First I do agree with you that my formula V = 1/fee is misleading, as it just tells you the number of transaction data (in bytes) you can make on the blockchain per one Bitcoin. This, however, may not necessarily constitute value yet, because some people do not see the benefits of blockchain transactions over normal transactions in centralized system.
Your formula on the other hand V = transaction_data_size_in_bytes * fee shows the perceived utility. The tX fee basically expresses the perceived utility of Bitcoin blockchain space.
Yes, I understand that these are different approaches: your original formula is some kind of "value of use", and my formula is the "price of usage".
An idea how we can solve the problem that altcoins seem "more useful" in your original approach: tying V to the system's security. In PoW blockchains like, you can calculate the 51% attack cost. The way we calculate isn't that important, there can be calculations per hour, per year or per 6 confirmations (approximately equal to 1 hour), if what we want is a comparison between blockchains. On Proof of Stake blockchains like Ethereum or Solana however the security is harder to calculate. [1]
We have then: V = a * 1/fee (fee per byte, of course) as a better measure for the "data store value of use" metric. (As explained below, this is still for me not a good metric for "intrinsic value".)
We could now compare this to other online data storage systems.
Let's say we could compare it with a hosting contract of 5 different VPSses on different continents to achieve data redundancy. Digital Ocean for example has this cheap option for droplets:
- 1 GiB Memory
- 1 vCPU
- 1.000 GiB Transfer
- 25 GiB SSD
- $0,00893 $/hr
- $6,00 $/mo
Let's say we need the data (25 GiB) for 20 years (short term storage would not make sense on blockchains). So our formula would be: $6 * 12months * 20 years * 5 droplets. As the SSD is the upper cap for long term storage, the resulting
$7200 would be the cost for
25 GB (not for the 1000 GiB/month transfer).
Bitcoin, if we are lucky, can provide 1 sat/vByte. For simplicity's sake let's say its 1 sat/Byte (in this case we cramp all the data in the witness). As 1 sat at $100000 is $0.001, this is a price of approximately 0.1 cents per byte. For a kByte, we have about 1 USD. For 25 GB, we get
27 million USD.
We see thus that Bitcoin is not competitive at all here, even for 20 year longterm storage. We could get 18750 droplets for that price! This is of course the result of the fact that a blockchain is a very inefficient storage method for data. But there is one catch: The blockchain is much safer if we're talking about
financial data, which has to be much more safely stored than on 5 VPSes. More on that below.
I strongly disagree on that one on a fundamental basis. I believe that there is no good or bad usage of blockchain space, the only thing that matters is whether you pay the fee.[..] Please consider, that any activity on the blockchain that is not financially sustainable (like Spam transactions) will eventually die out due to the fixed supply of Bitcoin.
I agree with you that we shouldn't discriminate between "good" and "bad" usage. However, my idea goes into a different direction, I think I was not clear enough.
Normally, if we apply the principle above discussed to different data classes and data storage methods, we will probably reach an equilibrium that blockchains have a "value of use" only for financial transactions, due to their high cost. The incentives to store other kinds of data on the blockchain could however temporarily be distorted due to fads like Ordinals/Runes. And thus we would have to take these fads into account.
But there is a more general problem: if Bitcoin is valuable as storage for financial transactions, then I think the "value proposition" changes fundamentally. We need a network for financial transactions to become valuable. And thus, I'm of the "Bitcoin is a social network" camp and would valuate it with methods which include Metcalfe's Law.
[1] while some studies suggest they have a higher attack cost, this only takes into account "honest" attacks, i.e. attacking it by buying stake, But there are also possibly attacks on "weak subjectivity" (the nodes connect to some "master" nodes in PoS blockchains).
