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.
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.
Beanie babies 2.0.
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
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.
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.
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
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.
