Topic: If Bitcoins aren't tied to a conventional currency how did they get so valuable? (Read 1058 times)

They are not "tied" to it but there are a lot of people who need to use fiat currency in order to buy and sell bitcoin, there are not enough places that accepts bitcoin so you can live with it forever, if every shop and store you buy things and all cafes you eat and all taxis fares you take were capable of accepting bitcoin than you wouldn't need to change your bitcoin to fiat currency but unfortunately that is not there yet.

Hence, this is the reason why people calculate the success of bitcoin with fiat currency, not really comparing the price of fiat and bitcoin but basically comparing the purchasing power of bitcoin and fiat. It doesn't mean it is "tied" but it means it is compatible, the comparison is the reason why we know how much bitcoin can buy in the real world right now.

We can't say "I purchased a bread for 150 satoshis today" yet but we can say "I purchased a bread for 1 dollar which is roughly 150 satoshi" which is the reason why it exists.

Bitcoin valueable because the network security and bitcoin is store of value. bitcoin not tied with conventional currency or fiat because bitcoin is decentralized cryptocurrency

demand is actually flexible, depending on the condition of a market, so it is not always high demand is a benchmark that bitcoin will always be valuable. It is possible that later bitcoin will continue to weaken and the price will only be stable at that number

Cryptocurrency is based on its intangibility - it was created on the Internet. This may scare someone, however, it is only remnants of imposed stereotypes. Most of the money "lives" on the servers of large institutions. Clients deposit money that appears in your account, while tangible accounts are issued to others.

In order to have a certain value, it is not necessary to be bound to any existing currency. The consumer value of any item or object improves, and its price increases. In relation to cryptocurrency, its price is determined by the demand for it. Cryptocurrency is not tied to the currency, it is compared with it. Thus, it has a certain value.

The reason bitcoin cantik get value is because there are supply and demand the higher the demand then the more valuable it become,so the one they determine the price is the people,this is one of the advantage of decentralized investment, there are no politic or other outside factors

Usually the thing with something that has value. Sure, a lot of people may be seeing it more as a speculative asset right now, but that does not change the fact that bitcoin has a lot to offer to so many of us in the long run considering how we will surely get to be able to have freedom from banks and all the governmental policies that has been screwing up a lot of things over the years.

It is just very simple, over time as demand keeps increasing, and there is limited supply as we all know, which is what makes bitcoin deflationary; it is the need for it that will keep driving the value up.

That is usually the thing. As long as people see the value for it and they are willing to pay anything for it based on the fact that it gives them that purpose they are looking for, I am certain this is a space we all know is going to give a lot of people that purpose. Uganda is an example, in which we see the unbanked really making all attempt to at least take hold of their own future, and we see the likes of hyper inflated ridden countries like Zimbabwe, utilizing the crypto space to at least, be able to do transactions all over the globe, after a dead economy. So, there is a lot of value to look out for in this space, and based on demand for it, that is what typically bring about the growth.

Because there are not many of them and because it is very easy to exchange bitcoins among people, if you wanted to send a huge amount of money from one bank account to the other there will be a lot of problems along the way and it is possible that banks could freeze your money, but that is not a problem with bitcoin and that is why bitcoin has value.

Supply and Demand. People all around the world get bitcoin for couple reasons, some buy it because they believe it will get higher in price and make them rich, some buy it because they want to buy some other crypto but can't buy it directly with fiat, some buy it because they want to gamble. I can continue to list the reasons why people buy bitcoin but in short people just buy it for some reason and since they buy it sometimes the price goes up.

Depending on how many people are selling their coins and how many people are buying coins the price either goes up or down. It looks "valuable" to you but the price has actually reached 20 thousand dollars at one point which shows that people actually bought bitcoin at 20 thousand dollars thinking it would still go up. Supply and Demand determines the price.

All about demand and supply and what makes bitcoin even more special is the deflationary features, so over time, with increase in demand, it is pretty obvious how the space will definitely get to develop and grow in value as well. It is already backed by the value it creates on its own, so it does not have to be backed by anything else.

This is a decentralized currency and every one of us as long as we accept the price we are paying for it, then that is what would always keep making the value to grow stronger. It is necessary to understand that with real life usage, and as store of value, even if the price is $100m to a bitcoin and people see the need to have to use it, they will most definitely do.

Cryptocurrency does not necessarily need to be tied to a regular currency in order to have a certain value. The value of a cryptocurrency is acquired by the fact that it becomes useful for people, creates convenience and comfort in its financial activities. Cryptocurrency has only a ratio in price with a regular currency, but not a price peg to it.

When there is a demand for something and the supply is limited,you should such thing to grow in value.The price is practically demand by the community.The more the world at large see a need for BTC the more it will grow in value,the moment the community don't see a need for it anymore, it will surely drop.

indeed the same as a market, if demand is high and supply is small, price will soar. besides that of course bitcoin technology is the answer to future evolution

In this modern day of trading like usual buy and sell of goods and other form of exchange,fiat or national currency was the standard medium of exchange. Over a period of time as inflation grows the vale of currency gets lower, so bitcoin try solve this anti-inflation circumstances but it failed that's why bitcoin was traded as part of assets or commodity but not an actual currency so far.

Much like how gold and other things got expensive, it is how much people are willing to pay for it. You have to remember thst crypto currency is based on supply and demand (like any other commodity) and price would move depending on how much people are willing to pay for it. I just don't know the technical side of it.

In our world, any value is not an objective concept, but a subjective one. That is, the value of the object is determined not only by its internal objective characteristics, but mainly by the agreement between people about its value. This arrangement has the appearance of the laws of supply and demand.
Art objects are a good example.
Now uniqueness is valued especially highly. Even a completely worthless premat, if it is unique, is of great value.
And Bitcoin first proposed the uniqueness property in the Internet space. In which it was possible to copy anything.

Other than Supply & Demand, people are also looking for something that are not controlled and manipulated by governments or some corporate entity. The world have seen what these governments and entities can do to the global economy and they are searching for alternative currencies that are not under their control.

This was the spark that caused the wild fire adoption in the early days of Bitcoin.  When more people realize the evil behind these entities and these government, adoption will increase.

The market consists not only of cryptocurrencies but of many other items that are of some value. If you say that bitcoin is not supported by real money, then where is the proof that any other cryptocurrency is provided with this money and costs exactly as much as there is on the SMS. Where is the proof that for example the world's leading companies and their shares are worth the price that they offer? like Apple or Microsoft? The essence of the market is not to provide something with real money but demand. If a stock or cryptocurrency is needed by buyers, it will cost more if there is no cheaper and not necessarily a reinforcement of assets with gold or real money. The market is driven by supply and demand.

I think that the price of bitcoin also depends on the production itself, because people who produce bitcoins lose not small money, and they do not have the benefit of selling it cheaper.

I think bitcoin is not necessarily associated with any currency, bitcoin is always bitcoin, anyway, the bitcoin value will be very high in the next time

Bitcoin and altcoin are not a substitute for traditional money. If bitcoin is not linked to a conventional currency, the value of bitcoin is unlikely to be sustainable.

I think if bitcoin is not associated with a common currency the value of bitcoin will continue to decrease, the impact of bitcoin will not be too big for the economy, bitcoin is still not comparable to traditional money.

it will be a little difficult, so the price of BTC is still pegged or refers to conventional currency, but if all aspects or transactions in this world have fully used BTC, then the BTC will have its own value and may not be affected by conventional money, but I think now btc still has high value and is still very valuable if we have it, hopefully the market is getting better so that the bcc has a high price again and hopefully in the future btc can be used as a full transaction tool without having to exchange the conventional money at least this will make life we are a little simpler

If Bitcoin is associated with a common currency, I think at that time the value of bitcoin would not be as volatile as it is today, and it is likely that the bitcoin value will increase sharply because only to 21 million Bitcoins

Geez! I hope the user who paid 10,000 Bitcoins for the pizza did well out of Bitcoin (no doubt they did), otherwise they would be in the Bitcoin regret forum.

This market is ruled by ideal model of demand and supply. People get interested in the new technology and are excited about generating some money on their own.They have demand and partially create their own supply. Others simply want to buy some coins, so they form demand, but the supply should be provided by others. What is essential for the increasing of bitcoin's price is limited supply. There cannot be more that 21 million coins, so when new people will join the market, they'll have to divide the btc that's already circulating. Plus, bitcoins are also generated in limited amounts each 4 years or so, which means that even though some day there will be more of them, people who want them now have to pay more.

If bitcoin is combined with Chinese yuan, what is the value of Bitcoin?

The current value of bitcoin is still considered as virtual and not long. When bitcoin is linked to another common currency, the value and future of the bitcoin will increase to a new level.

What currency do you usually prefer? US dollar or another high-value currency? If bitcoin is associated with a high-value currency, the value of Bitcoin may be high.

Bitcoin has not been accepted by some countries. If bitcoin is not associated with a normal currency, the stability of bitcoin is not guaranteed, the value of bitcoin is unstable.

Lol who told you that Bitcoin is not tied to conventional currency? Man it is. The main purpose Satoshi even made it was for it to be used as a way for making peer-to-peer transaction, but since it has a value that fluctuates up and down based on what is being invested on it, it continues to be going any direction based on what we invest, the price we are ready to buy and sell. So it is tied to conventional currency.

You’ve made the perfect explanation of this so no need for further explanation. And like you said it is fluctuating based on the rate of demand and supply, so that means that it is relying on conventional currency to gain its value, cause if we don’t invest our money (the real currency we are using) in it, then the value wouldn’t increase, and if it has increased already it will then start to decrease due to the rate of demand has decreased.

Everything is based on users and investors which are "creating" the price of bitcoin, let's show this on example, you have something material, it has its own price but in some way this is only a thing made from something, the same is with coins but they are just in internet not in ours hands.

I think its value and the hype comes from the economic drive that is being created by the investors like us. What else could be the reason for that? Do you really think that there is any other way for the crypto to gain its value? Its just the real money that gets flooded into it time to time basis and over the time it can be condensed market and hyped prices for the bitcoin. For bitcoin the most easy way to get the value is its popularity and people just trying it out with thousands of dollars as an investment. Thats the possible explanation for this.

This is very true because it is what drives most of the hype about new things. Then when so much interest is on a specific thing, everyone and their auntie (well not quite with bitcoin--yet) wants to buy it. So then it gets more and more expensive.

That's also the issue in the other direction, when people realize that speculation is just... speculation. That the numbers aren't supported by the facts, and the prices are much too high. Then they all run for cover, sell it off, and protect themselves. The recovery stage takes time, but it will go back up again.

The growth of its price is parallel to the growth of those interested and buying bitcoins. The more popular is bitcoin, the more it grows in price.

Actually it did for now because people are deciding on the market price for crypto or bitcoin basing on its demand for it. As the demand for crypto goes high then so does its market price and it is even tied up to centralized currency like dollars. As you can see that the value of bitcoin is always being tied up with dollars or any local currencies.

Everything in this world has a perceived value. Bitcoin is so valuable because the people like you are me accept that it has this much value. The same concept applies to the currencies. The value of anything is greatly affected by the demand and supply forces. When Bitcoin was launched, its value was very less but when its demand started increasing, the supply being limited, its value started rising.

Think of bitcoin as a pass-through of every transaction it depends entirely on the elements to form. However, it does not belong to any organization so it is not affiliated or dependent on any other. It simply represents electronic money in general as a bridge to the market.

In many countries there are centralized online exchangers with the help of which you can buy or sell bitcoin. There is also a decentralized exchange - localbitcoins , I like it more.

Bitcoin is the peoples money. People are giving it a value because they rule it themselves. It is not like traditional government money where government can affect the prices. Hence this causes bitcoin to be up or down, expensive or cheap, whatever the price of bitcoin is actually decided upon what people value it. The value of it comes from the chances of not being tied to governments or corporations and having your own currency that you can call yours without anyone meddling with it.

All things in this world get their value based on demand. This demand is being decided by the supply. This is one of the core concept of every economics which applies to bitcoin ecosystem too. You sound like a school boy, go and educate on this from wiki pages before asking any more doubts from this community.

Your answer very good, I also think as same as you.

     Even if Bitcoin is not tied to a conventional currency lot of people believe that the digital currency has many potentials the government doesn't understand what is the intention behind this digital currency creation they think that this is a scam the reality behind this decentralized digital currency was introduced to advance the potential of transaction in the digital goods .The value of Bitcoin is determined by the market as modern technology improved  new stuffs developed, the blockchain can increase the pace and can be used in business.

It's quite the opposite - it's because bitcoin is a decentralised and independent currency that it's got intrinsic value. Its supply can't be modified like fiat can essentially be printed into existence by the government/central bank.

Bitcoin's utility as a decentralised currency is what makes it valuable. People know that it's an international medium of exchange that has a decentralised supply, which means that it's a great long term store of value. That's where the demand comes from. Same principle as gold and silver.

On the contrary, fiat currencies are actually intrinsically worthless - its supply can be increased at any time by a central entity, and we see this with Venezuela and and Zimbabwe as recent examples.

I think the current absolute minimal base price of 1 Bitcoin depends on the electricity costs associated with the mining and the upkeep costs of the mining facility/rig. Add 10-15% to that number and that would be the normal, natural price of Bitcoin. What we have now is pure market speculation blown out of proportion by unabridged human greed. It costs money to mine 1 Bitcoin and it's not like you could get it for free out of thin air.

The simple answer is that there is just demand for it, but what's interesting is how the demand came there in the first place.

In the early days of Bitcoin people were just giving it away to friends they met through this forum for example.
People also started doing small OTC trades with each other, that gave Bitcoin its initial value (couple of cents per BTC)

Now the really big step forward, was when someone bought a couple of pizzas with Bitcoin.
It was the first time (I think) that someone had purchased physical good with Bitcoin. It's definitely the first famous purchase...

In the beginning I think many people bought it, just to be a part of the community, not so much for it's possible future value.

That has shifted though, whereas now, more and more people buy it for investment purposes.

Bitcoin is valuable because its supply is limited and the demand is high, that's where bitcoin is valuable because of its expensive price and profits that can also be a lot.

While I do believe that it definitely does contribute what you stated, the premiums are more related to the lack of actual supply, and to a lower extent the monopoly position of market makers exploiting the arbitrage opportunity at cost of poor people. These people don't have much choice other than to buy every available satoshi at any price.

Bitcoin in South Korea last year has been trading $6000 above the USD rates of exchanges as Bitfinex, GDAX, Bitstamp, etc. They have the best possible and cheapest overall infrastructure, which points out that it was purely the lack of supply that drove Bitcoin to these record highs. As quickly as that premium popped up, that quickly did it vanish. Most premiums right now are well under 5% which is pretty normal I guess.

It is about the supply and demand of the bitcoin. That's just how it works. Meaning that if the supply meets the demand. The value of crypto would become stable. But due to the fact that the demand is higher than the supply. Bitcoin soared up so high in its value.

Well, that's the reason why a lot of people say that BTC is a Ponzi scheme. But the fact that people bought something of limited supply using real currency made Bitcoin worth something. Come to think of it - what is gold tied to? What if one day people say that it's just a piece of metal and they don't want to value it? Everything that people consider and want to be valuable becomes so, in case of gold it's beauty, durability and limited amount, in case of Bitcoin - it's very convenient and innovative technology. Another thing that matters is that Bitcoins don't come out of nothing (like everything in Ponzi schemes) - they are mined and mining requires electricity power, which has a value. And the more there are Bitcoins out there - the more power it is needed to mine some, this genius concept practically eliminates the possibility of inflation.

Indeed they are not tied to it but there market cap creates a valued base for the prices of all crypto currencies and mainly bitcoin. When money is flooded into the market then it creates huge demand against the purchases of different coin. Know that the coins are all limited in number thus this demand creates less supply situation all the time. With the difficulty of mining not much coins are generated every time and thus as whole there is large demand and less supply situation and thus giving the price to the coins. Thats how I understand the whole thing here.

If I understand correctly bitcoin is depending on the overall demand that market has to it so when it is the more people wanted to buy bitcoin it gains more price, and opposite words the same.

WITH TRADE,
for example someone selling food and drink and receiving payment with bitcoin,
so, bitcoin is valuable because it can buy food and drink,

it is a small example of bitcoin can be valuable without conventional money

I think initially there was utility for crypto currencies in 3 major areas which fueled its rapid rise

The first area is the unbanked demographic. There are many around the world who cannot meet the minimum balance to have a bank account. Crypto currencies give this demographic a way to execute electronic transactions without having to jump through hoops to meet the demands of banks.

The second area are crypto funded darkweb markets like silk road, alpha bay and hansa. While many of these were shut down in 2017 and no longer have much impact on the value of btc as they once did. They are a big part of crypto currencies history and in previous years represented a significant portion of bitcoin value.

The third area is bitcoin's relatively low transaction fees in comparison to many services offered by banks. Some countries like cuba are known to charge ridiculous fees and taxes on wire transfers going into the country. American immigrants from cuba would need a method to send money back to their cuban families. Bitcoin gave them a way to achieve this without having to pay 40% taxes/fees or whatever the going rate was.

In countries like africa we often see bitcoin trading substantially higher than other countries. The reason for this is due to bitcoin offering substantially lowering taxes and fees on things like wire transfers and electronic banking services. Bitcoin is much cheaper than its alternatives which is why africans are willing to pay more for bitcoins.

Keep in mind, this is a general overview off the top of my head. I might have missed a few things. The historical price of bitcoin and its design revolving around algorithmically limited supply which makes it virtually impossible for it to be hyperinflated like fiat money along with btc being deflationary are all contributing factors as well. As is the revolutionary design of bitcoin utilizing blockchain which has many real world applications. Bitcoin's ease of use, convenience and security measures also play a large role. As does the way transaction costs compare to traditional banking services.

That's because a lot believe of the potential of this digital currency. This isnt tied up to any currency or not backed up by gold because many in the government isnt aware whay really means by the creation of bitcoin and only believe that it is a scam. This digital currency was made by Satoshi to advance the potential of transaction in the digital goods. As you know we are on the modern technology where a lots of improvement and new stuff developed. No wonder that a blockchain can increase the pace by including this coin/token scenario on these progress which can be used on business, retail, banking and a lot of things. The verdict here is blockchain is created to have decentralization but the government simply wants yo control this and this isn't good.

Nothing in life is truly isolated. For one to get the true value of anything it has to be compared with another. That is what bitcoin does. It has to square up to a fiat. Dollar is the most widely accepted of all the fiats (Pounds and Euros inclusive). And that is why bitcoin is paired with the dollar. So, when people advocate for the abolition of banks so that cryptocurrency can become mainstream I look at them and take a good laugh. Abolition of banks will mean goodbye to fiat, right? That isn't going to be possible.

This bootstrapping process has achieved something that most people—including me—would have thought was impossible a decade ago: a valuable currency that's neither backed by a commodity like gold or silver, nor by a powerful institution like a government or bank. On one level, bitcoin's value is rising simply because more and more people are betting that its value will continue to go up over time. The question, of course, is whether they're right about that.

Each of these booms—and, for that matter, most bubbles throughout history—has been driven by the same basic publicity-price feedback loop. As an Internet writer, I've seen this process first hand. During times when the price is rising, there's a lot of traffic to be had writing about bitcoin, so reporters like me write articles (like this one!) about it. The articles cause more people to pay attention to the currency, and some of those people decide to buy. That pushes the price up even more, triggering more media coverage and more public interest.

This cycle repeated two more times in 2013. In May 2013, bitcoin's price briefly rose above $250, before falling by about 80 percent. Then in late 2013, bitcoin's price rose above $1,000 before once again crashing by 80 percent. The current boom—which has taken the currency from a low of $200 in early 2015 to a high above $10,000 in recent days—is the fourth major bitcoin boom.

Simply because of it's supply and demand. Of course we know that bitcoin is supply is limited to 21M bitcoin and 17M of it are already mined thus the demand is increasing as the value is increasing. It's just ironic that when bitcoin is in dump only few have their interest to it but when bitcoin is increasing they bought it like there were never tomorrow. And that's also why bitcoin drastically increase when the bull run starts.

But as the bitcoin community grew, the currency's value steadily climbed. By the time I started paying attention to bitcoin in April 2011, its value had climbed to $1. This was at the start of the first great bitcoin bubble. Media coverage of bitcoin attracted new users, which caused the price to rise. The rising price, in turn, attracted more media interest. The value rose to more than $30 by June, before it crashed and fell to $2 before the end of 2011.

Good question! When the bitcoin network was first created in 2009, bitcoins were barely worth anything. Bitcoin lore holds that the very first real-world bitcoin transaction occurred in May 2010, when one early bitcoin user paid another user 10,000 bitcoins for two pizzas. At the time, bitcoins were trading for less than a penny each.

The value of BTC is determined by the market. If you are willing to buy BTC for $8200 and the other person in the market rather want to buy BTC for $8100 then both of you has to wait til someone is wiling to sell for the price you set. However the market place will set and average to which the basis for what the price would be just as how CMC shows the price is.

If Bitcoins aren't tied to a conventional currency, how did they get so valuable?