] ▶️ is determined from the standpoint of the producer

• #Value [Subjective] ▶️ Is set by the consumer's PoV

[18/19] Because the value of #XRP is very subjective and set by the #XRPL's users, it's no surprise that individuals are putting prices out there like "589" or "50,000," even if they are not rational.

The objective truth is that the price will always be determined by the market.

[19/19] Thank you to everyone who took the time to read this lengthy topic about #price vs. #value! ❤️

If you enjoyed the thread, please follow me:
@krippenreiter

Please feel free to contribute by sharing here 👇

@WKahneman @digitalassetbuy @Fame21Moore @sentosumosaba @BCBacker @XRPcryptowolf @X__Anderson @stedas @Kevin_Cage_ @AlexCobb_ ✌️
— My most recent post on the difference between "#price", "#cost" and "#value," and why it matters in the #XRPBuyback controversy —