Topic: why can't bitcoin be based on something that has value? (Read 1988 times)

you are yet again forgetting the layering affect. and the different wording

something that people find desirable and useful (their sentiment(values)).. turns a liability(cost) into a asset(value)

values(sentiment)+value(cost)=valuable
combining the values and value = something "becomes valuable"
valuable=able to have value

costing alot doesnt "give value" on its own
but its that underlying cost thats the financial value amount underlying the price of an item that has values

EG bitcoin jan2009-feb2010 had values(sentiment desire/need) but didnt have a value(economic number)
bitcoin did not become valuable until ~march 2010


just concentrating on the words "backed by value" (not values/valuable))
is the backed by a underlying cost no one wants to sell below thus its backed by a minimal amount everyone refuses to go below. backing a minimal amount(value)
bitcoins is backed by a value of $15k. no one wants to sell below this right now. thus its backed and supported.
the price is higher due to the speculative part of sentiments of individuals

but underlying the random whims of individuals. is the ultimate bottom cost no one sells below buy everyone is willing to pay that or more.. thus backed by that value


banks dont store/offer bitcoin.BANKS ill repeat BANKS do not. they offer FIAT services

people can use banks to service their FIAT transfers. but BANKS dont service bitcoin custody.

as for other businesses (exchanges) well if the bitcoin is not on your key the coin is not yours. you have no legal rights to the coin, you are stuck with whatever rights the service whichs to offer in its terms and coditions to privilige of access to balance at whatever rate they may decide..

yes good honourable exchanges do offer 1:1 but thats something you need to check a businesses terms and conditions for.

 exchanges. under their business practice and service T&C may decide to allow users to do things with balance the business stores in its databases. where the business decides to honour a 1:1 swap of their mysql balance for a coins deposit/withdrawal. but that can easily change by them change their business terms and conditions..

do not confuse a crypto exchange for the BITCOIN protocol/rules

you see this happen with fiat. banks change there terms of service about fiat. its where they change interest rates or monthly charges, or rates, or fee's or other messy things where people dont always get back what they handed to a bank

do not confuse a bank with a bank note. once you hand abank note to a bank. you lose rights over the bank note. they can and do limit your access to the bank notes you deposited(handed to them)

do not confuse the bitcoin networks storage.. with businesses terms and conditions of users membership of balance on their database..

do not trust a exchange.. use them by all means for quick activity. but dont think of exchanges as wallets or the bitcoin network rules

well in this context i thought we were narrowing down the focus to something that takes alot of energy and that's what supposedly gives it "value" which i disagree. you can expend alot of energy on something but does that automatically give it value?



How do you think most people obtain bitcoin? They transfer fiat from their bank to a centralized exchange and hope the exchange gives them some bitcoin that they can then transfer it into their own wallet to be able to self-custody but they are relying upon banks and financial institutions for the entire procedure, as I mentioned above. And that's the problem. When you want to cash out, you have to go through the entire procedure IN REVERSE. Most people do anyway. People that follow the status quo. So in reality, bitcoin is heavily tied into banks and other financial outfits like it or not. Heavily dependent upon them for its current price.

something having value (economic number)
someones values(desires, emotions, sentiments of features and benefits)
something valuable(value + values)

there are 3 different words of different meaning you are not quite grasping

let alone the previous lessons of the different of price vs value


banks ?
no bank has offered a bank account to put your bitcoins in

if you mean exchanges used as custodians.

you dont store your own bitcoin in a custodian. .. once you transfer your coin to a custodian address, they are no longer "your own"

bitcoins never leave the blockchain. EVER
if they are not on your keys they are not yours.

peoples decision to give up ownership rights to property they feel is theirs by deciding to transfer ownership over to a custodian is not a bitcoin flaw.. its a human flaw

once the transfer is complete where you no longer have ownership control using bitcoin. you are then no longer using bitcoin. but using the human world of trust and business law

(much like handing bank notes to a bank. doing so you lose the privilege of bank note utility, and now entered the realm of business law of their service terms and conditions of their limits and access restrictions if you were to request some bank notes back)
....

bitcoin stores bitcoins perfectly. using the cryptographic keys to secure ownership access vis transaction signing as proof of ownership

if someone seen a banana/necklace/bank note on the open street. can you prove it was your banknote.. nope

everyone can see bitcoin on the blockchain. but no one else can grab it and take it. only the owner can move it/claim it.

bitcoin is stored very very well

bitcoin solves many many flaws of previous versions of money.
but nothing can solve the many flaws of human

it requires us humans to know and learn and protect what is ours. it requires us to change our ways

just because something takes a huge amount of energy to obtain does not necessarily make it valuable i would think.  for example someone could clone bitcoin and modify it so that the difficulty target had more leading 0s. meaning its harder to mine takes more energy. does that make it more valuable?


You mean these? I'd say bitcoin meets most of them pretty well but not all of them sufficiently for example fungibility. bitcoin is not fungible. because bitcoin is not private and anonymous. the "storability" one is also a bit suspect since to get to the point of being able to store your own bitcoin, most people are going to be relying upon banks and financial institutions, if that wasn't the case bitcoin wouldn't be anywhere near the price it is today.

Bitcoin’s monetary properties include:

Transferability — The ability of an item to be transferred anywhere in the world with the highest possible speed and at the lowest possible cost
Divisibility — The ability of an item to be divided conveniently and reliably into smaller pieces, thereby accommodating any transaction size
Storability — The ability to be self-custodied by anyone, without relying on a bank or financial institution
Durability — The ability to be as resistant to degradation as the medium in which it is stored
Verifiability — The ability of an item to be reliably verified as real by its users
Fungibility — The ability of each item unit to be equivalent to any other item unit
Scarcity — An item’s resistance to increasing its supply
Censorship Resistance — The ability for anyone to use a form of money without fear of the money being confiscated or frozen.

Question to you specifically. What is gold backed by? Nothing. It has value because it meets the 5 monetary properties. It backs itself. It takes a great amount of work and energy to mine gold. So does Bitcoin. Bitcoin also meets 7 monetary properties. It also takes an extreme amount of computational work and energy to create it. Thats why it is called a Bearer Asset, Base layer, apex property. Its the properties that it meets for monetary value, not backing.

Bitcoin is pretty ok with the fact that it is independent and don't need a backup, or let's come in again from this aspect, what should be the back up for bitcoin? Is it gold, or what? I don't see anything worth the standard to back a decentralized currency like bitcoin, it obviously make no sense and needles, the network is self protected with it value embedded within.

BTC is backed by electricity, that is a scarce good. The reason to have a limit of 21 one million units is to add even more scarcity to the currency. It could have been any limit. It could have been just 1 unit and it would haven’t been the most convenient, but it would have worked. In any case, it seems to me that what you don’t understand is the concept of money.

Start with this interview to Saifedean Ammous: https://podverse.fm/es/episode/m3jJcVzOl.

Try to understand this concept also: all and any currency used as money, based on multiplication of its fundamental unit, over the time and independently on how long it takes to reach the mathematical limit, its value tends to cero. This is the pathetic case of fiat currencies (include ETH on this type of currencies). On the contrary, all and any currency used as money, based on the subdivision of its fundamental unit, over the time and independently on how long it takes to reach the mathematical limit, its value tends to infinite (this is hypothetically and meanwhile nobody demonstrates this statement to be false, where wealth created by humans tends to).

If you understand the mathematical concept of limit, you’ll understand this. If not, maybe you should also study this concept first.

You can also download Ludwig Von Mises “The Theory of Money and Credit” from this link: https://mises.org/library/theory-money-and-credit.

 It breaks the whole concept of decentralization and cryptography that is built VIRTUALLY. Bitcoin was created for this, to create a coin that "does not exist".

Electricity has value you dummy ! lol.

Just like Gold, time and energy is spent to mine Bitcoins. It's safe to say that cryptocurrency's value doesn't come out of thin air. Most people can't believe how something intangible as Bitcoin can be more valuable than Gold. That's because they truly don't understand how Bitcoin works. The general public only believes what the government says about Bitcoin, so they will say Bitcoin doesn't have value without taking the time to do their own research. It shouldn't matter since ultimately the market decides how much Bitcoin is worth in Fiat terms. As long as there's demand for BTC, it won't be going anywhere soon. Just my thoughts

This is the best answer that suit op request because I still haven't seen currency been backed by something which keeps me contemplating. Bitcoin is a peer to peer currency and it existence had prompted many altcoins that we see in the market now.
 Many altcoins now that are in the market seem to be backed by something which is nit ways read and most time it is users to decieve investors to keep investing in n such project. Bitcoin is still doing what it promised and I am happy that many adopters of it has no regret so far.

$11,000 income per year to install 400 solar panels and a bunch of bitcoin miners ?  I don't see how that would make financial sense. Hopefully this person would have some other use for those solar panels if he couldn't make a profit from mining bitcoin.

it depends what type of hydro electric generation is being used. if it's pumped storage then they can store the excess energy into a reservoir for later use. so it's not being wasted in that case. it just gets used later during periods of peak demand. try this example instead: https://www.marketplace.org/2022/03/25/crypto-miners-use-natural-gas-stranded-in-wells-to-power-energy-hungry-rigs/



that's an extreme example but ok i wouldn't argue that bitcoin (or any other cryptocurrency) makes it easy to move your money. but it's not maybe as simple as just packing up a few bags and memorizing your brainwallet passphrase. what if you own alot of physical assets like real estate and houses? first you have to sell them, get the money, convert it into bitcoin. in an emergency, you might not have all the time in the world to do all those things.


the third one is that something better comes along that people prefer it and bitcoin takes a back seat to it. so far that hasn't really happened.

Each of these assets has its own value, its own advantages and disadvantages. What determines the price of gold? It needs to be found, mined, for this you need a lot of equipment, then processed, transported and stored. All this affects its final cost, as in the case of bitcoin, in order to get it you need equipment, electricity, equipment maintenance. But the amount of bitcoin is limited compared to gold, and the more people want to own some part of bitcoin, the more expensive it will become.

First off btc has definite utility in the power sector.

It also can be used to create demand and build larger solar arrays.

Lets explain the demand concept.

Warehouse owner has a 2 acre flat roof not in use.
He is a dry goods warehouse. Means he uses no refrigerators and very little power.

He wants to creat a solar array. His demand is very low. Maybe 10kwatts an hour day 240 kwatts a day or 7200 kwatts a month.

A two acre solar array can have 400  400 watt panels which is about 160 kwatts peak per hour.

that is about 800 maybe 900 kwatts a day.

so lets put a 400 panel array on the roof. Nope why daily demand is only 240 kwatts not 800-900

So maybe only 100 panels are allowed maybe 120.

you waste the space on the roof  and can not do the 400 panels.

Well bitcoin fixes this.
Put in enough gear to make 40kwatts an hour vs your current 10 kwatts an hour.

that is about 10 s19 miners.

do it for six months maybe one year you now have the demand to allow 400 panels. vs 100-120 panels

This is real utility. you created 900 kwatts a day worth of power vs 240 kwatts a day of power

and you mined btc.

That is real value. commerical power is at least 5 cents a kwatt

900-240= 660 times 5 cents is $33 a day in extra power created by those miners

that is over 11000 a year in extra power create.

thus real utility

so the argument you post should be deleted or altered to say besides demand utility (which i clearly show is real) what worth does btc have.

I have a second one btc due to pow mining can allow for excess power production to not be wasted.

Yeah power plants have over capacity and shut down if coal or oil but if the plant is hydro it can not be shut down. btc mining allows that excess power to not be wasted.


that is  two real examples of why btc has true value.

third since i proved that btc has real value it means a real value item can be moved out of a country in case of a war.

ie you live in ukraine and escape you can easily recover your coins in another country.

so three real true reasons that can not be erased or dismissed as fake value.


and as the op what you got to shut that down?

World world three and complete loss of the civilized world 🌎 world be one valid argument
Complete world agreement to outlaw btc  also works that would mean no internet.

Maybe you have a third one?

ok so let's break down the gist of that article.

Bitcoin Value is Partly Determined by Bitcoin Scarcity

Not all cryptocurrencies have a maximum supply like bitcoin but some do. Does that mean they are valuable?

What Gives Bitcoin Value? Difficult To Take, Yet Simple To Move

Well again, most cryptocurrencies rely upon public key cryptography for their security and such. So that makes them difficult to take if you don't know the private key but simple to move if you do know the private key. So that means all cryptocurrencies are then valuable?

Or is bitcoin somehow unique in that it has value while some of the others don't yet they function essentially equivalent to bitcoin. Maybe bitcoin is just treated as more valuable because it is more popular thus more people use it than some other cryptocurrency? Is that the basis underpinning bitcoin's true value proposition because if so, that could change. All it would take is people to start using some other cryptocurrency in place of bitcoin and then bitcoin would be less valuable?

Very good question. First, I was thinking like you and then tried to understand the nature of the money and the economic system what the Bretton Wood  X and X group has created after the second World War. 

You need to understand what is value and how you determine the economic value system in the financial medium of exchange ? Currency cannot be based on economic value, as many economists thought that all the fiat currency should be  based on gold value.

The fact is gold does not have any economic value but there is an ornamental value of gold, which is much lower than the gold price. Gold value was imposed by a monopoly system by the bankers that was top of the goldsmith's ornamental value.

So Bitcoin is not actually a currency like that of fiat  curgency that is tendered by the government and it has a monopoly currency value according to the Foreign Exchange Regime.

Bitcoin is different and Bitcoin directly valued by the market demand instead of gold value or fiat currency value.

Bitcoin value seems to rise and fall but it has two different fundamental elements involved, first the market demand of Bitcoin and fiat currency devaluation. Both is working together to determined the Bitcoin value in the Foreign Exchange Market.

 

To many experts, this limited supply, or scarcity, is a big contributor to Bitcoin's value. Cannot be copied: Because Bitcoin operates on a blockchain ledger, no one can counterfeit a Bitcoin.  The scarity is what Bitcoin's value based on. https://xtrading.com/financial-questions/what-makes-bitcoin-valuable/

you can't do that with bitcoin because bitcoin isn't backed up by any asset that has a stable price. but imagine how you could do it if it was. make sense now? consume the asset, your bitcoin is burned. buy the asset, you just minted a bitcoin. maybe i should call it something else other than bitcoin because people here seem to think i'm suggesting bitcoin has to be changed over to working that way.

will never happen.

well that's one of the weaknesses of bitcoin but that's how bitcoin works and it works so until something better comes along we're stuck with it. not like it's a huge problem but the ford model t got replaced eventually with better cars. same thing could happen to bitcoin.

People are not necessarily the best judge of something. That's why bitcoin's price fluctuates wildly over the years. Because people can't make up their minds what bitcoin is worth is what I think.

Yes, bitcoin is certainly an improvement over the government just printing money out of thin air. Does that mean bitcoin is the ultimate solution to that problem? No. probably not. thus this thread 

For obvious reasons the supply of bitcoin is limited and you can't "contract" or "expand" the supply. Imagine "contracting" the supply of bitcoin and your coins vanishing from your wallet. How would you feel?

Why does it have to be based on something that has value? Bitcoin has it's own value. We, the people determine the value of bitcoin. Fiat currency isn't based on something that has value and is printed out of thin air whenever the government wants. At least bitcoin isn't controlled by government or centralized organization where they can fix, add or remove supply.

Gold is often appreciated by mainstream investors due to its tangibility and versatility. You can use Gold for many things in the real world like manufacturing jewelry, using it for semiconductor components, etc. But you can't do that with Bitcoin because it doesn't exist in physical form (even the physical coins you see around are not really Bitcoin, they're just wallets with public/private keypairs on them). Despite this, BTC has value because it's backed by real world resources (energy spent during the mining process). Not only that, but the cryptocurrency itself has a limited supply of 21m coins and there's no central authority behind it. The decentralized and censorship-resistant properties is what has made Bitcoin an extremely-valuable cryptocurrency to this date.

If I'd were to invest into a store of value to help protect myself against inflation, I'd choose both Bitcoin and Gold for complete peace of mind. But not everyone is willing to hold both types of assets/commodities. As long as you don't invest all of your life savings into them, there should be nothing to worry about. Just my opinion