It's backed by a Network Effect shared value. I like the phone analogy.
If you were the only person with a cell phone, would it have value? No of course not.
Now give another person a cell phone and boom you now much greater value N Squared. The more people that have them, it has much greater value until like today.. it's a necessity.
Look up Metcalfe's Law. It devised a metric to be used to describe different network values.
Edit..Wanted to add, you can personally see this effect and calculate it yourself by just looking at the # of new address creations. It's a round about way but you can judge the velocity of value growth.
Topic: Answers to what is Bitcoin backed by? Give your answers (Read 247 times)
It's backed by everyone agreeing that it's worth something.
Bitcoin is backed up by nothing, not even gold, not even fiat, nothing.
The only thing it that it could be considered as "backed" is just by the trust of people, but nothing more than that.
If all those guys decide to sell, then the price dies, it is all a cycle.
The only thing it that it could be considered as "backed" is just by the trust of people, but nothing more than that.
If all those guys decide to sell, then the price dies, it is all a cycle.
Belief.
At the very core of anything that has collective value in life amongst humankind that exceeds mere intrinsic value, there is only the collectively shared belief. That's it.
Call it shared belief, faith, trust, whatever it is all the same idea.
Philosophically one cannot dispute this, nor prove it wrong.
At the very core of anything that has collective value in life amongst humankind that exceeds mere intrinsic value, there is only the collectively shared belief. That's it.
Call it shared belief, faith, trust, whatever it is all the same idea.
Philosophically one cannot dispute this, nor prove it wrong.
Nah, stop giving fake answers, we all know that bitcoin is not backed up by nothing, and there is nothing wrong with that.
Maybe it is backed up by speculation and what other people think about it, nothing more.
Maybe it is backed up by speculation and what other people think about it, nothing more.
Bitcoin is backed by different things and is self stabilizing network which can't be brought down entirely.
It is backed by;
1. Huge community support who believes whole financial system can crash anytime soon like before
2. Normal investors who want to take profit out of bitcoin growth
3. People who want to have full control over their wealth
4. Miners who are using their machines to mine bitcoin and support bitcoin network for some reward
To be currency there is no need to get backed by some fake trust of government or by some valuable items like fiat with high inflation.
It is backed by;
1. Huge community support who believes whole financial system can crash anytime soon like before
2. Normal investors who want to take profit out of bitcoin growth
3. People who want to have full control over their wealth
4. Miners who are using their machines to mine bitcoin and support bitcoin network for some reward
To be currency there is no need to get backed by some fake trust of government or by some valuable items like fiat with high inflation.
I Couldn't say it better.
Bitcoin is backed by Investors ever ready to invest and continue in transactions.
Here is my answer.
Bitcoin is backed by the full faith of those who do not trust governments.
I do not think it's just a lot of people who put confidence in bitcoin because bitcoin is considered a currency for the future so people assume in the future the price will be very expensive and now have started to prove that bitcoin is perfect for modern currency because of the ease given in transactions and everything is done freely and certainly does not take time and place because everything is done online. Bitcoin is backed by the full faith of those who do not trust governments.
Here is my answer.
Bitcoin is backed by the full faith of those who do not trust governments.
Bitcoin is backed by the full faith of those who do not trust governments.
Bitcoin is backed by math. This beats the full faith and trust of the US government.
Bitcoin is regulated by an algorithm. This beats individual decision makers who are influenced by those they regulate. Hands down. Any day.
there is nothing backed by anything by people who trust this currency,
but purely and exclusively by speculation so that the price goes up or down
but purely and exclusively by speculation so that the price goes up or down
Items 1-3 fall under 'supply and demand' and are not 'backing'. Item 4 is invalid and mining hardware in no way supports bitcoin prices. We could remove 99.99% of the miners and the network and price would still be the same. Now if we ever upgrade to a tree-based system instead of a blockchain everyone has to hold, that could be different.
Bitcoin is backed by different things and is self stabilizing network which can't be brought down entirely.
It is backed by;
1. Huge community support who believes whole financial system can crash anytime soon like before
2. Normal investors who want to take profit out of bitcoin growth
3. People who want to have full control over their wealth
4. Miners who are using their machines to mine bitcoin and support bitcoin network for some reward
To be currency there is no need to get backed by some fake trust of government or by some valuable items like fiat with high inflation.
It is backed by;
1. Huge community support who believes whole financial system can crash anytime soon like before
2. Normal investors who want to take profit out of bitcoin growth
3. People who want to have full control over their wealth
4. Miners who are using their machines to mine bitcoin and support bitcoin network for some reward
To be currency there is no need to get backed by some fake trust of government or by some valuable items like fiat with high inflation.
Bitcoin is not backed by miners... miners are backed by bitcoin investors. You have it all backwards. Miners can buy all the equipment and electricity in the world and then not be able to pay for any of it if investors dont buy their coins. Maybe you're confusing this with 'how does bitcoin work'.
Bitcoin is backed by the electricity bills of miners and their payouts...
Bitcoin is backed by work just as all currencies are.
First tell me what currency IS backed by something? Fiat has some protections by the government but no backing except for debt - you can trade one dollar bill for another dollar bill. Gold has a fraction of its value backed by its ability to be used in industrial and medical applications - but not the whole value. There is used to be digital currencies that were backed by gold - meaning for each unit there was a bar of gold in a vault somewhere. Cryptocurrencies are not backed by anything but supply and demand - the bids on the exchanges and what your neighbor will pay you for a bitcoin. It's like asking 'what are beanie babies backed by'
Here is my answer.
Bitcoin is backed by the full faith of those who do not trust governments.
Bitcoin is backed by the full faith of those who do not trust governments.
in other words, it's backed by nothing. just like gold. that's a feature, not a bug.
money being "backed" by anything requires centralization. this is why the idea of a gold-backed cryptocurrency (often floated by gold bugs like peter schiff) is useless. both gold and bitcoin derive their value from their network effect. people value them because other people value them and use them for money. anyone who tells you that gold derives value from industrial use is ignoring the actual market share of industrial gold use. the only thing that matters in both cases is network value.
here's a brilliant post from satoshi that explains this phenomenon. (he also explains why bitcoin is more attractive than gold as a value transfer network)
bolded for emphasis:
As a thought experiment, imagine there was a base metal as scarce as gold but with the following properties:
- boring grey in colour
- not a good conductor of electricity
- not particularly strong, but not ductile or easily malleable either
- not useful for any practical or ornamental purpose
and one special, magical property:
- can be transported over a communications channel
If it somehow acquired any value at all for whatever reason, then anyone wanting to transfer wealth over a long distance could buy some, transmit it, and have the recipient sell it.
Maybe it could get an initial value circularly as you've suggested, by people foreseeing its potential usefulness for exchange. (I would definitely want some) Maybe collectors, any random reason could spark it.
I think the traditional qualifications for money were written with the assumption that there are so many competing objects in the world that are scarce, an object with the automatic bootstrap of intrinsic value will surely win out over those without intrinsic value. But if there were nothing in the world with intrinsic value that could be used as money, only scarce but no intrinsic value, I think people would still take up something.
(I'm using the word scarce here to only mean limited potential supply)
- boring grey in colour
- not a good conductor of electricity
- not particularly strong, but not ductile or easily malleable either
- not useful for any practical or ornamental purpose
and one special, magical property:
- can be transported over a communications channel
If it somehow acquired any value at all for whatever reason, then anyone wanting to transfer wealth over a long distance could buy some, transmit it, and have the recipient sell it.
Maybe it could get an initial value circularly as you've suggested, by people foreseeing its potential usefulness for exchange. (I would definitely want some) Maybe collectors, any random reason could spark it.
I think the traditional qualifications for money were written with the assumption that there are so many competing objects in the world that are scarce, an object with the automatic bootstrap of intrinsic value will surely win out over those without intrinsic value. But if there were nothing in the world with intrinsic value that could be used as money, only scarce but no intrinsic value, I think people would still take up something.
(I'm using the word scarce here to only mean limited potential supply)
Here is my answer.
Bitcoin is backed by the full faith of those who do not trust governments.
Bitcoin is backed by the full faith of those who do not trust governments.
That is true, but you can not give that answer as an argument to someone who is just introducing himself in all this new "world".
You should know that bitcoin is purely backed on speculation, not on the trust, if bitcoin starts to go down, everybody is going to leave (just like it has been happening lately)
But yes, the price is based on that + speculation + faith.
Nope I think the price is based on the big time holders or whales whether they will pull out or trust bitcoin and wait to go for a higher value. Once they sell their bitcoin it will totally crash depends on how much they have or they would sell, and having faith is just a thing to stop the fall of the value. And for the price to go high it depends on the rich people who are willing to invest to bitcoin and probably buy big time and then sell soon so basically it only runs on a cycle by the rich people. It is called price manipulation.
Here is my answer.
Bitcoin is backed by the full faith of those who do not trust governments.
Bitcoin is backed by the full faith of those who do not trust governments.
Not only do they not trust governments probably most despise governments and you can see this in parts of the world that are breaking at the seem on an economic level. Venuezula can barely hold its head up but their citizens flock to BTC as a safe haven. Also a side note but probably still true it is therefore backed by greed because if everybody cashed out same time it would also fail and cease to exist.
Here is my answer.
Bitcoin is backed by the full faith of those who do not trust governments.
Bitcoin is backed by the full faith of those who do not trust governments.
That is true, but you can not give that answer as an argument to someone who is just introducing himself in all this new "world".
You should know that bitcoin is purely backed on speculation, not on the trust, if bitcoin starts to go down, everybody is going to leave (just like it has been happening lately)
But yes, the price is based on that + speculation + faith.
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