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
Fiat currency is backed by taxation, which can only be paid in the very same currency that the taxer prints.
📺 Your Taxes Pay for NothingYup, 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.
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
bitcoin is a bad currency but you absolutely can buy legal things. like, check shopinbit. there’s also a similar website that buys the thing for you from amazon
Payments of this nature using the layer 1 blockchain are not super feasible, as you say. (Although I’ve made several online purchases using BTC and it works quite well.) However, layer 2 solutions like the Lightning network do allow for extremely fast and cheap transactions, then they use the slower layer 1 blockchain for final settlement later.
Cryptocurrencies have three main attributes that affect their usability: Speed, Security and Costs. You can pick any 2 but there’s always a tradeoff with the 3rd. For example, BTC chooses to prioritize security over everything else. This results in it being slower and sometimes more expensive than other crypto, but that extreme security is what makes it such a good store of value over the long term.
If you want faster and cheaper transactions, you can use other cryptos like Solana but the security and reliability is no comparison.
You’re right, you may never use layer 1 for everyday transactions but there is nothing better when it comes to storing and transferring large amounts of value. So just sell a little BTC every now and then and convert it into whatever currency you need for everyday use, whether that be fiat or some faster, cheaper (but less secure) cryptocurrency.
People buy big ticket items like cars and houses with bitcoin, not chocolate bars.
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.
the only tangible value I personally see in Bitcoin, because it’s not really being used as legitimate currency, is for criminals.
Please, factual answers only.
In 2021, 0.15% of known cryptocurrency transactions conducted were involved in illicit activities like cybercrime, money laundering and terrorism financing
sounds like the word “known” is doing some heavy lifting there
The assumption that bitcoin is only used by criminals is much less accurate.
You’re gonna have to give me a source for that buddy.
It came from here but this source has more detail.
Is that by total number of transactions or by bitcoin volume?
I copied that from Wikipedia which got their reference from through NY times.
For specific details, this is probably a better source https://www.trmlabs.com/resources/reports/the-illicit-crypto-ecosystem-report-2022
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.
Bitcoin has massive value as a tool to transfer money, anonymously, and through borders effortlessly. Its extremely valuable for money laundering, scamming, stealing, and dodging tariffs or raising money (see how much crypto is stolen by north Korea)
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.
Just like anything else, it’s worth what people are willing to pay for it vs what people are willing to buy it for.
Currently bitcoin is just a digital commodity with a finite supply which makes it a good store of value if people continue to use it.
The thing is, there’s nothing preventing bitcoin from tanking and becoming essentially worthless besides people buying it because the price is low.
If in a hypothetical future the bitcoin price becomes stable then it will become a valuable commodity. It’s value is wholly derived from it’s users and nothing else.
It’s not very convinent for governments or large institutions to hold it in it’s current form since it’s too easy to steal without leaving a trace. For government use there is going to be needed some development to allow for government or Central banks to have complete control over the currency without giving that control away which I think might be possible. In that case settling international transactions in bitcoin as opposed to the dollar for BRICS countries might be an option which doesn’t use the US dollar.
All the other uses IMO are pretty much fluff such as paying in bitcoin.
The real answer is: It depends how you define value.
Can you make money with Bitcoin? Yes. Are you likely to make money? No Is the technology useful applicable? Yes Is it being used and applied ethically and for the good of people? No. Is it a ‘store of value’? No, it’s more like an extremely volatile stock or a lottery ticket. Can you use it like money? Yes Is there any reason to use it like money? Not really, not even among other cryptocurrencies.
Depending on which of these aspects of Bitcoin matter to you it will be more or valuable.
I don’t think bitcoin provides much value in itself. Its basically an asset that is hard to make more of, like money or gold, which are also valuable because of this and that gold and specific currencies are relatively widely used.
bitcoin’s supposed added value over money is private digital transactions across the globe in a private way, so that you can send money whoever you want, but it’s not practically private, and has so large operating costs (even just the transaction fee) that it’s not really better than bank transactions.
so in short: its value is in its scarcity, and that you can speculate on it. the other possible advantages are not realized.
since the value is in speculation, the dollar limit is when investors start selling enough of it so that others will do the same out of fear. which is who knows how much. but it’s probably more related to other factors than the dollar value.
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.
If you haven’t yet, I can really recommend reading Satoshi’s whitepaper on what Bitcoin is really for. The fact that crypto is now used as an asset to trade in order to gain ‘old’ money really spits in the face of the ideology of a decentralized ledger. And the fact that a dollar value is assigned to it means it becomes the target of a lot of scams. The fact that a decentralized ledger also means greater anonymity has made it a popular target for illicit activity as well.
But by design, it really only wants to take power away from banks in order to stop devaluation, make it impossible to charge people for transactions and to put control of assets into the hands of individuals. The amount of money currently in circulation is way more than the actual physical amount available, because banks can lend you money they don’t even have. Bitcoin would make this impossible.
not even fiat (heh) is worth anything if we don’t accept it as store of value, let alone an electronic register on a digital ledger.
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.
No
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.
Thank you.
I guess the part where I’m stuck is the current volatile state of this “currency” compared to the idea or the promise of it.
Should I buy BTC now or wait? Is it a currency or an investment?
If something is an investment, can it also “be money”? Like, if I buy a painting for ten grand then twenty years later its worth 15 grand, I suppose I could trade the painting for something of an agreed upon equal value or I could sell it for money with which I can buy things. This concept isn’t really how we’ve experienced money in my lifetime.
It’s this push / pull of crypto’s facade where I’m struggling. It’s looked at as both currency and investment at the same time. It doesn’t seem to have much value today to use as currency because as soon as you buy something you’ve lost money. I could take 100USD worth of BTC to buy a thing and tomorrow that hundred dollars could have been worth $110. It’s not possible to say something is “worth” .01BTC because that value will change tomorrow.
It seems it’s only worth something today because people are investing in the promise of it. We don’t know if it will ever really be used as a currency as you’ve described. And, if and when that day comes to pass, what will the value of 1BTC be worth? Should I just wait five to ten years to buy crypto to avoid the speculative market? Maybe I miss out on capital gains over a hundred thousand dollars - is that so bad?
Or, in your opinion, is it inevitable that this will be the world wide currency of the future?
All good questions.
It can be both a currency and an investment. Money can be an investment, but not any fiat money that exists in the world today, thanks to inflation (money printing). Gold and silver can be both money and an investment, but even gold and silver have an inflation rate (new metal being mined and introduced into the market, aka market dilution.)
The reason this is a hard concept to grasp is because we are taking something that is truly finite (21 million bitcoins, EVER to exist) and we measure it against the USD which literally has no limit to the amount they can and will print. When you think of it this way, Bitcoin price relative to USD has no limit because USD money printing has no limit. There can always be more USD but never more BTC, therefore BTC’s value when denominated in USD will theoretically go up forever (though not always at the same crazy rates we’ve seen the past 15 years.)
Take gold for example. In the 1960s it was $35/oz. Today it’s over $3,000/oz. Is this because gold has somehow changed to become more valuable or did the USD just become less valuable while gold stayed the same?
1BTC will always be 1 of 21 million BTC. USD on the other hand will always be continually devalued due to money printing.
Nobody can tell you exactly how this is going to work out 20 or 50 years from now but the growing consensus is BTC price relative to fiat price can really only continue to go up because it’s literally the the hardest form of money in the world - even more so than gold. It’s the only asset in the universe that we can buy and hold and know exactly how much of it there is and ever will be.
I don’t recommend anyone buy into something they don’t understand but I will say I believe it would be well worth your time to study bitcoin and learn about what makes it different from fiat. Read books like Broken Money, The Bitcoin Standard and The Big Print.
