Topic: Why are people running around saying Bitcoin is intangible / not backed? (Read 5426 times)

Taking total gold estimate from here, which is just an estimate, and using the total ever bitcoin amount of 21 million, there is about 0.004 bitcoins per.

If gold and bitcoin were backing each other (trading at that price, 4 mBTC per ounce gold) the price of bitcoins would be about 430 000 USD.

To say you will buy gold at 1 satoshi per ounce, you would need about 52 btc to back up the entire world supply of gold.

Gold is backed by Bitcoin because i will always buy 1 once of gold for 1 satoshi.
The question is not what back up bitcoin but what is backed by bitcoin.
Bitcoin is fundamental and backed by FAITH.

As are all currencies and dieties.  They are all based and backed by faith.

That's a poor example. That is called the "labor theory of value" and it is no longer generally accepted. It's not the mining that gives it value. You can argue that if mining cost nothing, then the supply of bitcoins would be infinite (and its value would be 0), but that is still not what it derives its value from. One day, you will no longer be able to mine bitcoins at all. Will its value then become infinite (or 0)?

The value of a bitcoin is simply what someone will trade for it, just like everything else.

Mining has a very strange relation to bitcoin.
Realistically speaking, no matter how much energy you expend on mining the amount of coin created per time unit is constant.
I'm not sure that maps one to one to other things.
I think it is difficult to understand bitcoins value by just looking at mining.

Next time someone tells you bitcoins are worthless, ask them to mine one for you.
Only once they've spent the time and resources mining one will they understand it's value.

As for fiat being backed by nothing.
It's a debt note and it's backed by someones need to earn the debt note to pay down their debts.
As long as there is still debt you hold a unit of human labour time. (some might even call then slavery units)

Well, you're obviously having trouble explaining it to  a certain segment of society who aren't... shall we say... well educated on technology. Using these words makes reassures them... without them even knowing.

Backing is a promise. Bitcoin = no promise. That's why I want them. It's not a flaw.

So bicoin is like God and Feelings?

Oh my...

Just because it intangible - doesn't mean it isn't valuable.

See: God

Just because it isn't back by anything doesn't make it worthless.

See: Feelings

Of course you're right.  
But you can't hide farmland, at least not practically. And when it comes down to it that is the one asset which constitudes the ultimate wealth.

You should generalize this to something like "Ownership means nothing without a way to protect it."
I don't think that power is the only way to protect something altho historically it was just the easiest way. One of the better things about protecting something with an army is that you show off your army. That deters potential attackers.
So this relation of protecting the heap is not so easily defined in terms of just power.
I could pretend that i was protecting something with an army but in actuality i have the thing of value in another place. In this case i protect my ownership with misinformation, not power.

What this interview forgets to mention is the cost of guarding the investment. That is also where the term backing usually comes from:

Historically currency was a receipt for an amount of grain, and that grain had to be guarded by an army. The value the receipt had was affected by the amount and the power of the army guarding the grain.
Ownership means nothing without power.

Put in that situation, I'd choose the farmland and the ExxonMobils, and $1 trillion in gold rather than $1 trillion in cash.

The whole concept of tangible versus intangible when it comes to currencies is flawed. After all, tangible asset holdings are very different when you have say a fluffy pillow versus a banana tree (which also holds different value if you live/don't live where they can actually grow) versus gold versus copper versus farm land versus a mickey mouse alarm clock, etc etc. There's this really great quote from Warren Buffett in an interview where he dives into this:

Warren Buffet: "….Well, I just don’t know. I don’t know whether cotton’s going to go up. I mean, we use a lot of cotton. I’ve watched it go from 80 cents to $1.90. You know, we use a lot of copper and I’ve watched it go from $2 to $4-plus, so I mean there’s all kinds of things in this world that are going to go up and down in price. You know, maybe hamburgers will tomorrow. And— but I— I’m— I don’t know how to judge that.

I do know how to judge to some extent the earning power of some businesses. And the real test of whether you would like it as an investment is whether you would be happy if it never got quoted again, and just in terms of what the asset did for you. But that doesn’t—

I will say this about gold, if you took all of the gold in the world it would roughly make a cube 67 feet on a side. So if you took all the gold in the world, we could have a cube that went down there 67 feet high and that would be the whole thing. Now for that same cube of gold it would be worth at today’s market prices about $7 trillion. That’s probably about a third of the value of all the stocks in the United States.

So you could have a choice of owning a third of all the stocks in the United States or you could have a choice of owning that little block of gold, which can’t do anything but kind of shine there and make you feel like Midas or Croesus or something of the sort.

Now, for $7 trillion, there are roughly a billion of farm— acres of farmland in the United States. They’re valued at about $2 1/2 trillion. It’s about half the continental United States, this farmland. You could have all the farmland in the United States, you could have about seven ExxonMobiles, and you could have $1 trillion of walking around money.

And if you offered me the choice of looking at some 67-foot cube of gold and looking at it all day, you know, I mean touching it and fondling it occasionally, you know, and then saying, you know, `Do something for me,’ and it says, `I don’t do anything. I just stand here and look pretty.’ And the alternative to that was to have all the farmland of the country, everything, cotton, corn, soybeans, seven ExxonMobiles. Just think of that. Add $1 trillion of walking around money.

I, you know, maybe call me crazy but I’ll take the farmland and the ExxonMobiles….."

So yes, Bitcoins are intangible as they are digital. So yes, Bitcoins are tangible because it's backed by a physical network of people and computers, and math. But really, the concept of intangible and tangible when it comes to "backed" currencies is flawed because people lose sight of what actually has real value from a tangible sense of investing.

Tangible and intangible are a philosophical debate anyway as much as liberalism and realism are in the philosophical debate. The key really comes into how we collectively agree to value both terms to see relevance.

(sourced from my own site: http://coincollectingenterprises.com/investment/warren-buffett-gold-useful-vs-useless-investments)

People who bring up the "not backed" point usually refer to backing as of a gold backed currency.

We should not care about that.
The whole gold backed currencies are historically nothing more than fraud. This was done with the argument of securety and convinience while in reality it was done to inflate the gold supply. In that respect "backed" currencies are worse than bitcoin.

That's what I always say.

I don't care if it's baked or not.. Fiat are, by definition "not backed by anything that trust in govt"

Do you trust world govts ?

In numeris I trust !

All currencies are backed by the faith that you will be able to exchange it for goods and services of greater value (to you) than your own goods and/or services that you exchanged for it.

But you could not back that up by reality.
Tangibility, it seems to me, is a pretty well defined word.
So please enlighten us and show us where the tangibility of bitcoin resides.