Topic: If Bitcoin were backed by something. - page 2. (Read 8115 times)

Helium has extreme costs of holding. To store helium is no fun.

Gold is backed by trust. As any currency. If some currency is "backed by gold", then people fall into false impression that the gold itself has value. It has not. When gold is backing currency it is just a proxy of trust, because people simply have trust in gold.

Fiat money as well are backed by trust. By trust into issuer, which is central bank, that the issuer will maintain price stability. This is why common currency markets watch extremely closely even quality of shit of the board of central bankers. Because it is always just a matter of time until central bankers do something nasty.

The stickiness of money's value: It is first backed by a consensus, then if a large drop in price happens, people will feel that now it is the right time to buy, thus support the price at a lower level

Actually the mining cost is a good indicator, since the demand from fiat money will always flow to the lowest possible cost to get coins, either mining or purchasing, the result is that the mining cost will be close to the actual exchange rate

Regarding altcoins, just like silver, tungsten and many other metals, they have similar property as gold, they never became as valuable as gold, since people need only one type of universal money to do the transaction, for convenient

Thank you, and to the rest of you for your sharing your knowledge.

In summary, I don't really like where this cryptocurrency is going then. After reading this, I don't know if I can even trust in the "trust". Don't even ask me why. In my view, its like opening Pandoras Box.

If I say asset X is backed by asset Y, it means that I personally agree to give you asset Y in exchange for asset X at the agreed upon value. 

So, to initiate a "backing" you need a central issuer (in this case me) to make the promise of future exchange between the two assets.   

Generally, you should see that I used the word "backed" and realize that I am probably lying to you.  The history of this word has only shown that it is used fraudulently leading to defaults.  Even when an individual or group fully intends to trade the asset for the paper when asked, often circumstances lead to default.   

Bitcoin is not backed by something.

Bitcoin is backed by people.

We're deciding the price of it.
If I've bitcoin and I want to sell it at price of 30$ or 1000$ who would say anything about that?
Or Vice versa, If I want to buy bitcoin I could just say I want to buy bitcoin at 500$. If someone wants to sell this price I got it.

We're using fiat currencies just as a tool to buy or sell bitcoin.

When the bitcoin is accepted as a currency in world wide, it's gonna mean a lot.

Something similar was stated above, but as soon as bitcoin is backed by something physical such as gold, it implies that someone or some entity is holding the physical item that is being used to back the currency.  So then you have some type of centralized entity that has to be able to resist the pressures of some other people and groups of people.  Some of those people will be legally able to guns (governments) to force their will on this entity, some people may try to do so illegally (gangs, criminals etc).  As soon as some entity is doing the backing, then that entity can be robbed or pressured by their government to remove the backing.  Or to water down the backing etc.

Could a government be the backer?  Sure, the government of Russia could resist the pressures from the EU, China, and US for example.  But could the government of Russia resist the pressure of Putin to do so?  Probably not.   Could a US government agency resist pressure from China or Russia?  Sure.  But could the  agency resist the pressure of the President?  No.  So then, which government would it be?  There would be no consensus.  Would it be the UN?  They can't even resist the pressure from the smallest member, so that would be even worse.

So, in general backing bitcoin by something physical will result in centralization and all the problems inherent therein.  And you have the problem of picking who the centralized entity will be.

Bitcoin itself is backed by math, the trust in the network, the trust in the protocol, the blockchain, the infrastructure and the combination of all of those (and more) into a network.  It is likewise backed by the uses of all of those things. And together they are quite useful and consequently valuable.  Nothing physical, but nevertheless these non-physical things backing bitcoin are quite valuable. 

Kind of like the internet in 1993, few people were as aware as they could be of the uses to which it could be put.  People are only scratching the surface of the uses of the blockchain concept.

:-)

It very well could. Although I personally like scarcity as a property. The ability to create infinite coins hurts the value of coins already held. Kind like what happened to benie babies. People started to collect them and see them as valuable. Then the company that makes them came in and overproduced them, collapsing the price.  (not that hoarding them was smart in the first place).

I have not seen an alt coin that betters bitcoin for me. Most seem to be copies of Satoshi's work with some find/replace script kitty stuff. But that could change and a better system could emerge. The next few years should be interesting!

Ah, good point. I agree.
But then the next problem is that bitcoin can be replaced by alt-coins with the same properties. Some of them even allow infinite creation of new coins... (meaning it can never become scarce, and therefor more valuable per unit)

True, but value of those properties is a small % of total gold value. If you take away all the speculative/investment/store of value part, the price would fall to something around 15% of it's current value.

Also, remember that it's use in jewelery is mostly due to it being considered precious and valuable. Afaik pure gold is too soft and brittle to be used as sole material to make rings etc, you have to mix it with other metals.

Helium (gas) got some very unique properties and apparently is very scarce, but it's not considered valuable or precious.

It's true that gold does have some special properties. It's non-reactive, great conductor of electricity, etc. But that is not why gold is valuable. There is a long history of gold being considered valuable. This tradition is not connected with electrochemical properties. Gold is simply perceived to be valuable beyond it's utility.

Bitcoin also has utility and special properties. It is the fastest, cheapest, and most secure way to send money to anyone. That is an extremely compelling idea. Like gold, it's supply is limited and unchangeable. But also like gold, the real reason to exchange some wealth for bitcoin is because of a shared belief in it's future value.

Except gold has very rare physical and chemical properties, while also being scarce...
Gold really does have value by itself, as a resource. Bitcoin does not.

If a crash really happens BTC and Gold will be worth a lot.. A LOT.  If the idea paper is value is gone... shit will get real.

Do you think that the global elite (Bilderberger etc.) will accept the Bitcoin? I mean either Bitcoin or our existing shit economy (based on debts and manipulation of our population). The big crash is coming, I assume in 2016/2017. Our economy will drown.

If it was backed by anything physical the country in which that item was held would be stolen by the country.  All of the banks are criminals and in 100% control of the money supply in every country.  Attempt to make something new they will jail you for life and steal EVERYTHING you own.

Liberty dollar, google it.  We are debt slaves, our masters would never allow competition.. alas our masters are not very smart.. or not as smart as they would like to think they are.

Designers >>>>>>>>>>>>>>>>>>>>>>>> all, Bitcoin is proving this.  Intellect is humanities greatest strength.

Gold is effectively "worthless".. however since you can never trust a human it is not worthless..  The fact it cannot be duplicated, it is rare and cannot be printed to infinity is insanely valuable.

So the general consensus that bitcoin is precious and valuable is what we need, and nothing else.
Bitcoin is backed by math certainity, the blockchain. The rest is indeed consensus.

Like any floating commodity, BTC is backed by demand. If it were backed by something else, it would simply be a proxy for that something else's demand.

Bitcoin is backed by the exact same backing as gold. Belief in it's value.

BTC is backed by network of people (community).

For now bitcoin is all about acceptance. It's backed by community support and people's belief in it as reflected in the increasing hash rate. If you take something tangible and try to use it as a medium to support bitcoin, not sure how that would work out. Could that item be quantified and more valuable than bitcoin.... i really don't have the slightest answer.

Bitcoin is owned by the community and it's not possible for the community to buy something let's say gold to keep it and support each and individual coin??