I get that anything is worth whatever someone is willing to pay for it. That’s besides the point. My point is, beyond speculation, what do crypto coins represent?
I also understand that the value of the US dollar is being questioned almost as much without the backing of gold.
But what I really want to know is what is at the foundation level of Bitcoin that people are buying into?
I have a basic understanding of the blockchain, etc. I sold 1BTC in 2017 for $1200 when I thought that was as high as it would go. At this point, at over $100kUSD and rising steadily, what is the $ limit and what is that limit based upon? I thought it was based on the value of mining to check transactions but this seems… not worth $100k to me.
I’ve been thinking, the only tangible value I personally see in Bitcoin, because it’s not really being used as legitimate currency, is for criminals. By now, there must be trillions of dollars in BTC acquired by criminals holding corporations hostage. When you’ve got people like Trump involved (either explicitly or by way of manipulation) with an executive order to establish a crypto czar, this suggests to me that he’s creating pathways for bad actors to more effectively gain more wealth. These are the people who are most excited in Bitcoin, beyond speculation.
I mean, there’s little to nothing on the up and up with crypto, right? It’s a scam. Right?
Please, factual answers only. I’m looking for someone to dispel my speculation with genuine economics of the matter.
So you know how fiat currency is backed by nothing more than the fact the government says it’s valuable and we all agree to that? Crypto is sort of like that except without the government bit
Yup, all boils down to faith in the currency. For something like the dollar, it’s backed by faith in the US government. For something like Bitcoin, it’s backed by faith in the resilience of the blockchain and the value buyers place on it. Emperor Norton minted his own currency which was accepted all around San Francisco based purely on the fact that people accepted it.
Fiat currency is backed by taxation, which can only be paid in the very same currency that the taxer prints.
📺 Your Taxes Pay for NothingSome states have been looking into allowing you to pay your taxes with crypto, so checkmate atheists.
No stable state with a strong currency would ever do that.
Based on … What exactly? Your gut feelings?
But I can buy anything with fiat curency and with bitcoin I can basically buy nothing. And I never will be able probably, bitcoin is too slow to be used as an actual curency to buy common things like groceries
My point is, beyond speculation, what do crypto coins represent?
Nothing.
One could argue envriomental damage or power consumption, which is of almost no relevance to a currency, but thats the imprint they leave on the world because of their existence.
Yeah, this is what I came here to mention. Environmental damage and power consumption are what bitcoins cost, but those costs don’t give bitcoins any inherent value.
It’s actually a pretty appalling example of human ingenuity. We’ve managed to invent something that has a disproportionately terrible impact on every person on earth through its environmental effects, while simultaneously producing no practical value to anyone other than those wealthy enough to be in control of it.
At its core, it represents an irreversible proof of digital existance. Blockchain is the only technology that can do this, and it makes it more valuable than you’d think.
Bitcoin itself has first mover advantage, and that keeps it on top. It’s hard to point to any particular feature of bitcoin that warrants this first place position, aside from pure decentralization of holdings.
The irreversibility of blockchain transactions is very underrated to most of us, but think about it… no bank or government, even with military involvement, can reverse a transaction or seize assets. For most of us in nations with sophisticated financial infrastructure and govt, this doesn’t sound like a big deal, but for the majority of the world, this is a huge deal.
It also represents freedom from fiat. Since the beginning of currency govts have used it as a means to extract wealth from the populace. Printing, confiscating, and controlling as it pleases them. We’ve historically used gold to hedge against this, and there’s even instances in history where govts have devalued and confiscated gold as a means of supporting itself. Bitcoin brings all the freedom of gold, with all the benefits of the digital world.
Awesome. I appreciate this perspective.
Can you dig a bit deeper into the benefits for normal people that an irreversible transaction offers? To me, this seems like a detriment. Like, if I sell something on eBay and it turns out to be broken or fraudulent, PayPal can reverse the charges for me. Actually, I have a real world example of buying sneakers online that never arrived and had my credit card reverse the charges for me.
It’s not a benefit in the example that you provide. It’s a benefit to the seller for sure. For that type of transaction it benefits you with lower prices due to retailers not having fraudulent sales result in chargebacks. This is the reason you’ll see it adopted by merchants (not Bitcoin, but stablecoins on Solana or Eth L2s).
The benefits on the consumer side are around freedom of money - no seizures, no bank runs, no fraudulent cc charges (but added key management risk), no inflation (eh, but added volatility rn), instantaneous worldwide transfers (that’s where you see the remittance market buying in). Also new decentralized financial markets which bring better yield rates than banks.
It’s a little more gray on the consumer side and I would expect services built on top to add insurance, escrow, and custody (exchanges and banks) type features.
The other place it’s making waves is with larger amounts of money. Hedge funds, venture capital, and higher net worth individuals. It makes moving capital around much easier.
So in that realm we see growth with it making its way into traditional markets - like stocks and commodities. Instantaneous settlement in this world is huge. Stock transactions can take anywhere from a day to 3 days in the tradfi system. On-chain we make atomic, irreversible, censorship resistant transactions instantly.
You can already see companies launching stock backed tokens on chains now. Just a couple weeks ago StockX went live on Solana. Anyone can buy US stocks, anonymously, with no onboarding requirements. This disrupts global capital markets.
So in summary, the benefits down at the consumer level focus more around access to new, secure products for earning yield and availability of alternative inflation-free assets with instant availability.
Also, privacy. This world really re-enables us as consumers to have some financial privacy. That’s another whole rabbit hole tho and my thumbs are tired.
Removed by mod
This is actually quite good. OC? / Source?
Removed by mod
I always pay my respects to a fellow knower
o7
To you and yours
i’m glad you said that, i was confused if this was either an apocryphal from ayn rand… or the great nagus, who knows.
Removed by mod
This is not the same for all crypto currency, but a bitcoin represents a “proof of work”. When people “mine” bitcoins, they are consuming computational resources, and when they find a bitcoin, it is a certification of the work that was done to find it that becomes the value of the coin. And then, as others as mentioned, people just agree that that work has a certain amount of monetary value. But the proof of work is what limits the supply and allows that value to exist. 3Blue1Brown has a really good video that goes into the technical details if you’re interested.
Thank you for being one of the few to take me seriously and offer a thoughtful response.
I can understand now the value of a token that represent some amount of effort that is limited in its supply. As “promised”, no other bitcoins will ever be made. So this alone makes it worth something. The fact that it represents some amount of effort achieved does seem to give it some validity. Although, IMO, certainly not $100k worth.
I’ll need to think this over some more and maybe update this post with some more thoughts on the future of the coin.
When it was first released, I was interested in the decentralized nature of it as a currency. I liked - well, I still like - the idea of a currency that isn’t controlled by a government. At the time (2009-ish?), I also thought it was anonymous, which also appealed to me; cash is mostly anonymous, but it can’t be used online, and even then the fact that society was increasingly moving toward cashless - and very traceable, and usary-heavy - credit cards was clear. Stripping privacy is critical to control.
Bitcoin isn’t anonymous, but other cryptocurrencies are, and bitcoin laid the groundwork. To your question, I, and many other people, paid some money to get some bitcoin - I think I spent $120? Mainly so I had enough to explore the space and play with it, because even then mining seemed painfully slow. Once money was spent on it, by whomever and for whatever reason, it acquired value: the value that, if you had some, you could sell it to someone else, or trade it for goods. In that way, it has the same value as an IOU on which I’ve scribbled “Good for $10 from Ruairidh Featherstonehaugh” and signed my name. Flawed metaphor, but you get there idea - the paper itself has no intrinsic value.
Despite that mining is so horrible for the environment, the concept that motivated Bitcoin still IMHO has value. An entirely digital, cashless system, not controlled by any one organization but rather by the community of participants. If Bitcoin didn’t have the environmental cost - if it has been proof-of-stake rather than proof-of-work, or if the computational work was actually something useful to society like gridcoin.us, it wouldn’t be so controversial. Sure, people are still going to be bitter about not buying into it early, but as long as people are willing to trade goods and services for it, it’ll have real value based on market rates.
What is a first edition holographic charizard worth? What is the utility of that card?
Things are worth what people are willing to pay for them.
You can’t eat a Bitcoin for sustainance. Or hammer a nail with it. You can’t do either of those things with a pokemon card either.
I feel like you get this, based on your post… But you still are hung up by it.
Bitcoin’s attractive utility for many is that you can transfer them pretty much unimpeded by any external entity. Like a government for example.
Like, hypothetically, what if you wanted to send a million dollars to your family back in, I dunno, Hong Kong. Do you think you can put that in a suitcase and hop on a plane? Do you think your bank will just send that wire? No. Government needs to know about it.
You can send a million dollars worth of Bitcoin, though. No problem.
What about if the government decides to seize your assets, for whatever reason? Maybe you were a little too loud about your support of Palestine and a man child president decided to make an example of you? They can raid your home. They can seize your bank accounts. Can they get your Bitcoin? Nope (if you’re actually holding it yourself)
What sets Bitcoin apart from other currencies is that it’s very government resistant. You CAN hold it yourself. Not digitally in a bank. Not as bills under your mattress. It cant be seized.
How much SHOULD Bitcoin be worth, given the utility it provides? No idea. But it’s something.
Bitcoin is a ponzi scheme with a really long time horizon. In a way, any fiat currency kinda is as well. The difference is that a government backed fiat currency like the US Dollar is backed by the US Government saying “you will accept the USD, or else”. That backing keeps the game running. Bitcoin has nothing like that. The only reason it keeps going is because of speculation, money laundering and the purchase of black market goods.
So, as long as you can go buy drugs or move money across borders with Bitcoin, it will have value. As long as it has value, some folks will speculate on it. That can keep prices up, right up until it doesn’t. So, as is always the case for speculative assets, caveat emptor.
Besides gambling hype I think regular people are into it for a couple reasons:
-don’t have to trust the whims of your state government (who could devalue their currency at any time)
-deflationary by design so your earnings maintain value (no one could discover a btc meteor to mine)
-Requires broad miner consensus to change the rules
Beanie babies 2.0.
In this world anything can have value as long as there are other stupid ppl who’d believe you. Any form of money is just a piece of paper. Gold, silver and all those are just rocks. Even food once was cherished as the ultimate wealth but now we waste food by Metric F*ck tonnes.
No one on this earth or beyond can predict what will be the value of anything. If someone says this is going to make you a millions they are either trying to sell you their course/books/etc. Or they think you are the next idiot to whom they can sell garbage.
It’s value is in remittance if nothing else. It’s cheaper than western union. But the network is only “cheaper” in that way because it has distributed the costs of running the network to the speculating miners who solve pointless puzzles with monsterously greedy processing farms hoping to win the lottery and get back more than they put in. It’s a ponzi scheme, it takes more from everyone who came later and gives the value to early adopters who were there when you could solo mine coins with whatever hardware and a bitcoin was worth 7 dollars in exchange. Look up how many coins Satoshi is supposedly holding. If they were to cash out even a small fraction the whole market would crash. So use it as a remittance service but not an asset if you must. This from someone who mined 27k worth of it back when it was 7$ and spent it all on illicit medical cannabis before it inflated to 50k
I believe I’ve seen recent cost analysis of using crypto exchanges to transfer money across international borders instead of doing direct conversion through whatever “classical” money transfer service and it showed that due to exchange rates, price fluctuations between crypto exchanges, gas fees, and fiat exchange rates into and out of crypto from usd to whatever currency of the recipient its actually tangibly cheaper to just use a direct wire transfer and currency exchange.
I’ll have to see if I saved the post with the price breakdowns to send you but I just wanted to share that in case you hadn’t heard about it yet. If you had seen that and did find it cheaper somewhere else I’d also be interested to hear where it is actually cheaper. That’s just the most recent analysis I had seen of the costs to exchange from fiat to crypto, send internationally, and then withdraw it in the native currency.
Rip to the millions you smoked away btw lol I would’ve done the exact same honestly
USD FX pairs are currently cheaper using traditional transfers.
However going from a non G20 currency to another non G20 currency can be much cheaper using crypto.
Ah thats interesting, yeah the study i saw was specifically looking at usd to pesos. Good to know!
Bitcoin doesn’t even attract criminals as it’s traceable. You can easily tell who bought what and traded what. Since all the exchanges are KYC, no criminal worth their salt would use Bitcoin. Instead, they would rather use Monero. The only people buying and selling Bitcoin are people who want to gamble on it getting higher
Money is an IOU. Bitcoin is an IOU but the ledger is decentralized rather than in control of banks.
Once you start seeing the value of any currency as one of itself rather than trying to express it in a different value system, a Bitcoin needs nothing but its inherent worth as payment.
That said, because we all still use traditional forms of currency, a Bitcoin is now worth, say, 112000 breads. It’s worth two new mid-sized cars.
Value is based on scarcity and demand. If something is hard to come by, like bitcoin currently is, the price is hardly affected. But if demand is higher than the supply, prices skyrocket. Demand dies down the moment people feel like crypto is a scam. Supply will stop since Bitcoin has a physical limit (of the top of my head 21 billion). It is no longer realistic to start mining the stuff and receiving it for payment is just silly at this point.
But to flip it around, what is the value of a US dollar, without expressing it in terms of another currency? It used to be tied to gold. You can’t really state one dollar is equal to, say, one bread. The price of bread has fluctuated. Or, has the value of a dollar fluctuated and has a bread always been worth one pair of socks?
Baseline: everything is worth one of itself and trying to express it in another value system is just a snapshot, a moment in time which will have changed soon after.
Thank you for a real answer like I specifically asked for.
The fact that Bitcoin does represent some amount of effort and that there’s a limited supply does seem to give it some value. While there is a theoretical finite resource of gold, it’s still being discovered. Which, theoretically, makes it less valuable than a predetermined finite resource. And, the US dollar continues to decline - almost by design during this administration.
How BTC is used today and in the future can continue to be debated but I’m satisfied in understanding it’s a limited supply of something that represents some amount of effort.
You have to think about Bitcoin in a different way from any other form of money that has ever existed because it’s literally the first of its kind.
I work hard for money. I expend my time and energy and talent in exchange for money (USD, in my case) that I can then trade in the future for the things I want/need. So money is an abstraction of my time and engergy, stored for later use.
Unfortunately, USD is pretty highly inflationary and it loses a lot of value over time, so it doesn’t make sense to save it for very long. I have to either spend it or invest it because every day I hold on to it, it loses a little more of its original purchasing power.
I could invest my money in gold or silver because those things are certainly more finite than USD and hold value better, but precious metals are heavy, difficult to transport and store in large quantities and I can’t easily use gold to pay for my daily expenses.
So here’s an idea: What if instead of converting my time, energy and talent into some physical thing that I have to hold onto and contend with inflation, etc. we just cryptographically assign that value to an entry on the public blockchain ledger? Now, that value is permanently locked into part of the total 21 million supply of bitcoin and no one can create more of it. Bitcoin is literally the hardest form of money ever created.
If I want to exchange that value with someone else in the future, I use my private cryptographic key to prove that I own it and I can effortlessly transfer it to anyone anywhere in the world in a matter of minutes.
You can’t think of Bitcoin as some “thing” that you buy because a “bitcoin” is really nothing more than a unit of measurement. The real power of the bitcoin network is the ability to store and transmit value in a completely secure and trustless way that’s immune to the manipulation of fiat currency.
If you’re truly interested in understanding the answers to your question of “is bitcoin actually worth anything”, I recommend the book Broken Money by Lyn Alden. It’s an easy read and it will absolutely change how you see money.
