I heard a lot of discussions from different people that against BTC, let me discuss BTC in historic view to see what BTC is and what it will be.
Opinion 1:
BTC is a Ponzi schema, the reason why I accept it is because I believe there will be bigger fools to purchase it from me.
Answer:
In that point of view, US Dollar could be viewed as a much larger Ponzi schema. The reason why you accept US Dollar is because you believe someone else(or maybe everyone else) would accept it. Someone may argue that US Dollar is backed up by Government or Federal Reserve, and that’s the reason why we believe in US Dollar, which is not true.
In the beginning of 20th Century, there is no Federal Reserve, bank notes are separability published by more than 4000 Banks across US, if you want to exchange/transfer one banknote from this bank to that bank, you need to pay discounts.You may ask why America did not set up US Central bank earlier, wrong question, America did set up First Bank of the United States and Second Bank of the United States. But American people even President Jefferson did not believe in Government control money system in 18th to 20th Century.
A private central bank issuing the public currency is a greater menace to the liberties of the people than a standing army.
-Thomas Jefferson
Why do we now regard US Dollar as a safe way to store value? Modern monetary theory has an opinion that it’s Tax Driven. The US Dollar you received can pay off your debt to government, which is Tax. One just keep in mind that this note can be paid for bills, that’s enough. The fundamental basis of this theory is that US Government acts as US Dollar final receiver. That’s leads to my opinion, as BTC is becoming a worldwide THING, as long as some governments accepts it as legal currency or commodity, to pay for their people’s debt, BTC has its value, the same as US Dollar. Yes, we have Japan/Denmark/Estonia/Finland/Greece/Iceland/India/Italy/ governments regard it as currency, we have Austria/Germany/Canada/Philippines regard it as Barter Good. We now have 105 of 251 countries to regard it as legal. That’s fit for Modern monetary theory.
So the conclusion is, if BTC is a Ponzi schema, so is US Dollar.
Update from Brianlee0112/jakerfox:
Ponzi scheme are subjected to more of centralized system and bitcoin is a completely decentralized system.
Opinion 2:
BTC has no intrinsic value, but Gold/Silver has.Answer:
Since thousands year ago, in Mesopotamia, Silver was used as currency, to exchange goods, to loans, and to finance business. The interesting thing is that Silver has no intrinsic value at that time, today we can use Silver for industry, but at that time, Silver is useless, the only reason to use it to exchange goods, is that it’s hard to get it. It’s value is abstract, but good for value transfer.
1.) It must be durable. Money must stand the test of time and the elements. It must not fade, corrode, or change through time.
2.) It must be portable. Money hold a high amount of 'worth' relative to its weight and size.
3.) It must be divisible. Money should be relatively easy to separate and re-combine without affecting its fundamental characteristics. An extension of this idea is that the item should be 'fungible'. Dictionary.com describes fungible as:
"(esp. of goods) being of such nature or kind as to be freely exchangeable or replaceable, in whole or in part, for another of like nature or kind."
4.) It must have intrinsic value. This value of money should be independent of any other object and contained in the money itself.
- Aristotle’s Sound Money
| Gold | FiatCurrency | Land | Oil | BTC |
| Durable | yes | n/a | yes | yes | yes |
| Portable | yes | yes | no | no | yes |
| Divisible | yes | yes | no | yes | yes |
| IntrinsicValue | yes | no | yes | yes | yes |
BTC does not fit for point 2, but as the world is becoming more and more digital, Aristotle cannot foresee this, but instead, BTC take this as an advantage. We are making more and more value through our technology, so if one currency needs to fit point 2, one needs to carry large bulk of currency to go around, that’s not good.
For point 4, US Dollar has no intrinsic value, Federal Reserve can publish US Dollar to market by “keyboard stroke” (-Bernanke). That’s why so many countries meet hyperinflation, so did America in 1970’s. If in any Emergency situations, eg. at war, the first choice of government is to publish Debt or even just print money, which is a huge allure for any government.
The conclusion is, BTC has the same intrinsic value as Gold/Silver has, which is the cost to mine them. For US Dollar/fiat currency, the answer is no.
Opinion 3
BTC is a Big Bubble.Answer:
As discussed in point 2, BTC is an upgrade GOLD. So let's assume that BTC replaces gold for government reservation, how much will be 1 BTC equaling to USD?
from wiki(
https://en.wikipedia.org/wiki/Gold_reserve), in 2018, the sum of top 20 government gold holding is: 29334.8 metric ton, equaling to $1,218,919,609,600, and let's assume that governments take holding of as much as 50% circulating BTC as reserve(comparing to gold, the percentage is about 30%), given the circulating BTC number now is: 17,038,200(a lot of them are lost), so the price of BTC should be: $1,218,919,609,600 / (17,038,200 * 50%) = $143,080, and now the BTC price is around $8400, how could that be a bubble?
So, even governments replace 10% of their Gold reserve to BTC, the BTC price should reach as much as $14,308.
BTC also has properties that Gold has not, that it has the ability to easily transfer throughout the world, it has smart contracts, it's indeed circulating, paying for goods.
Why governments will take BTC as reserves? It's indeed Nash equilibrium. If BTC just has a potential to be Gold, then if any government does not take it for reserves, it will lose in the future. Comparing to huge potential of a loser, the government must make the move to reserve BTC. Once more and more countries join in, the others will never want to be left behind.
So the conclusion is, even $100,000 for 1 BTC, there is no bubble for it.
Let’s take a deeper view of BTC.
From the beginning of human history, people were looking for something to act as General Equivalents. Good for Good exchanging is not good for value storage, and hard to take value around, so that it limits people’s freedom. Once currency is made and commonly accepted, our life conditions grows. In China, thousands years ago, people even use beautiful shells to exchange things, mainly in lands far away from Sea, so that shells are difficult to fetch especially for beautiful shells.
So the fundamental requirements of currency definition are abstract, once if something is hard to get and publicly accepted, and easy to store, the thing could be used for currency.
As the Global Economy growth, we need something that’s more easy to exchange and store value, an anchor that our economy be based on, something that’s has it’s intrinsic value, something that cannot be devalued by some government’s own interest. That’s the reason that cryptocurrency appears. BTC is a currency that if you trust Math, you believe it cannot be published through a keyboard stroke. As so many people accept it, and so many government regards it as legal, it has its own intrinsic value.
