Topic: Re-visit the question: What is bitcoin's value backed by? - page 7. (Read 9149 times)
Weed
Weed
(-and when did we go back to arguing the value of coins come from the cost to mine? Didn't we realize how ass-backwards that was two years ago?)
(-and when did we go back to arguing the value of coins come from the cost to mine? Didn't we realize how ass-backwards that was two years ago?)
In a way you could say that it is backed by Fiat Currencies...
Think about it you can buy and sell things with bitcoins and what do people do with those bitcoins when they have them? Buy things with them ? Maybe, but the majority of them will eventually exchange it for Fiat. Because lets face it in the physical world there's not alot of places where you can use Bitcoin.
Even though i think it's backed by Fiat I personally believe imho that this is still great. Because even though Bitcoin can not replace fiat it provides so many great features for E-Commerce. Bitcoin to me is Virtual Cash and I will be very happy to use in when it stabilizes in the end because of that.
Think about it you can buy and sell things with bitcoins and what do people do with those bitcoins when they have them? Buy things with them ? Maybe, but the majority of them will eventually exchange it for Fiat. Because lets face it in the physical world there's not alot of places where you can use Bitcoin.
Even though i think it's backed by Fiat I personally believe imho that this is still great. Because even though Bitcoin can not replace fiat it provides so many great features for E-Commerce. Bitcoin to me is Virtual Cash and I will be very happy to use in when it stabilizes in the end because of that.
All it takes is one or two supermarket accept bitcoin payment, nowadays large supermarket almost has everything people want in daily life. And the supermarket can pay their employee and sub-contractors with bitcoin
Fiat money has been existing for a long time, so most of people don't ask why it still has value after the gold that used to back them were removed 1971
If you are a merchant and everyone have both bitcoin and fiat, you will definitely welcome bitcoin over fiat, but people might want to spend inflative fiat and save deflative bitcoin, so anyway bitcoin will not be used at large scale, it's like some kind of high powered money which seldom used to do the payment, although it has the payment function
If bitcoin value always double each year, who will spend them? They will more likely to mortgage them and get a fiat loan to spend
In a way you could say that it is backed by Fiat Currencies...
Think about it you can buy and sell things with bitcoins and what do people do with those bitcoins when they have them? Buy things with them ? Maybe, but the majority of them will eventually exchange it for Fiat. Because lets face it in the physical world there's not alot of places where you can use Bitcoin.
Even though i think it's backed by Fiat I personally believe imho that this is still great. Because even though Bitcoin can not replace fiat it provides so many great features for E-Commerce. Bitcoin to me is Virtual Cash and I will be very happy to use in when it stabilizes in the end because of that.
Think about it you can buy and sell things with bitcoins and what do people do with those bitcoins when they have them? Buy things with them ? Maybe, but the majority of them will eventually exchange it for Fiat. Because lets face it in the physical world there's not alot of places where you can use Bitcoin.
Even though i think it's backed by Fiat I personally believe imho that this is still great. Because even though Bitcoin can not replace fiat it provides so many great features for E-Commerce. Bitcoin to me is Virtual Cash and I will be very happy to use in when it stabilizes in the end because of that.
It's backed by confidence. The only reason I'll accept a bitcoin to send you a lamp is because I believe I can use that bitcoin to buy myself a table.
Fiat is backed by the power of the government. Bitcoins are backed by nothing.
Just like bitcoin, the value of fiat is not backed by government, it is backed by a consensus. Government can not give you anything in return if you bring fiat to government, you can only pay tax with fiat
Bitcoins are backed by demand, just like any other currency.
What is a fiat currency's value backed by? It is backed by the economy behind it, you can use that currency to satisfy certain kind of demand, so it has value
What is bitcoin's value backed by? It is backed by some properties, although those properties do not provide goods/services that satisfy any kind of demand, but they combined together can satisfy an ultimate demand: To get a lot of income quickly, and all the other demand will be satisfied in turn
The problem today is not that your demand can not be fulfilled, it is you don't have enough increase in income and the cost is getting higher every year. So, there will never be a race to bottom phenomenon for bitcoin: Everyone selling their last coin to buy a cup of milk before they starved and bitcoin price crash to 0
In general people will treat it as a digital asset and hold them in hope of fast price appreciation. Price will rise eventually due to higher and higher difficulty and lower and lower coin supply, and you can buy more and more things with bitcoin throughout the world because many merchants will try to get bitcoin through their sales later
Gavin mentioned an interesting thought: If the coin price double each year, you only need to spend half of your coin each year and your purchase power will stay the same forever. So when you have accumulated a certain amount of bitcoin which worth 2 years' worth of living expense, you can retire
Some one will argue that if everyone is doing this then there will be no one working to provide the goods/services, but currently it is over production and low income enviornment, until we have a shortage of labour force (which is very unlikely due to rising of AI and robots), nothing to worry about
What is bitcoin's value backed by? It is backed by some properties, although those properties do not provide goods/services that satisfy any kind of demand, but they combined together can satisfy an ultimate demand: To get a lot of income quickly, and all the other demand will be satisfied in turn
The problem today is not that your demand can not be fulfilled, it is you don't have enough increase in income and the cost is getting higher every year. So, there will never be a race to bottom phenomenon for bitcoin: Everyone selling their last coin to buy a cup of milk before they starved and bitcoin price crash to 0
In general people will treat it as a digital asset and hold them in hope of fast price appreciation. Price will rise eventually due to higher and higher difficulty and lower and lower coin supply, and you can buy more and more things with bitcoin throughout the world because many merchants will try to get bitcoin through their sales later
Gavin mentioned an interesting thought: If the coin price double each year, you only need to spend half of your coin each year and your purchase power will stay the same forever. So when you have accumulated a certain amount of bitcoin which worth 2 years' worth of living expense, you can retire
Some one will argue that if everyone is doing this then there will be no one working to provide the goods/services, but currently it is over production and low income enviornment, until we have a shortage of labour force (which is very unlikely due to rising of AI and robots), nothing to worry about
In History, the value we known is based by gold and silver. Now, it is just only trust and firearms so the supply . The design of bitcoin, is just trying to bring the old concept back plus better management. The value comes from there
Originally, Bitcoin had a value of zero. But then, a while back someone bought 2 pizzas for 10,000 BTC. This put the value of 2 pizzas into the overall system. It was a tiny amount but it still counted. Others have bought drugs and other contraband with BTC. Some have exchanged work for BTC. Some people bought electronics. All of these tiny amounts add up until a currency that is worth essentially zero begins to have value. A while back, a single BTC only traded for a penny but the "intrinsic" value was in there and it grew.
Others began to see this value and believed the value would continue to go up and, of course, they wanted to speculate on it and make some money. This speculation caused the price to rise as more money was pumped into the system. The intrinsic value hasn't risen nearly as much as the price, due to the speculation. However, the intrinsic value has risen because Bitcoin has gotten more visibility with all of the added speculation. This increased visibility increased the public's awareness of Bitcoin. It caused entrepreneurs and inventors to come up with new ways and new opportunities for people to use the currency. This cycle brings in more inventors, more speculators, and more end users. The speculators, unfortunately, drive the price up and are ultimately responsible for the peaks and valleys. But this isn't such a bad thing because every time the price rises, it creates more awareness and so the intrinsic value continues to slowly rise, even though it looks like the price may be falling today.
Ultimately, Bitcoin is "backed" by its usefulness. As long as you can do things with it, then it has value. The more people can do with it, the more value it has.
Consider this -
What if you could purchase something with complete anonymity? You can already do this with cash but can you do it almost instantaneously across the world with virtually no cost? This feature may not have value to you but it has value to others.
What if you could start accepting payments online and not have to: pay merchant account fees, worry about chargebacks, wait to get paid by the merchant, or have to set up a secure website? These features may not have value to you but they have value to others.
What if you did not like putting money into a bank, for whatever reason (maybe you're afraid the banks will take your money the way they did in Cyprus), and wanted to control your own money but still needed a way to pay others without sending checks, moneygrams, wire transfers, etc.? This feature may not have value to you but it has value to others.
What if you had a factory and wanted to export your products to another country but did not want to wait up to 8 weeks to get paid and purchase letters of credit for upwards of $100,000 each? This feature may not have value to you but it has value to others.
What if you were a world Superpower and were tired of purchasing all of the United States' debt and wanted a new currency to use as your "gold standard"? This feature has a lot of appeal to most countries in the world.
This is just a small sample of the usefulness of Bitcoin. Not everyone is taking advantage of the things Bitcoin can do for them today. Not yet anyway. But the list of things Bitcoin is useful for is growing rapidly and the number of people figuring out how Bitcoin personally benefits them is growing daily.
Others began to see this value and believed the value would continue to go up and, of course, they wanted to speculate on it and make some money. This speculation caused the price to rise as more money was pumped into the system. The intrinsic value hasn't risen nearly as much as the price, due to the speculation. However, the intrinsic value has risen because Bitcoin has gotten more visibility with all of the added speculation. This increased visibility increased the public's awareness of Bitcoin. It caused entrepreneurs and inventors to come up with new ways and new opportunities for people to use the currency. This cycle brings in more inventors, more speculators, and more end users. The speculators, unfortunately, drive the price up and are ultimately responsible for the peaks and valleys. But this isn't such a bad thing because every time the price rises, it creates more awareness and so the intrinsic value continues to slowly rise, even though it looks like the price may be falling today.
Ultimately, Bitcoin is "backed" by its usefulness. As long as you can do things with it, then it has value. The more people can do with it, the more value it has.
Consider this -
What if you could purchase something with complete anonymity? You can already do this with cash but can you do it almost instantaneously across the world with virtually no cost? This feature may not have value to you but it has value to others.
What if you could start accepting payments online and not have to: pay merchant account fees, worry about chargebacks, wait to get paid by the merchant, or have to set up a secure website? These features may not have value to you but they have value to others.
What if you did not like putting money into a bank, for whatever reason (maybe you're afraid the banks will take your money the way they did in Cyprus), and wanted to control your own money but still needed a way to pay others without sending checks, moneygrams, wire transfers, etc.? This feature may not have value to you but it has value to others.
What if you had a factory and wanted to export your products to another country but did not want to wait up to 8 weeks to get paid and purchase letters of credit for upwards of $100,000 each? This feature may not have value to you but it has value to others.
What if you were a world Superpower and were tired of purchasing all of the United States' debt and wanted a new currency to use as your "gold standard"? This feature has a lot of appeal to most countries in the world.
This is just a small sample of the usefulness of Bitcoin. Not everyone is taking advantage of the things Bitcoin can do for them today. Not yet anyway. But the list of things Bitcoin is useful for is growing rapidly and the number of people figuring out how Bitcoin personally benefits them is growing daily.
Weed
Bitcoin is backed by Mathematics, it's like with anything though, as long as even a few people believe Bitcoin or anything else has value, people will be willing to pay a price for it.
As it is now, the largest companies queue up outside Obama's door, begging for handouts, only turning their heads towards Ben's office to get clues of what is going on. Unsound, ineffective and capital-wasting.
Let's say, the Government need $300 billion to pay the pension funds and social security, how is that possible with bitcoin? Even if they bid a price of $30K per coin, and bitcoin exchange rate rise 300 times, they still won't get enough coin, since some of the coins are not for sale or totally lost
If the USD supply is fixed, if economy grows, the USD's value must rise, means goods and services' price will drop, because there are more goods chasing for the same amount of USD. If a merchant do not have enough USD, then even the demand is big, he won't be able to do all the purchases
If you ever played Fallout 3, you will experience this: When some merchant does not have enough amount of money, even you have lots of precious items, you won't be able to sell them to buy the things you want. And to drop the price for everything in order to utilize the limited amount of money just feels very strange: No one wants to drop their sale price first unless they have no other choices, what if he dropped while others did not drop? So lack of money typically reduced commercial activities, only a severe lacking of money everywhere will cause a price war
Bitcoin is not going to totally replace fiat money, otherwise we will see every merchant drop their sale price constantly and all the projections of future earning are negative. The only occasion that goods/services' price in bitcoin does not change is when economy does not grow at all
Do not say "everyone". You do not know what everyone wants. Sure a sector of people (like you clearly) want to get rich quick, but lots of people want the world want a "global currency".
That bitcoin is succeeding where other alt currencies are failing is simply a measure of the brilliance of the bitcoin concept and how that produced the first mover's advantage it enjoys today. Other alt-coint can be exchanged for cash dude. Just go to btc-e.com and you can exchange several alt coins for cash.
That bitcoin is succeeding where other alt currencies are failing is simply a measure of the brilliance of the bitcoin concept and how that produced the first mover's advantage it enjoys today. Other alt-coint can be exchanged for cash dude. Just go to btc-e.com and you can exchange several alt coins for cash.
I still think the bitcoin's deflative nature decided that it is more likely to be used as an investment tool instead of a transaction medium. For transaction medium you typically want a stable exchange rate, maximum 5% volatility per year, not 1000% per year. To keep a constant value, the money supply must be adjusted all the time, and that is simply not possible for bitcoin
I totally disagree. Widespread use of bitcoin means low volatility, entrepreneurs will take on the stabilizing, and people will generally make sound business decisions.
As it is now, the largest companies queue up outside Obama's door, begging for handouts, only turning their heads towards Ben's office to get clues of what is going on. Unsound, ineffective and capital-wasting.
Do not say "everyone". You do not know what everyone wants. Sure a sector of people (like you clearly) want to get rich quick, but lots of people want the world want a "global currency".
That bitcoin is succeeding where other alt currencies are failing is simply a measure of the brilliance of the bitcoin concept and how that produced the first mover's advantage it enjoys today. Other alt-coint can be exchanged for cash dude. Just go to btc-e.com and you can exchange several alt coins for cash.
That bitcoin is succeeding where other alt currencies are failing is simply a measure of the brilliance of the bitcoin concept and how that produced the first mover's advantage it enjoys today. Other alt-coint can be exchanged for cash dude. Just go to btc-e.com and you can exchange several alt coins for cash.
I still think the bitcoin's deflative nature decided that it is more likely to be used as an investment tool instead of a transaction medium. For transaction medium you typically want a stable exchange rate, maximum 5% volatility per year, not 1000% per year. To keep a constant value, the money supply must be adjusted all the time, and that is simply not possible for bitcoin
I totally disagree the ultimate demand is "to get a lot of income quickly".
The ultimate value in bitcoin is its ability to disrupt how money is sent round the world, making the process very very quick and very very cheap for anyone on the planet with a smartphone. Its got nothing to do with get-rich-quick schemes....
The ultimate value in bitcoin is its ability to disrupt how money is sent round the world, making the process very very quick and very very cheap for anyone on the planet with a smartphone. Its got nothing to do with get-rich-quick schemes....
Although many people do not admit, get-rich-quick is what everyone ultimately want, if there is such an opportunity guaranteed by government and banks, almost everone will join the game, just like housing bubble
The utilities you mentioned is not the reason behind the success of bitcoin, there are many alt-coins provide even quicker confirmation and scalability than bitcoin, but they never made any real sense, because get-rich-quick effect has already been proved on all the existing bitcoin investors, and part of that success comes from bitcoin's ability to be exchanged into other currency, where MTGOX played a vital role in early days of bitcoin's spread
Do not say "everyone". You do not know what everyone wants. Sure a sector of people (like you clearly) want to get rich quick, but lots of people want the world want a "global currency".
That bitcoin is succeeding where other alt currencies are failing is simply a measure of the brilliance of the bitcoin concept and how that produced the first mover's advantage it enjoys today. Other alt-coint can be exchanged for cash dude. Just go to btc-e.com and you can exchange several alt coins for cash.
It is backed by collective confidence in an alternative virtual currency.
Bitcoin is backed by stupidity, just like any other deflationary cryptocurrency is.
PS: 1 BTC can't lose its value just because...
PS: 1 BTC can't lose its value just because...
Quote
Two things are infinite: the universe and human stupidity
True, being stupid proves that you are still a human
A smartass alien might find it difficult to live on earth
Isaac Newton: “I can calculate the motion of heavenly bodies but not the madness of people.”
Weed
It's backed by dreams and wishes: Speculators. 
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